MM's & Short Selling Bashers

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CYBERSMEARING: INTERNET PRIVACY VS. ACCOUNTABILITY

http://www.gcwf.com/articles/interest/interest_31.html

Perhaps it has happened to you. You may be at risk of it right now. If your reputation is important to you or your business, its consequences can be particularly painful. It may even be happening to you right now without your knowledge. It is called "CYBERSMEARING" and it exists in the gray area where Internet anonymity has outpaced the response time of the law and mainstream business.

Men's Room Wall Meets Wall Street

In this explosive growth of the Internet lies a threat that can reach businesses and individuals alike, but can be particularly harmful to publicly-traded companies. Recent months have seen a disturbing increase in instances of the Internet being used to victimize businesses through an abuse called cybersmearing.

Cybersmearing is the practice of using the Internet to broadly and rapidly disseminate defamatory and false statements about a chosen target. Targets can include both businesses and individuals. When the target is your business, the consequences can be particularly painful. Small startups may find a cybersmearing campaign interfering with efforts to raise private funds. Publicly-traded companies can instantly find themselves on the defensive, trying to rebut unfounded accusations made by anonymous accusers. Perhaps most threatening is the rising trend in cybersmear tactics to manipulate stock prices. Even the best efforts to inform investors of the strengths of a company can quickly be undone by the cloud of suspicion a cybersmear campaign can create overnight.

Founders of a startup company may work years to prepare for an IPO and hen breathe a sigh of relief when their company is well received by the markets. However, their dreams of rising stock prices and millions in increasing market capitalization may be shattered by someone they have never heard of, cannot identify, and who has no market expertise or credentials whatsoever.

As daunting as it may sound, that is often the hallmark of a blindsiding cybersmear campaign. Just when a startup is positioned to realize its market potential, its name begins appearing on Internet-based bulletin boards. Postings relating to the startup may number in the thousands and can be blatantly defamatory - often with no factual basis whatsoever.

Regardless of the falsity of the accusations levied, they successfully create a cloud of suspicion surrounding the company. Investors without resources to conduct their own due diligence and with numerous startup offerings from which to choose may avoid the stock based on the cloud of suspicion. The stock begins to decline and the authors of the cybersmear postings, who often are shortsellers, cash in. If the company fights back with accurate responses, the responses often are distorted or are insufficient to eliminate the suspicion. If the company is silent, the postings utilize the silence as confirmation of the accusations.

How Can Bart Simpson Ruin Your Company?

The threat of cybersmear tactics is further complicated by the anonymity of the Internet. Often, individuals engaged in these tactics hide behind several layers of false identities. They commonly identify themselves only by character names borrowed from television shows like the Simpsons, movies like the James Bond series or even names based on political scandals. The struggling startup may encounter indefatigable downward pressure, created by an online identity known only as Bart Simpson. In addition to using a fictitious character name, the mudslinger uses a variety of means to evade efforts to locate him or her, including registering Internet service to a false name and leaving trails of false addresses. These "hit-and-hide" tactics are often nothing more than an elaborate effort to avoid accountability. Unfortunately, they often work, especially when the victimized company cannot persevere long enough to reveal its accuser.