David Prosser: Opportunities online for rogue traders

Outlook The legal victory of Nighthawk Energy, the Alternative Investment Market-listed oil services company, over a pair of bulletin boards is a personal triumph for its chief executive, who has been concerned for some time about the anonymous – and damaging comments – people have been making online about his company. The wider question, however, is why he had to go to court in the first place.

Now Nighthawk has secured a court order forcing the boards in question to hand over details of the identities of those who have been posting about it, the company has the option of taking legal action against them to prove its argument that what has been said about it is defamatory.

Good luck to it. Investors should, of course, be free to voice their opinions about the performance of companies or their prospects. But the suspicion has always been that bulletin boards make it far too easy for people to spread malicious gossip – often, in the case of small companies with thinly traded shares, in the hope of making a buck or two from price movements that result as the rumours spread.

Such behaviour is illegal – it is straightforward market manipulation. Yet the administrators of bulletin boards rarely police the activities of those who post on them. And regulators do not routinely monitor them either – the Financial Services Authority says it only investigates cases where companies complain that they have been targeted.

That makes it too easy for an investor to plant a false story, earn a few quid from the resulting share price movement and then cash out before the company has a chance to quash the lie. Other investors lose out as a result, as do the companies themselves.

These sort of word-of-mouth driven cons were rampant in the bad old days of the City, before the regulators made an effort to tackle the abuses through which a network of dodgy dealers made money. The internet has enabled the conmen to make a return, and not enough has been done to crack down on them.