GP, I found this also verrrry interesting:
Member 3038133
Copyright 1999 Responsive Database Services, Inc.
Business and Industry
Copyright 1999 Securities Data Publishing
Mutual Fund Market News
LENGTH: 505 words
HEADLINE: Cybersmear Becomes the New Internet Scam
BYLINE: Mike Garrity
HIGHLIGHT:
The SEC is receiving a growing number of complaints about lies which anonymous users of the Internet are posting online--so-called cybersmears
BODY:
Short sellers, disgruntled current and former employees and others are creating an Internet headache that can be difficult to combat, according to a top securities regulator who monitors the Internet.
The SEC is receiving a growing number of complaints about lies which anonymous users of the Internet are posting online, said John Reed Stark, chief of the SEC's office of Internet enforcement. The so-called cybersmears can hurt the stock price of a company, a fact that can effect mutual fund companies through their funds' investments or in the price of the stock of those fund companies that are publicly traded, Stark said. The smears also can unsettle a company's business partners, employees and customers, Stark said.
"We're receiving a growing number of complaints about this problem," Stark said. "My view is that it's only going to get worse."
Stark spoke at The National Investment Company Service Association's mutual fund compliance conference in Boston last month.
The cybersmears take place in Internet chat rooms. There, individuals, either using a pseudonym or impersonating another, criticize a company or its products, deliberately using inaccurate information, Stark said. The comments can include purported inside information that predicts that the price of a company's stock is about to go down. Indeed, in at least one instance, one Internet user pretended he was the SEC, Stark said.
"It's a fairly new phenomena," Stark said of the cybersmears.
It is not unknown to companies, however. In May, for example, Stone & Webster of Boston, an engineering firm, filed suit in Massachusetts state court to obtain the names of those who used an America On Line chat room to discuss Stone & Webster. The conversations in the chat room included confidential company information such as the profit margin on a job Stone & Webster bid, said James Jones, general counsel for Stone & Webster, in an interview. Revealing that information violated company confidentiality policies and hurt the company's competitive position, Jones said. The suit is pending, Jones said.
The SEC has had success prosecuting cases of Internet fraud, Stark said. Since 1995, the agency has filed more than 100 cases arising out of alleged securities law violations committed online. The Internet provides a medium where it can be easy to find fraud and, in some cases, stop those who set up fraudulent investments before the investments' organizers are able to raise money, Stark said.
"The Internet is a tremendous window," Stark said. "We get to look at the developing fraud as it happens."
The SEC, however, has yet to bring a case based on an alleged cybersmear. Such cases can be difficult to bring because statements made in a cybersmear can be couched as opinion protected by the First Amendment, Stark said. Companies can best defend against cybersmears by establishing policies which apply to employees about using confidential information and by deciding whether it wants to sue authors of cybersmears, Stark said.
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