Since early May, Life Clips, the Charlotte startup that makes action cameras, has been mentioned in four articles on TheStreet, the widely followed financial-news website known for its founder and CNBC personality Jim Cramer.
Those articles were written by Adam Heimann, a principal at Midam Ventures LLC. That’s the investor relations firm that has an agreement with Life Clips to run positive stories on a website called Tech Stock Insider.
In a July 20 article on TheStreet, for example, Adam Heimann highlighted Life Clips’ 360-degree action camera and quotes the company’s CEO Bob Gruder saying “sometimes a regular snapshot doesn’t do the moment justice.”
TheStreet article has a note that says Heimann’s piece is a “commentary by an independent contributor” and that he held no stock in Life Clips at the time of publication. But the article doesn’t mention Midam’s contractual relationship with Life Clips.
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After the Observer made an inquiry about Heimann’s articles, Gary Henrie, counsel for Midam, wrote a July 29 letter to TheStreet saying it was his opinion that Heimann’s failure to disclose Midam’s relationship with Life Clips did not violate federal securities law.
The lack of a disclaimer was “not a material omission that would operate as a deceit upon the investing public,” Henrie said in the letter, which was provided to the Observer. He noted that the articles mentioned products from other companies and did not have “touting references” to Life Clips’ stock.
Henrie, however, said going forward it would be “good form” for any articles written by Heimann that mention Life Clips to disclose the “business arrangement” between Midam and the Charlotte company.
Heimann told the Observer that getting articles published at the TheStreet was not part of any services provided by Midam. “I wrote articles for TheStreet.com independently ... on companies and products I think are interesting and feel deserved to be written about,” he said.
On its website, TheStreet highlights its “unbiased approach” to covering the financial markets. In a statement, TheStreet spokesperson Jon Kostakopoulos said Heimann “is one of our free contributors and not an employee of TheStreet.com.”
Chris Roush, a business journalism professor at UNC Chapel Hill, said it’s not unusual for penny stock companies to pay writers to produce positive stories about their companies. “Unless you look really closely, you don’t see the connection,” he said.