In a recent decision
, the British Columbia Securities Commission
has ruled that B.C. resident Jesse J. Hogan contravened that province's Securities Act
by intentionally distributing false information on five NASDAQ companies using email, chat rooms and electronic bulletin boards. Hogan's efforts increased trading volumes and prices, which returned to normal levels after Hogan had realized his gain. The Commission rejected the argument that Hogan acted as an adviser by posting unsolicited information on the Internet. The Commission concluded that the Internet postings amounted to misrepresentations of material facts and that the Internet communications fell within the definition of a "transaction" for the purposes of the Act and hence, the Commission had jurisdiction over Hogan's activities.
On the question of whether Hogan's conduct brought the integrity of the markets into disrepute, the Commission rejected Hogan's argument that Internet investor clubs constitute a savvy subculture with a different regulatory requirement; deciding instead "that just because the Internet has vulnerabilities does not justify the exploitation of those vulnerabilities".
In a similar matter, the U.S. Securities Exchange Commission
settled its case against 17 year old Benjamin Snyder, who posted a false Bloomberg story in an unsuccessful attempt to boost the price of his 785 shares of Viragen International, Inc.
For the full text of the Hogan decision, visit:
To view the U.S. SEC order in the Snyder case, visit:
Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.
E-TIPS is a registered trade-mark of Deeth Williams Wall LLP.