Carnegie Sues Over Internet Messages

Carnegie International, a telecommunications holding company, has accused Internet users of posting defamatory messages about its executives to drive down the company’s stock price and spark a lawsuit by shareholders.

A Carnegie lawsuit said the messages--by a Texas businessman, a Maine lawyer and a California Internet user identified only as “Indianhead”--claimed company officials engaged in insider trading with shares awarded under a bonus program. The messages also exhorted shareholders to consider “a major class-action lawsuit,” Carnegie alleged.

The Carnegie suit, which was filed in federal court in Baltimore and seeks more than $1.1 billion in damages, is one of the first in which a company has struck back at Internet surfers who use the World Wide Web to question executives’ actions. Securities and Exchange Commission officials wouldn’t comment on Carnegie’s suit, although regulators are looking into similar allegations of stock manipulation through Internet chat rooms and message groups, said John Reed Stark, head of the SEC’s Internet enforcement unit.

“We haven’t brought a pure ‘cyber-smear’ case as of yet, but we are very concerned about the issue,” Stark said.

Complaints of false Internet messages have increased in the last year, Stark added. Last month, M.H. Meyerson & Co. filed a nearly identical suit against Internet users who sent out messages accusing the brokerage’s chief executive of stock manipulation, insider trading and money laundering.