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Microcap & Penny Stocks : 1st Net Technologies ( FNTT ) -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (1316)	4/6/1999 9:31:00 PM
From: John H. Farro	Read Replies (2) \| Respond to of 1827

John, I agree, it is good policy to stick to the truth and to label your opinions as opinions. However, what you believe to be the truth and what is actually the truth may be two different things. Let me give you a hypothetical example: Suppose you invested in a company (say, HotShot Technologies) that over the past year had developed five new and exciting hot technologies. Now, suppose HT had issued five different press releases over the last two months announcing that it had negotiated multimillion dollar deals with five different companies. Each of the five different companies had contracted to use a different one of HT's technologies. And in each news release the CEO of HT's contracting partner paints HT's technology in glowing terms. Suppose the stock multiplies ten-fold over that two month period. You're sitting there fat and happy as a clam and then BAMM! A news release comes out saying that company A has cancelled its contract with HT. You're unhappy, but you don't grouse too much because life can throw unexpected surprises at you. Now, suppose a couple of days later HT issues another release saying that its contract with company B fell through. You are getting really pissed as you watch your stock value plummet. Now, suppose over the next three days HT issues three more press releases saying that its contracts with companies C, D, and E have been cancelled. "Hey, wait a minute!" you say. "One or two contract cancellations could be due to outside forces beyond HT's control. But five contracts with five different companies using five different technologies! I smell a rat! This is a scam and the CEO is a crook and ought to be hauled off to jail!" Would you be telling the truth in this situation? I think 99.9% of investors would agree in your assessment and believe that there was probably some pumping and dumping going on. You are certainly telling the truth as you know it, based on the facts available. And if that is all there was to the story you would be perfectly justified in your conclusion. Now, let me add one more piece of information and see if that changes your assessment of the situation. Suppose someone had just kidnapped the CEO's daughter and sent the CEO a ransom note. Suppose the kidnapper didn't want to demand cash for the safe return of the daughter--perhaps he's been there, done that. Besides, such crimes are so cliche. No, our kidnapper has stumbled on an innovative new way of making money. Suppose he sold short a lot of HT stock before the kidnapping and he sent the CEO a note saying he had better issue five press releases announcing the cancellation of the contracts or else he will kill the daughter. So the CEO issues the releases to save his daughter's life. Now, was your statement about the CEO being a criminal perpetrating a scam true? Does the CEO deserve to go to jail? I don't think so because he was acting under durress. Yet your statement was a reasonable conclusion based on the facts available to you at the time. You shouldn't be penalized just because you drew your conclusion on an incomplete set of facts. There was no way for you to know the extenuating circumstances. And it would be wrong for the CEO to threaten you with libel in this situation. If you could be sued for libel simply because you said something that was erroneous, then you would probably never say anything bad about anyone else for fear that your statement was unintentionally false. You would probably censor yourself. Most people would. And a lot of scams would go unexposed because of this. That is why libel law demands some degree of fault on the part of the defendant in order for a successful lawsuit. Tolerance for some error is necessary to give breathing space for a sharing of information. I would modify your statement of "always tell the truth" since it may not always be possible to tell the absolute objective truth. I would say "never lie". Also, "Make every reasonable effort to ensure that what you are saying is the truth. Always tell the truth as you know it." I realize this is a convoluted and ridiculous hypothetical example, but it's been a long day and it's the best I could think of. Here is one more short example. Suppose you have information from two different sources that you believe to be reliable that John Doe is a crook. You publish the fact that John Doe is a crook. Now, suppose it turns out that your two sources lied to you. Should you be guilty of libel? Robin Messing