Arianna Huffington An AOL Stock Tout?

HuffPo founder dismisses skepticism about merger with legacy online player, but she may have overstepped stepped SEC rules.

Paul McDougall, Editor At Large, InformationWeek

May 23, 2011

2 Min Read

In a possible violation of securities laws, Huffington Post founder Arianna Huffington said Monday that an investment in her employer AOL's stock is the path to riches.

"If you buy AOL stock right now you're going to make a lot of money," said Huffington, who spoke on a panel at TechCrunch's Disrupt conference in New York City.

Huffington was responding to skepticism by about AOL's decision to buy news aggregator The Huffington Post for $315 million earlier this year.

Ironically, the doubts were voiced by TechCrunch founder Michael Arrington, who himself became an AOL employee after the online company bought his site last year for an undisclosed sum, and who now reports to Huffington, a frequent critic of so-called "old media."

Arrington reminded Huffington, whose formal title is president and editor-in-chief of Huffington Post Media Group, a unit of AOL, that it can be against the law for corporate insiders to tout their own stock or make promises of future performance.

Indeed, most officers of public companies take great pains to invoke "safe harbor" rules while noting that any statements they make are not to be taken as an indication of their company's stock performance.

Huffington said 25% of the funds she received from the sale of Huffington Post were converted to AOL shares. But her remarks seemed more an offhand joke than a genuine attempt pump AOL shares. Still, the shares climbed after her remarks and closed up 1.69%, to $19.85, on a day when the major markets fell. AOL's stock has crept mostly downward since it split off from Time Warner in 2009.

Those facts alone could merit at least a call from SEC watchdogs.

AOL acquired Huffington Post with an eye to creating "a next-generation American media company with global reach that combines content, community, and social experiences for consumers," according to a statement at the time from AOL CEO Tim Armstrong.

Interviewed by Arrington at TechCrunch Disrupt, Armstrong said he's still convinced the merger with HuffPo was the right move. "The intersection of information and commerce is a very powerful place to be," said Armstrong.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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