Considering the excessive quantity of very negative, unsubstantiated and slanderous posts about Labor Ready on the YAHOO board, does there not seem to be a close correlation between what has happened to LBOR this last week and the stock of AgriBioTech Inc as discussed in the following Reuters article?
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mercurycenter.com
Posted at 10:13 p.m. PDT Thursday, August 27, 1998
Internet posting is undoing of firm's stock
Reuters
CHICAGO -- You can't shout ''fire'' in a crowded theater, but you can write ''sell'' on an Internet message board.
That's the costly lesson that seed company AgriBioTech Inc. learned this week when its stock fell more than 20 percent after someone posted negative comments about the company on a Yahoo Inc. message board.
The person who posted the message, identified only by a screen name, acknowledged at the bottom that the damaging comments made about the company and its top executives were not true, but AgriBioTech said the rumors were enough to cause the stock to drop.
While freedom of speech protects the right to express opinions, it does not give people license to incite panic -- like shouting ''fire'' in a crowded theater. Tuesday's comments about AgriBioTech caused the equivalent of a panic in AgriBioTech's stock and led to record trading volume of about 6.3 million shares, said John Francis, a co-founder and director of AgriBioTech.
Francis said the company's reputation was damaged by the comments, which the company has said repeatedly are false.
''When you have a force like an Internet where people can anonymously come out and say anything they want, that's an issue that is going to have to be dealt with,'' Francis said. ''We live in a free society and we believe in the system. We think the system will ultimately prevail. Will we weather the storm? Yes. Is our credibility damaged? Yes.''
The incident raised questions among investors and analysts about how Internet sites that deal with publicly traded companies are regulated. Users on one AgriBioTech message board called for more Securities and Exchange Commission oversight of Internet stock pages.
''I think this board and others should be a target for the SEC to begin investigations into these lies posted,'' one user wrote on an AgriBioTech stock message board Wednesday.
An SEC spokesman said the regulatory agency investigates allegations of fraud committed over the Internet or anywhere else, but would not confirm or deny any investigation into this incident.
Mike Riley, producer of Yahoo Finance which has thousands of message boards for discussion of publicly traded companies, said users need to make their own judgments on whether to trust information posted on message boards.
''They are an unmoderated public forum and in any environment like that you've got to take with a grain of salt what you see there,'' Riley said. ''Yahoo doesn't claim any responsibility for what is posted there, obviously the companies that are discussed don't, and it's up to the individual to make a judgment about the veracity of the things that are said.''
Thomas Smedinghoff, a partner at the Chicago law firm of McBride Baker & Coles and an expert on Internet law, said defamation is defamation regardless of the medium, but said Internet offenders often go unpunished because chat room operators can't always determine who posted messages.
''The law of defamation applies to me whether I write, or whether I post or whether I say it on television,'' Smedinghoff said. ''The impact is potentially much greater and much quicker (on the Internet) but the law is going to be the same.''
Yahoo's Riley said the law does not hold liable companies like Yahoo who publish information written by other sources.
''We're just the messenger,'' he said. ''There is such a huge volume of activity that we couldn't keep up with it even if we wanted to, and quite frankly we don't want to. We believe in open discussion. The best response to bad information is more discussion.'' |
