SELL AT THE OPEN BEFORE THE BIG DROP
flloydian_us
LUCENT RELEASES EARNINGS WARNING! DAMN!
hot_like_wasabe
**********WARNING*************
BIG GAP DOWN IN THE MORNING
SELLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL
flloydian_us
If you've logged on to a financial chat room recently you've seen headlines like this before. It's the "shorts" vs. the "longs" in an epic and sometimes ugly drama that unfolds
in company-specific chat rooms every day. The headlines above are just a few of the more than 20 messages posted within 24 hours throughout high-volume chat rooms such as Yahoo!
Finance and Silicon Investor by Fred Moldofsky, a Houston day trader. They're also evidence in the latest high-profile case involving false or libelous information posted on
financial chat rooms.
In addition to the sensational headlines, Moldofsky allegedly manufactured and posted a phony press release announcing an earnings warning, using a format similar to prior
financial announcements from the company he targeted. To give the scheme added credibility, he used a screen name nearly identical to another chat room participant who was well
known on the board as a supporter of the company.
The press release was spotted by the company and brought to the attention of the Securities and Exchange Commission, which on March 30 filed a complaint charging Moldofsky with
securities fraud for posting a fake press release related to Lucent Technologies, Inc. He was later arrested on charges of securities fraud contained in a criminal complaint
filed by the U.S. Attorney for the Southern District of New York.
As the nation's stock markets continue to hold the public's fascination, as well as their finances, and with more than 53% of the U.S. adult population online, it has become
increasingly necessary to be prepared to detect and respond to potentially damaging online rumors, misstatements or outright fraud.
At the very minimum public companies should regularly monitor key chat rooms. There's usually one site in particular that follows a company more closely than any other. With
the proliferation of chat rooms, bulletin boards and online newsletters, it's nearly impossible to monitor every post and plug out there. There are, however, a few useful search
engines that can sift through some of the more trafficked sites.
Keeping an Eye Out
For more detailed analysis of chat room posts there are services offered by
companies such as NetCurrents (http://www.netcurrents.com)
and eWatch (http://www.ewatch.com) that
handle the time- and data-intensive research. CyberFacts, by NetCurrents, tracks
more than 50,000 message boards, e-publications, newsgroups and other relevant
sites. They provide notification of unusual activity, statistical tracking and
online perception reports.
Once you have the tools you need, you'll likely discover more than a few scathing posts. Most PR and IR firms counsel against defending your company or your client's company
on these forums. Once you do, you may be expected to return - again and again - and, oh yeah - again. With the proliferation of posts, many wildly speculative, the concern is
that companies will be drawn into compromising positions. And, if a company rep answers some questions but avoids others, the boards can be quick to interpret the silence as a
tacit response.
Not all companies avoid dialog with investors on these sites. At PSINet, a multibillion-dollar Internet communications company, one senior executive regularly posts on PSINet's
Yahoo! Finance chat room. He uses his name, not an alias, and is clear about his position at the company. The regular participants appreciate his presence, recognize the value of
his participation, and rely on him to help bring reason to the board during extremely volatile trading days.
In some cases, companies are pursuing legal action to root out anonymous chat room participants, sometimes finding disgruntled employees or others with supposedly "insider"
information. In fact, Silicon Investor reported that it receives about one subpoena a day for chat room records.
In one recently reported case, HealthSouth CEO, Richard Scrushy, alarmed by personal attacks and allegations of financial improprieties filed a "John Doe" suit that let the
company subpoena chat room records. Comments by a handful of participants began reaching research analysts who started asking the company questions about its fiscal health.
HealthSouth asked for records of the more than 300 anonymous posters that followed the company on Yahoo! Finance. Yahoo! turned over the records of only 20 participants, but
enough for HealthSouth to locate the alleged culprits and file further suits.
The success of these sites seems to demonstrate that investors find them extremely useful, or at least entertaining, and on the whole participants are legitimately sharing
ideas and information. Even if there are shorts online trying to bring down a stock, there is generally no legal remedy, nor should there be - people are entitled to their
opinion.
Whatever the course of action, chat rooms should be factored into the communications programs of any publicly traded company. It falls on communications departments and
agencies to institute early warning systems and quick response plans before online chat spins into offline crises.
What Else Is Out There?
Investor Packages - http://www.InvestorPackages.com
This site provides access to more than 1 million news and information links
for over 8,000 publicly traded companies. To find news from a multitude of sources,
simply plug in a company stock symbol or the name. The site checks all the links
and pulls up news and information about that company.
Company Gossip - http://www.companygossip.com/
A site devoted to topics about public companies such as:
The Lazy & Worthless, The Incompetent, Rumor Mill, Financial Stuff, Does the pay suck? and Who is most overpaid?
Company Sleuth - http://www.companysleuth.com
Company Sleuth calls itself the "Internet's top covert information specialist."
This site provides free "inside" information on publicly traded companies. Once
you sign up, they will email you information culled from various sources including:
new patents, SEC filings, discussion group postings, analyst ratings, "scoops,"
insider trades, job postings and stock rumors.
eWatch - http://www.ewatch.com
This company, recently acquired by PR Newswire, offers a service called CyberSleuth.
For $4,995 they will find out who is behind the screen name of that troublesome
poster. Add in another $1,995 and they'll have it done in 48 hours, otherwise
you wait 7 to 10 days.
Source: Reid Walker
Chat Facts
It seems that nearly every news and information site on the Web has added a chat room or bulletin board. In addition to sites that made their name in chat, mainstream
publications online are jumping onto the chat wagon. CBS MarketWatch (http://cbs.marketwatch.com) even has a columnist, or what they call a community editor, dedicated to watching
and writing about postings on chat rooms such as Yahoo! Finance, Silicon Investor and others. The column, called "All Aboard - On the Message Boards," even charts and correlates
interesting posts to stock prices.
Where to Search
The more popular financial chat sites generate millions of page views per day. The rule of thumb is the more volatile the stock the more volatile the board. There are hundreds
of chat sites, but here are some of the more popular ones:
Yahoo! Finance - http://finance.yahoo.com
Silicon Investor - http://www.siliconinvestor.com
Raging Bull - http://www.ragingbull.com
Motley
Fool - http://www.motleyfool.com
Reid Walker recently became managing director, Global Marketing Communications
for GE Global Exchange. He can be reached at 301/340 5985 or [email protected]. Walker also will
be speaking at PR NEWS' Advanced Crisis Management Seminar June 20 in
Washington, DC. Register today at http://www.PRandMarketing.com/
seminars or call 888/707-5814.