One of the truly frustrating things about the Internet is that it enables anonymous posters to deface the online world with a form of graffiti --- let's call it Effiti. What is Effiti? Likely you've seen it if you visit forums on Yahoo! or at so many other community sites that spring up daily. It's the mindless raging at everyone and everything. It's the virulent attacks against racial and ethnic groups in a discussion about the weather. It's the persistent effort to derail any meaningful dialog through repetitive, abusive postings.
Some say we should revel in the freedom of speech that encourages such conduct. They say that we all have the right to just ignore the poster and the postings. And with much merit, these defenders of free speech warn that the remedy may well be worse than the problem.
Okay. Fine. But then, let's consider the case of Sirna Therapeutics (NASDAQ symbol: RNAI), which states on its website (http://sirna.com) that it is "developing a new class of drugs based on RNAi-drugs that we believe will significantly improve human health." For purposes of this blog, let's just characterize Sirna as a small biotech. I pointedly do not advocate that anyone buy or sell this stock. It is merely offered as an example of an online problem.
I am the only child of a father who died at the age of 46 from a disease for which Sirna appears to be seeking a cure or treatment. As such, I have an interest in learning more about that company's development and a similar investing interest in its prospects. Without question, there are likely millions of others with interests similar to mine.
So how do we learn about such biotechs? In these times we do online searches, we visit a number of investor forums, and we read as much as we can get our hands on. All of which often leads us to Yahoo!
Unfortunately, Yahoo! is under attack and not only appears to have no interest in defending itself, but seems intent on assisting in its own destruction. A visit to the Yahoo! message board for Sirna http://messages.finance.yahoo.com/mb/RNAI discloses that one poster has hijacked the forum for well over a year. In response to waves of forum users' complaints, Yahoo! intermittently deletes an iteration of the offending poster --- but the poster always reappears with a new handle. Veteran members of this board refer to the "troll" (a term now in use to describe folks who engage in abusing posting practices) as "Harley," which was among the first names he/she used. In his current status, he uses the name of "xxbenitecxx".
What are Harley's offenses? For starters, he posts messages whose subject line (that's the message which is prominently displayed to all viewers of the board) frequently calls for another poster to be killed. No, I'm not kidding --- the postings often start with "Please kill …" and the other poster's name. He has also posted messages with vile references to religious, ethnic, and racial groups. Moreover, he taunts Yahoo! by stating in some messages that he plans to destroy the board, or claims that he has.
Again, many civil libertarians would say --- so what? Don't read the message. Ignore him.
Let me add another twist.
Harley also posts fabricated news stories. Historically, he has fabricated press releases and references to publications such as the Wall Street Journal in which he claims that Sirna's drugs have killed experimental subjects or that the company's stock is down in another market or in a pre-opening market --- and those claims have all been false. Recently, on September 27 at 10:26 a.m. he posted the following subject heading: AMGEN BUYS SIRNA! ON CNN NOW! That posting is also false.
So what has happened to the Yahoo! Sirna board? Many posters complained to Yahoo! We were told to put Harley on "ignore," a feature in which you can block his messages from your personal view. However, his rantings were still available to new visitors and likely dissuaded many from joining in our discussions and exchanging views and adding insight. Even more frustrating, after apparently being inundated with complaints, Yahoo! would grudgingly delete one iteration of Harley but he would immediately resurface using another. It was obvious that this was the same poster because he used the same vile epithets, the same style of posting, and in some instances even laughed at how easily he evaded Yahoo!'s Terms of Service --- which claim to prohibit the very abuses he resorts to on their site.
Many veteran posters on Yahoo! simply abandoned that forum and joined a new one at Investorvillage.com. To that site's credit, Harley has tried to infest the board but the operators quickly delete his postings and seem to effectively block his swift return. Interesting. The same problem but two very different responses.
There is another more troubling issue. It is my understanding that a number of Yahoo! board members, including me, have contacted both Sirna and the United States Securities and Exchange Commission to file complaints about Harley's fraudulent use of fabricated press releases and false claims of positive/negative news stories --- nothing could be more easily cited to than the Amgen posting noted above. In response to those requests for help there has been an astounding silence. From the company's perspective, they may feel that Harley's defamatory postings are nonsense and best ignored. Not worth the legal cost of a lawsuit. Perhaps.
None of which explains or excuses the SEC's inaction. The SEC must take a more active role in policing online fraud. Many investors make investment decisions based upon information they glean online --- and by no means am I suggesting that such decisions are intelligently made or should be made on such a basis, but to deny that fact would be absurd.
What would I have the SEC do? I think it's fairly simple. When presented with proof positive that a poster has fabricated a story and is NOT presenting such a posting as an opinion, then the SEC should immediately demand that the posting be deleted, and then seek to ascertain the true identity of that poster. Not that different from those situations warranting a trading halt in the face of rampant rumors or non-public, material events. Contrary to what many folks think, it is not impossible to determine an anonymous poster's identity --- a subpoena can be served to elicit the name of an Internet Service Provider and then an attempt to track down the poster's identity starting from that point can be undertaken. Will all such efforts result in disclosure of the abusive poster's identity? No --- clever enough folks will find a way . . . they always do.
In many ways, I am a staunch libertarian and historically a proponent of free speech. However, Effitti poses some troubling challenges to those traditional notions and I am trying to balance the benefit of encouraging the free-flow of ideas on the Internet (which Effitti impedes) with the equally important benefit of free speech unbridled by improper government intervention. I don't have the answers. I do see the problems.
What I do hope to accomplish here is simply to raise the provocative questions.
Will online communities such as Yahoo! simply allow their franchise to be destroyed and their members forced to seek the services of more responsive competitors? Are Terms of Service agreements only enforced when conduct becomes intolerable but not when it merely violates the prohibitions set forth in those agreements?
Further, while no one desires unwarranted government intervention into our private conversations, does the SEC fail to understand that false press releases and fraudulent references to public announcements undermine the securities markets?