USA Today GARD exposure.
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Companies stoop to name-dropping on Net
By Tom Lowry, USA TODAY
NEW YORK -- More fledgling firms are peppering press releases with
the names and ticker symbols of established companies, with which they
have no relationship, to get wider recognition on the Internet.
Regulators are increasingly concerned that such "ticker spamming" is
misleading investors. Spamming is the Internet version of mass mailing.
Including names of technology heavyweights gets their company news
wider distribution through Internet search engines and hyperlinks.
"Investors need to look skeptically at these releases that hint that they will
become the next great stock," says Cam Funkhouser of the National
Association of Securities Dealers Regulation.
Last week, GS Telecom's shares more than tripled after it issued a release
saying it is "standing on the shoulders of such giants" as Microsoft, Intel,
America Online and 14 others.
That would have been picked up by anyone searching the Internet for
those firms and by programs that search automatically for companies and
any cross-references.
"It was a descriptive statement, meant as a visionary idea," and not an
attempt to exploit the names of those companies, says spokeswoman Lori
Chittenden . "But the more people who see our release on the Internet, the
merrier."
GS also projected sales of $1 billion in 2004 based partly on a new
currency "smart card" technology. The company had $32 in the bank and
$1,378 in overdrafts on Dec. 31.
PR Newswire, which distributes 1,300 press releases a day, says it turns
down clients that want to use names and symbols of unrelated companies.
"It stinks and contaminates the orderly flow of information," says John
Williams, PR News wire senior vice president.
Competitor Business Wire, which distributed GS Telecom's release, has
no steadfast rule. "Our role is not to edit copy, but listings of multiple
companies is becoming a red flag," says Cathy Baron Tamraz. Other
examples:
As it prepared to go public, adult entertainment Web site Efox.net
last month put out a release referring to Amazon.com, Borders and
Barnes & Noble. Efox, which has no relationship with those
companies, agreed not to sell stock for 120 days after Maryland
regulators said it "primed the market" ahead of its offering.
Four days before regulators placed a two-week trading halt on
Internet marketing company Citron in January, the company said in
a press release it expects to reach as many Internet users as
Amazon.com, Yahoo! and eBay and then listed their symbols.
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