what a bunch of f-ing idiots running wild on the net...hopefully gnet will meet my terms for this thread soon:..check this out.
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Wednesday October 20, 11:37 pm Eastern Time
MGM battles bogus message on Internet site
By Bob Tourtellotte
LOS ANGELES, Oct 20 (Reuters) - In another warning sign for investors using the Internet, a bogus posting from someone claiming to be Metro-Goldwyn-Mayer Inc.'s former chairman led the film studio to post a note warning investors to beware.
Late Tuesday, visitors to a Yahoo! message board would have seen a note from someone using the name frankgmancuso, advising shareholders to sell MGM stock ahead of a planned stock rights offering, which would, eventually, dilute the number of shares outstanding and place downward pressure on the stock price.
The bogus message pointed to MGM's stock price drop of around 2 points Tuesday as evidence of shareholders starting to sell stock. The problem was, however, that the rights had already started trading, and the falling stock price was due primarily to a technical adjustment after their issuance.
The real Frank G. Mancuso resigned as MGM chairman and chief executive officer last spring, but he is still a consultant and member of its board. So a warning bell from Mancuso should sound a fairly ominous note for investors.
But Mancuso did not post the note. Investors quickly called his office, which then informed MGM. After consulting with attorneys, MGM posted a message using the name, mgmcorporate, warning investors that Mancuso was not the posting's source.
MGM said the message appeared to be from short sellers who were attempting to affect the stock price, and it warned that doing so was a violation of U.S. securities laws.
''Frankly, we had some reluctance in dignifying the message, but we felt the issue was serious enough to warrant our posting,'' said MGM Senior Vice President Craig Parsons.
A short seller borrows stock from a stockholder, then sells it hoping the price will decline and the short seller can repay the borrowed shares at a lower price and pocket the difference. Essentially, a short seller bets the stock price will decline.
As of last month, MGM had a fairly large short position of 3.7 million shares out of a total of roughly 15 million shares in public hands, according to MGM, meaning there were quite a few market players who wanted to see the stock fall.
The story may remind some stock watchers of last April's bogus posting on Yahoo! concerning a southern California technology company called Pairgain Inc. (NasdaqNM:PAIR - news). In that case, a phantom message linked investors to what was purportedly a news story speculating that Pairgain was a takeover target.
The bogus story sent Pairgain shares soaring 31 percent, before it was detected as false and yanked from the board by Yahoo!. Federal Bureau of Investigation agents eventually traced the bogus message to a Pairgain engineer, and he was arrested.
As a general rule, Yahoo! does not comment on specifc posting on message boards, a spokeswoman said. But it does offer a disclaimer on its message boards that the notes are opinions of people posting them, ''are no substitute for your own research'' and ''should not be relied upon for trading.''
In other words, let the Internet investor beware.
MGM stock rose 11/16 on Wednesday to 21 3/8 on the New York Stock Exchange. |
