Can you trust commentators on the financial news channels when they tout stocks and offer advice?

The arrest of a financial adviser and TV commentator on suspicion of failing to disclose that he received more than $1 million in cash and stock from a Van Nuys company he touted might raise new suspicions even though the cable channels insist they have safeguards for avoiding such activity.

Courtney Smith was indicted by a federal grand jury in Los Angeles last week for violating federal securities law while recommending now-defunct GenesisIntermedia Inc. as an independent financial commentator on CNBC, CNN and Bloomberg Television between 1999 and 2001.

Smith is also the subject of a class action shareholder lawsuit and is being sued by the Securities and Exchange Commission.

The allegations against Smith predate 2003 regulations from the SEC, New York Stock Exchange and Nasdaq requiring on-air financial disclosure for analysts appearing on TV while they discuss companies or recommend stocks.

George Newhouse, Smith's attorney, said his client "looks forward to his appearance in Los Angeles and being vindicated on all of the charges."

At CNBC, a unit of General Electric Co. division NBC Universal, on-air guests must now sign a statement pledging to not undertake financial activities or recommend actions to others based on trading activity created by their recommendations. They must disclose their holdings, their family members' holdings and their firms' financial position in the month before the appearance if they have 1 percent or more of stock in a company they discuss on-air. They must also disclose whether their firms do investment banking business with companies discussed on-air.

But prior to 2003, outside commentators were not required to sign a statement promising they had no conflict of interest. CNBC management gave them written copies of their policies and discussed their holdings verbally.

"We updated those policies in 2003," said Amy Zelvin, a spokeswoman for the channel. "When a financial professional is on, we show a comprehensive chart showing if they have any ownership in a company they're taking about, if their families do, and how much."

CNBC has come under fire for perceived conflicts of interest involving Suze Orman, who appears on the financial channel and also is seen in commercials for a General Motors Corp. loan program. General Motors is a CNBC advertiser.

CNBC claims there is no conflict because Orman is not a CNBC employee even though its Web site states that Orman "appears regularly on CNBC as its personal finance editor."

According to Smith's indictment, Smith promoted GenesisIntermedia, an Internet marketing company, as a "very hot speculative pick" and "very cheap from my perspective" during his TV appearances. He had received cash and stock in the company valued at $1.2 million.

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