Re: Callaway finds chatty Web critic is rival golf executive (DEL)
Callaway finds chatty Web critic is rival golf executive
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Mike Freeman
STAFF WRITER
26-Feb-2000 Saturday
Steven Cade
Who are all these people, and why don't they like Callaway Golf?
Attorneys for the Carlsbad golf manufacturer had cause to wonder. For months an Internet golf site was abuzz with messages criticizing Callaway, from people with monikers such as "CarlsbadSurf," "SurfsUpNow," "IKnowgolf" and "PGAGolfPro" -- 27 screen names in all.
As it turned out, all the names belonged to one person: Steven Cade, the chief executive of a rival golf club company and a member of the Carlsbad School Board.
After a meeting with Callaway's lawyers, Cade posted a long apology Thursday on the Yahoo finance bulletin board.
For 18 months, Cade conceded, he had been using a variety of screen names to post 163 messages, most of them criticizing Callaway.
"I got caught up in the entertainment of reading and writing messages," Cade said in the apology, posted on the same site where he had been criticizing the company. "It is very easy to write something and then press `send' and the message is gone. If we only had time to think about what we were doing we would certainly hold back saying some things simply out of using better discretion. I made a horrible mistake and I feel embarrassed about it."
Steve McCracken, chief counsel for Callaway, said nothing illegal had occurred.
"Based on the cooperation we received, we don't see any reason to go to the SEC (Securities and Exchange Commission)," he said.
But the Carlsbad golf company did demand that Cade identify himself and post the apology.
"There are certain things in there that we felt he (Cade) needed to say. What we asked him to do was come clean with what he has done and who he is."
Cade is chief executive of La Jolla Club, a private firm that makes golf clubs for children and women. La Jolla Club had sales of roughly $6 million last year.
Reached yesterday by The San Diego Union-Tribune, Cade admitted he posted the messages and the apology. He maintained he was a shareholder in Callaway and that it was his right to express an opinion about the company. But he agreed he should have identified himself instead of using fake names.
"They felt that because I was involved in a golf company that I should have disclosed who I was," Cade said. "They felt that what I did was inappropriate, and I agreed with them. . . . I think the matter is dropped."
Cade said he has owned Callaway stock over the past five or six years and was posting messages on the bulletin board as a Callaway investor, not as chief executive of La Jolla Club.
Most Internet users who post things on investment bulletin boards use aliases. But Callaway uncovered Cade after starting an investigation "based upon some posts on the message board that suggested to us that there was insider stock tipping or a leak of trade secrets," McCracken said. "We don't get concerned with people who happen to disagree with us. . . . We only investigate in cases that would involve illegal activity."
The probe included serving a subpoena on Santa Clara-based Yahoo to uncover Cade's identity from the list of aliases that he used on the message board, McCracken said. A Yahoo spokeswoman said the company only reveals the identity of bulletin-board users after receiving a subpoena. She declined to provide further details about this case.
Dale Herbeck, an assistant professor of communications at Boston College who teaches classes on Internet law and cyber speech, said dozens of defamation lawsuits have been filed over inflammatory messages on Internet bulletin boards.
"This is a huge phenomenon," he said. "The promise of the Internet was to empower more people and to get more ideas out. At the same time you have to worry about what we're going to do when we have 100 million soapboxes."
If he had chosen not to reveal his identity, Cade said, "it could have ended up in some kind of litigation, and I didn't care to fight them."
At the time he was posting messages, Cade said he was buying and selling Callaway shares, including occasionally shorting the stock, a practice where investors bet that the price of shares will go down.
He noted, however, that he bought Callaway frequently and rarely took short positions. He no longer owns Callaway shares.
While he posted messages under several aliases, the one he used most was "Encinitas Ranch." Most of the other aliases were used prior to 1999.
Most of Cade's posts echoed a similar theme -- that Callaway was top-heavy in management, which he called "deadwood" in one message, and owned too much real estate.
Posting under another alias, "RichLewissayshello," Cade made a plug for La Jolla Club: "I checked out the Web site you suggested for La Jolla Club and found on their Web site some info on investment opportunities," he wrote. "I have heard that this is a company that has grown very rapidly and that they specialize in junior golf clubs, but I was wondering if anyone on this board knows anything more about them. I don't think they've done an IPO yet. What do you know?"
He also posed as Callaway golf retailers under two aliases,
"Biggolfretailer" and "golfmart 100."
His messages garnered a following on the Yahoo bulletin board.
"Kudos to Encinitas Ranch, that was an excellent and informative post," wrote one user in June. "I'll make it a point to read your posts from now on."
Another bulletin board user in June raved, "I think Encinitas Ranch is an Ely insider. His information is just too good. Even golf analysts don't have the kind of sources he has." ELY is the ticker symbol for Callaway.
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