Titan Subpoenas Yahoo to Give Names of Anonymous Users
Titan Corp., a San Diego-based information technology company, subpoenaed Internet portal Yahoo Wednesday to reveal the names of a group of anonymous message posters who Titan claims have been spreading phony information to drive its stock price down.
Titan has seen its shares drop from $44 in May to as low as $21 this month following a series of messages posted on Yahoo’s popular investment bulletin boards and other Internet message sites.
“Oh My Gosh!!!!!!! TTN [Titan] is getting nailed with huge sell orders!!!! Jump from the sinking ship!!!!” wrote one poster.
“Institutions are selling big time!!!!!!” wrote another.
The messages included bogus reports of poor company earnings and fraudulent accounting by the company.
In one incident, a fake analyst report detailing questionable business practices by Titan was sent to all of the company’s institutional investors.
The suit claims that some false and misleading information about Titan ended up in an August article in Barron’s. Barron’s officials couldn’t be reached late Wednesday, but the magazine did not post a correction to its initial story.
Titan Chief Executive Gene W. Ray said none of the reports were true, and in fact, the company has had largely good news to report over the past few months, including meeting all earnings expectations.
But the rumors have managed to hammer the company’s stock, cutting its market capitalization in half from $2.6 billion in June to $1.3 billion this month.
“These people are hitting a bunch of companies, not just ours, and most of them are getting away with it,” Ray said. “But we’re not going to take it. We’re drawing a line in the sand.”
Titan’s suit follows the nose dive last Friday of Costa Mesa-based Emulex Corp. stock. Its shares plunged more than 60% following the posting of a bogus press release stating the company was under investigation by the Securities and Exchange Commission.
Emulex stock rebounded the same day after the hoax was exposed to close near its opening price.
Titan, with 7,600 employees, is a diversified technology company that trades under the symbol TTN on the New York Stock Exchange. While its main business is providing information systems to government agencies, it also produces electron-beam food pasteurization equipment, satellite communications equipment and e-commerce applications.
Shares of Titan, which earned $35.2 million on sales of $634.8 million last year, rose $2.50, to $25, on the NYSE. The shares reached a 52-week high of $60.50 in March.
The Titan suit filed in Los Angeles Superior Court on Wednesday seeks damages and an injunction against the group of anonymous posters.
A Yahoo spokesperson said that the company’s policy on releasing real identities is to first notify the user, who has the option to go to court to block the release or resolve the matter on their own. If neither course is taken, Yahoo will typically comply with a subpoena, the spokesperson said. Yahoo’s policy on releasing identities is posted on its Web site.
Ray said the postings have come from “short sellers,” a group of traders who make money by betting that a company’s stock will go down.
Short sellers borrow shares, sell them at the market price, then hope to buy shares back later at a lower price, return them to the lender and keep the difference.
According to Titan’s suit, the short sellers have posted messages under at least 36 screen names.
“Titan will smoke out and expose the short sellers who wreak havoc in the lives of investors, and force them to disgorge their ill-gotten gains,” said Marshall Grossman, a lawyer for the company, in a statement.
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Bloomberg News was used in compiling this report.
