TO: ALL
THIS IS LONG, BUT INTERESTING.
>>>From the Raging Bull:
By: K.
Reply To: None
Friday, 21 May 1999 at 7:55 PM EDT
A must read for all !!!!
Washington, May 20 (Bloomberg) -- The M.H. Meyerson & Co. brokerage, in one of the first cases of its kind, is suing several Internet users on allegations they posted defamatory messages about the company in an attempt to drive down its stock.
The messages, by unnamed individuals using aliases such as ''TheDaytrader2000'' and ''j454545j,'' accused the brokerage's chief executive, Martin H. Meyerson, of stock manipulation, inside trading and money laundering, copies of the Internet messages show. The suit also names Yahoo! Inc., alleging the top Internet search service failed to remove offensive messages from one of its message boards when asked to do so.
The Securities and Exchange Commission wouldn't comment on Meyerson's allegations, though the agency is investigating other similar allegations of possible stock manipulation by users of Internet chat rooms and message boards, said John Reed Stark, head of the SEC's
Internet enforcement unit.
''Anytime you spread false information on the Internet, driving the stock up or down, it raises serious questions of possible market manipulation,'' Stark said in an interview.
An increasing number of companies have been complaining to the SEC about allegedly false Internet messages, Stark said. Perhaps the only other company suit alleging defamatory Internet messages was filed by Presstek Inc., a printing-equipment maker, in September 1997, he said. That complaint was settled in February 1998.
Selling Short
The suit by Meyerson, a 130-broker firm based in Jersey City, New Jersey, alleges that as many as seven of the accused Internet users were short-sellers, or investors who use borrowed stock to bet that a security will fall. Short-sellers, competitors and disgruntled
employees can benefit from a stock's decline, while investors and promoters can profit from its rise.
The suit, filed in New Jersey state court in Hackensack, alleges that the unidentified Internet users defamed the company with their messages between Feb. 1 and March 12. It also accused them of breaking their contract with Yahoo! by harassing Meyerson.
Using a Yahoo! message board about the brokerage, Internet user j454545j wrote, ''Hellooo Marty!!!! Nice pump and dump operation you got working.'' TheDaytrader2000 wrote, ''MHMY (Meyerson's ticker symbol) a freaking scam!!! Money laundering scums!'' Zzz138
wrote, ''I will cautiously short this stock.''
The complaint, filed in March, could spur other companies to file complaints against Internet users who spread false information, said Louis Thompson, president of the National Investor Relations Institute.
''The smaller-cap companies especially have been agonizing over this,'' said Thompson, whose group consists of investor- relations officers with more than 2,000 publicly traded companies. ''The most effective deterrent is for people to realize they can't hide on the
Internet.''
Identifying Users
Meyerson has identified some of the Internet users after issuing subpoenas to America Online Inc. and other Internet service providers, said Meyerson attorney Edward Tishelman, a partner with Hartman & Craven in New York. The firm intends to name the users in future
court filings, he said.
Meyerson's stock, which closed at 3 7/16 on Feb. 1, rose to as much as 21 7/8 on Feb. 4 after the company issued a press release saying it intended to start offering Internet brokerage services, possibly by the end of the year. It fell to as low as 4 1/2 on March 5, amid the Internet message traffic that's at issue in the suit. The company's shares fell 1/4 today to 8.<<< |
