If a company becomes aware of a rumour on a chat-room, news group or any other source that may have a material impact on the price of its stock, it should immediately contact Market Surveillance. If the information is false and is materially influencing the trading activity of the company's securities, it may consider issuing a clarifying news release. The company should contact Market Surveillance so that the TSE can monitor trading in the company's securities. If Market Surveillance determines that trading is being affected by the rumour, it may require the company to issue a news release stating that there are no corporate developments to explain the market activity.
Such action would be welcome in many quarters. But a mere promise of regulatory "action" is of little use to a company during that agonizing period when false postings are first discovered and the company must weigh its rather unsatisfying options. Seeking a judicial remedy may satisfy primal urges to seek vengeance, but is likely to be a costly and, perhaps, futile option. Anyone including short sellers, fired employees, disgruntled employees and irate customers can easily walk into a cybercafe, plunk down cash to gain Internet access for a few minutes, and then make false and disparaging postings through services like www.anonymizer.com. Such postings are difficult if not impossible to trace.
What courses of action are available to a company to protect itself against such rumors and to deal with false rumors once they have been posted? The remainder of this article will explore a few of the available options.
Smaller firms that do not have the resources to hire such consultants are not left out in the cold. Robotic agent software that will automatically troll designated sites is inexpensive and easily available through Web sites such as www.botspot.com. Moreover, some Web sites offer free services to monitor message board postings about certain companies. One such widely-used site is www.companysleuth.com.
When the company learns of false and disparaging rumors about its products, its management or the value of its stock, it has a variety of theoretical options. It may:
Remain silent and do nothing.
Handle the rumors in precisely the same fashion as it otherwise would handle any other marketplace rumors, without regard to the fact that the rumors arose via the Internet.
Contact, and seek to involve, the Securities and Exchange Commission, other regulators or law enforcement authorities.(20)
Reply via the Internet, press releases, or news conferences; it may provide a specific rebuttal or may simply refer to its public filings.
Issue cease and desist letters or formal demand letters to operators of Web sites, Internet message boards, chat rooms or Usenet newsgroups demanding that offending postings be removed or, in extreme cases, blocked in advance.
Sue the persons who posted the offending messages for cyberlibel or, if the postings were made anonymously, sue unnamed "John Does" for cyberlibel, and use the court's subpoena powers to identify the defendants so that claims may be prosecuted against them.
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