The need to put to an end malicious postings on investor bulletin boards

They can be used to communicate with fellow holders about relevant industry news or an unnoticed factor that might impact a company’s future performance. They can highlight an obscure but insightful article from a key opinion leader.

On-line shareholder bulletin boards and share chat rooms, however are increasingly a forum for defamatory abuse, insult throwing, and misinformation deliberately aimed at undermining shareholder value. Given the regular hijacking of these platforms in this way, should companies just ignore them or attempt to engage with the shareholders using them?

If you look at sites such as ADVFN, Interactive Investor and London South East, home to three of the most popular bulletin boards, you’ll see a stream of commentary from investors about every listed company there is. Each writers’ identity hidden behind an online moniker (such as pauliewonder, mr hangman or bomber13) and emboldened by anonymity many of these posters swap insults with each other, post derogatory remarks about the directors and make accusations of fraud.

It’s not edifying reading and you’d be right to expect companies to ignore the whole thing – for example if you were in Leeds on a Friday night and a stranger started shouting abuse, you’d sensibly ignore them and carry on walking, rather than stop and address their concerns.

This is the saddest part about the current state of bulletin board chat. They discourage companies from taking them seriously, and make CEOs wrongly assume that on-going engagement with retail investors will just be opening the door to more direct abuse for these ‘keyboard warriors’. In reality though many of the posters on these boards are genuine supporters of the companies they invested in, and spend a great deal of time researching the markets in which their investments operate, constantly on the look out for relevant information that might have a bearing on the value of their shareholding.

If you can sift through the vitriol, these bulletin boards do show the genuine concerns of some active investors, and, outside of the typically poorly attended company AGMs, there is very rarely an opportunity to get a snap-shot of retail investor sentiment.

I wouldn’t advise companies to directly engage on bulletin boards, this is a forum for investors to talk to investors, but reacting to what is published on-line can be done as part of an

ongoing Investor Relations strategy. This could be done by making something clearer on the company website or directors might consider purchasing shares as a sign of confidence if this is being discussed on-line, or if specific issues are being raised these can be addressed in the next trading update or financial results statement.

Of course, this is the answer to the question of how companies should engage with investors who post on the bulletin boards. It’s not about posting directly on these websites in response, rather listening to what is being discussed, carefully differentiating the hot air from the hot topics of concern, and then addressing those in the usual regulatory announcement channels.

Certainly, one example not to follow was the PR professional who set up his own anonymous online profile pretending to be an investor, so they could flood the boards with positive

messages for his client and counter any malicious posts.

One thing that urgently needs be done to improve the reputation of the bulletin board, is for those that operate these largely unmoderated platforms to eliminate the malicious posting and insult flinging. We have seen many concerned shareholders outraged that posters openly defame directors and accuse companies of deception without redress and quite rightly smaller companies have better use of their resources than to begin a legal campaign to silence anonymous bulletin board posters.

Perhaps then these online forums can become a more effective means of improving shareholder voice, allowing companies to listen and react.