For the past several years Toronto’s Agoracom has run online forums for mining, energy and tech companies where investors could gather to chat abut their holdings.
Yesterday the Ontario Securities Commission filed documents alleging that Agoracom’s own employees operating under dozens of online aliases made more than 24,000 online posts under more than 670 fake names to promote stocks in firms it represented.
Agoracom Founder George Tsiolis isn’t taking the allegations sitting down and yesterday issued a press release responding to the allegations. Tsiolis calls the allegations a misunderstanding, admitting that some employees initiated conversation on some client sites to simply act as a catalyst to spark conversation amongst members and forum users.
“We are all acutely aware of the dynamic in which complete strangers are brought together into a community for the first time and the inhibitions that prevent people from interacting. From our first days in school, to our first high-school dance, to the local town hall meeting, people are naturally afraid to be the first to speak or act. The minority of people that do tend to speak or act first tend to be the best, brightest or loudest in the group, which further drives the inhibitions of the majority. My extensive face-to-face experience with small-cap investors has shown they are no different. I have heard time and time again about their fear of asking “simple” questions that might demonstrate a perceived lack of knowledge, or contributing information that isn’t “smart”. We helped those investors open up and begin sharing their knowledge.”
OSC regulators allege that Agoracom representatives were required to post anonymously to the forums as part of their daily responsibilities with several of the company’s staff owning up to 50 aliases.
While fake comments on blog posts or in forums are nothing new, the OSC’s allegations in this case are serious as Agoracom stood to gain from the online postings. In exchange for its services Agoracom collects a monthly fee AND stock options in each of the companies it represented.
The OSC has issued a Notice of Hearing setting the matter down to be heard on April 26th.