January 4, 2000
--------------------------------------------------------------------------------
Leaked Research Lifts Stocks,
But Investors Fume Anyway
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE EDITION
It's hard to keep a secret on the Internet.
That's what some disgruntled investors learned over the weekend after shelling out $99 for access to what they thought was an exclusive list of the top 10 stock picks for 2000 from Internet-stock analyst Steve Harmon. Just minutes after the list was released to the paying subscribers, it was copied onto several stock-chat message boards, where anyone could read it for free.
"I can't believe I paid for something that now I can get anywhere. Talk about a rip-off," wrote one investor on stock-chat site Silicon Investor (www.techstocks.com), on a message board where Mr. Harmon often talks about his stock picks. Other angry message-board participants demanded refunds.
The report was available Friday, after the stock market closed, Mr. Harmon says. But by 5 p.m. EST, the list of stocks had been posted on Raging Bull (www.ragingbull.com), another stock-discussion site. And by early Monday, the list was everywhere -- even on Briefing.com (www.briefing.com), a financial news site.
Once trading began Monday, the stocks on the list took off. U.S. Interactive more than doubled in price to 92 at its high for the day, prompting the Nasdaq Stock Market to formally request a comment from the company on the market activity. The company declined to comment. The stock was quoted up 33 1/2, or 78%, to 76 1/2 at the 4 p.m. EST close.
In an interview, a spokeswoman for the King of Prussia, Pa., Internet consulting firm said the company was aware of Mr. Harmon's report, but declined to comment further.
Want to receive an e-mail alert when Heard on the Net columns are published? See the E-Mail Setup page for details on how to subscribe.
Shares of the other companies mentioned in the report also jumped. Internet marketing firm Net Perceptions surged 7 to 49, networking-equipment maker Redback Networks saw its shares rise 4 1/2 to 182 and Pacific Internet, an Internet-service provider in Singapore, soared 22 15/16 to 69 7/8. America Online, Terra Networks, Spyglass, CNET, Santa Cruz Operation and CMGI also posted solid gains Monday.
Mr. Harmon says he, too, is upset that his top 10 list was posted on the Net for all to see. "People who are posting this and haven't paid are stealing, plain and simple," he says. "The greatest thing about the Internet is the freedom, and it's also the worst thing."
Mr. Harmon directed questions about refunds to INVESTools, a Redwood City, Calif., stock-research site that is handling the sale of the report.
A spokeswoman for that site says refunds are unlikely, and will only be given to investors who may not have been able to view the report for technical reasons.
Besides, Mr. Harmon argues, investors got more for their $99 than just a list of ticker symbols. "We are providing complete analysis and updates throughout the year. People who are just getting the list of stocks are missing out on all of that," says Mr. Harmon.
Mr. Harmon first gained notoriety as a self-styled Internet analyst in 1996 when he created the ISDEX, one of the first Internet stock indexes. Earlier this year, Mr. Harmon left his job as a senior analyst with Internet.com, a Westport, Conn., portal site run by publisher Alan Meckler, and started his own Internet research firm called e-harmon.com (www.e-harmon.com).
Mr. Harmon says he was surprised to see so much trading activity in the stocks mentioned in the report, and says the report has received "considerably" more interest than a similar top 10 list released at the beginning of last year (he declines to say how many people purchased the report).
"We're going to be going after anyone who posted it on the Internet," he says, and that includes Briefing.com, which he says violated the copyright on his report when it listed the 10 companies on its Web site at 8:59 a.m. Monday.
A spokesman for Briefing.com says the site got the list from a stock trader who had seen the report.
"The stocks were running up in premarket , and we were trying to figure out what was going on with them," says Damon Southland, a technology analyst with Briefing.com who posted Mr. Harmon's stock picks on the site. "I'm honestly not really that familiar with Steve Harmon. We were simply looking for the reason behind the movement."
But Mr. Harmon could have difficulty going after a site like Briefing.com, or anyone else for that matter, says Jeffrey Neuburger, a lawyer from the New York law firm Brown Raysman Millstein Felder & Steiner LLP, who specializes in Internet-copyright law.
"Anyone making use of the entire report without his permission would be in trouble, but the question here is whether a list of 10 companies or stock symbols can be copyrighted," says Mr. Neuburger. "He could argue that he used some proprietary metrics in coming up with this list, but it would still be tough." |
