Great Britain: Oil firms may sue for false rumors on websites

Two small British oil firms say they are not after legitimate anonymous postings but want to rein in postings on private investor websites that contain “calculated lies”  that manipulate share prices. -db

Yahoo! News
August 9, 2010
By Myles Neligan and Rhys Jones

(Reuters) Two small British oil firms on Monday said they were considering legal action against individuals they accuse of spreading false rumours about them on popular private investor websites.

Nighthawk Energy and Nostra Terra Oil and Gas both said they had uncovered the identities of people who used pseudonyms to post untrue and damaging claims about them on internet bulletin boards, and may sue for defamation.

Nighthawk managing director David Bramhill told Reuters he had been contacted by representatives of two companies asking for advice on how to challenge anonymous bulletin board users, in a sign that others may take similar action.

Nighthawk and Nostra Terra both said that they did not wish to stifle online debate between private investors.

“This isn’t about muzzling investors that want to have a go at the company, or who want to complain that they’ve lost money, or boast that they’ve made money,” Bramhill said.

“That’s free speech and they’re welcome to it. This is about calculated lies.”

Nostra Terra said: “The majority of people posting comments on message boards do so, perfectly legitimately, using pseudonyms.”

A spokesman for the Financial Services Authority said bulletin boards were governed by market abuse rules, but that the watchdog relied on companies to draw its attention to potential attempts at manipulating share prices through false rumours.

Many private investors buy stocks in small oil explorers as a speculative investment, betting on a big rise in share prices in the event of a major oil discovery, and the sector is frequently debated on retail investor websites.

“These are heavily affected by private investor activity, and if there are a lot of private investors talking on a bulletin board, it will have an effect on the share price,” said David Jones, chief market strategist at spread-betting firm IG Index.

Nighthawk and Nostra Terra were able to identify the anonymous posters after obtaining court orders forcing retail investor websites iii and ADVFN to hand over information about them.

“The identities of various individuals behind these postings have now been established and the company and its directors are now considering with their legal advisers instituting civil proceedings against them for defamation,” Nighthawk said.

Nighthawk’s shares, traded on the London Stock Exchange’s junior AIM market, were 2.9 percent lower at 25.5 pence by 3:04 p.m. BST, while Nostra Terra was flat at 0.42 pence.

Nighthawk and Nostra Terra shares have fallen by 26 percent and 60 percent respectively the year to date.

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