Auric you talk about criminal activity. I see you haven't learned your lesson you DoDo.
Re:ZSUN's Suit Against Bashers:
Firm sues 8 Net users over derisive messages
By Bruce V. Bigelow
UNION-TRIBUNE STAFF WRITER
July 6, 1999
SAN DIEGO -- A little-known company with a U.S. office in Solana Beach has sued eight Internet users, alleging that they posted fraudulent and defamatory messages about the company in a conspiracy to manipulate its stock price.
The messages, posted by individuals using aliases such as "trader14U," "Auric Goldfinger" and "realmoney," repeatedly mock the company, called ZiaSun Technologies Inc., as "Stinky Stock."
An increasing number of companies have been complaining to the U.S. Securities and Exchange Commission about purportedly false messages posted to Internet chat rooms and message boards.
One of the most notorious cases of Internet securities fraud was closed last month, when an employee of Tustin-based PairGain Technologies Inc. pleaded guilty to charges stemming from a phony news report posted on the Internet in a bid to drive up the company's stock.
The Internet's cloak of anonymity and participants' tendency to insult or "flame" each other fosters a Wild West atmosphere in such electronic forums, posing new implications for freedom of speech.
But relatively few civil lawsuits have been filed so far.
"As far as I can tell, there have probably been five or six lawsuits of this kind filed around the country," said Christopher Howard, a Seattle-based lawyer representing ZiaSun. A similar defamation case was filed in May against a group of unnamed Internet users by M.H. Meyerson & Co., a New Jersey brokerage.
ZiaSun, which trades over the counter, represents itself as a holding company that operates a number of Internet-based businesses, such as Online Investors Advantage and Asia4Sale, that target Asian markets.
Bud Leedom, who publishes the San Diego Stock Report, says he has never heard of ZiaSun and generally does not include over-the-counter stocks in his report because it is too difficult to separate the wheat from the chaff.
Some of the companies that trade on the so-called "bulletin board" do not report complete financial results, "so I just exclude them," Leedom said.
ZiaSun's lawsuit, filed June 24 in a Seattle federal court, alleges that many messages posted on the Silicon Investor Web site amounted to a "cyber-smear" campaign against the company and its executives.
"I don't want to say anything. I've never been sued before," said Mike Morelock of Greenwood, Ark., who was named as a defendant in ZiaSun's lawsuit.
Morelock, a trader who posted Internet messages under the alias C.M. Burns, said he did not want to comment on the record about the case. But he nevertheless discussed it, saying ZiaSun's lawsuit has absolutely no merit and that the Internet discussion "is one of the funniest things you'll ever read."
More than 3,000 messages have been posted about ZiaSun on Silicon Investor's electronic message board since November 1998, when a ZiaSun forum was established for stocks priced at $5 or less.
Silicon Investor, which is operated by Washington-based Go2Net, was not named as a defendant.
The discussion reflects an intensely sarcastic verbal battle between ZiaSun's detractors and supporters, with both sides occasionally threatening to report the other's activities to SEC investigators.
The messages also question the credibility of ZiaSun's executives, including its Hong Kong-based chief executive, Anthony L. Tobin. Telephone calls concerning ZiaSun's lawsuit were routed to the Veritas Group, an investor relations consulting firm based in Vancouver, B.C.
"We feel strongly that there's a potential conspiracy among these individuals" to drive down ZiaSun's share price for the benefit of short sellers, said Mark Harris, who identified himself as ZiaSun's vice president of investor relations.
"We fully intend on launching a stock-buyback program," Harris said. "Why? We want to make their lives as miserable as possible. We intend to fight them with our credibility."
Harris said Tobin was outraged by the false statements posted on the Web site. ZiaSun's chief executive is a former British journalist and public relations executive who was attached to Singapore's Ministry of Information and the Prime Minister's Office.
"It's one thing to say you don't like the company, but they say that the company is full of crooks and criminals and that it's a fraud," Harris said. "They're making complete false misrepresentations. They're doing anything they can to discredit us."
ZiaSun's lawsuit also named Floyd D. Schneider of Saddle River, N.J.; Stephen N. Worthington of San Francisco; Paul Harary of Boca Raton, Fla.; and Tom Livia of Boca Raton, Fla. They could not be reached for comment.
Three other defendants, known as "jjs64," "GUS SIDERIS" and "Alpine Sleuth," have not been identified, ZiaSun's Howard said.
Sandra Harris, an SEC enforcement officer in Los Angeles, said she was unfamiliar with the ZiaSun case, and John Reed Stark, who heads the SEC's Internet enforcement unit, could not be reached for comment.
But in an April 5 speech, the commission's chief enforcement officer said the Internet has "revolutionized the old-fashioned boiler room" and created a bull market in securities fraud.
"Whereas policing insider trading was perhaps our greatest enforcement challenge a decade ago, policing the vast universe of the Internet is unquestionably our greatest challenge today," Richard Walker said.
Walker noted, however, that Internet-related securities fraud comes in several flavors.
One variety is the so-called "cyber-smear" campaigns, often perpetrated by "short sellers" to drive down a stock price on the basis of false information. A short seller is a trader who borrows shares of a stock to sell in the hopes that the borrowed shares can later be replaced at a lower price.
Another variety, Walker said, is the "pump and dump" campaign orchestrated by those who hype a stock by circulating false and misleading information to drive up a stock's price so they can sell their shares at an inflated value. |
