Tag Archives: Greenlight Capital

Online reputation management, , , , , , , ,

International Investor’s new list of top earning hedge funds of the last year has put them top and center of the financial industry’s news cycle. Not that they are ever far from it. That is part of what makes their online reputation issues unique.

For hedge fund managers, maintaining inner-circle confidentiality is a priority. But their rock-star status within the financial community makes that hard to achieve.  With the media focusing on the private lives of top earners, it also hard to stay out of the public eye – and off the Internet. That is why privacy ranks high on my list of the top online reputation issues facing hedge funds.

But there are several online reputation issues facing hedge funds and their founders.  The most important include:

Privacy Threats

Inside leaks that impact their trades.  Take Greenlight Capital’s legal move to force investment site Seeking Alpha to reveal the identity of an anonymous contributor last February. (S/he leaked information on a large purchase by the firm—23 million shares of Micron Technology). Greenlight’s experience is not unusual, but its willingness to take legal action is. Most hedge funds steer clear of this type of public statement. (The firm dropped the suit after independently identifying the blogger.)

A high level of unwanted online visibility. News about hedge fund managers’ personal lives, complete with photographs they didn’t create, populate the web and in some cases can damage their professional brand. Their personal addresses—and even satellite pictures of their homes—can be  appear on a variety of websites. This information can originate from a source they considered safe (for instance, making a political donation that is subsequently published with a list of home addresses) but is then aggregated and republished.

Due to the lack of laws governing Internet content, this is legal, at least in the United States. According to Section 230 of the Communications Decency Act, the main law regulating Internet content, “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

Parody Blogs and Twitter Accounts

Common online issues facing hedge funds include third parties that take up their name space (a URL, or website address, resembling a person or company’s name). This can involve blogs and twitter accounts that appear to post information in their name but are actually platforms through which anonymous users can parody (or perhaps praise) the person or company. Many hedge funds choose to ignore such sites. But when the sites take up residence near the top of search results – the first and second pages after a Google search of the company or founder’s name – they don’t just consume online real estate, they can also impact a brand.

Reviews

The private nature of hedge funds limits their involvement with investor reviews and comments, factors that are much more important in the greater financial services industry. But these can now come from a new and unexpected source: Google’s Places for Business. If you own a hedge fund and suddenly see a box in the upper right corner opposite your company’s website with your business’s name, a description, map of its location and an invitation for anyone to post a review of it there, you are looking at a relatively new aspect of Google+ local.  This can serve as valuable marketing for businesses that rely on and benefit from reviews and walk-ins (such as restaurants, tailors and even some investment firms). But it is probably not an asset for hedge funds.

Keep an Eye on Your Brand Name…Lower Down on Google

Online reputation management firms maintain 24/7 monitoring of their clients online to keep track of new online content that appears about individuals and brands. But there is a quick way for hedge funds and their managers to glean insight into potential new privacy or reputation management issues: watch pages four through seven of the results in a Google search of your name and your organization’s name. New and unwanted content often first shows up on those lower pages before climbing higher. Depending on its source, relevance and quality, this content can take several weeks to rise—if it rises at all. That delay can provide an opportunity to develop an effective response.

Even hedge funds that have not had any reputation management issues would be well served to consider potential problems and develop a plan that addresses them.  In the era of social media, that should also include social media and BYOD (“Bring Your Own Device”) policies for employees so you both know your rights.

Excerpts from this article were published in selected Hearst Media Services Connecticut newspapers on 6.7.14.

 
 
Internet Legal Issues, , , ,
online reputation management

Hedge fund Greenlight Capital has filed a petition in New York State Supreme Court seeking the identity of an anonymous blogger at Seeking Alpha, an investor website.  In mid-February Bloomberg published a report stating the contributor “allegedly disclosed the fund’s stake in Micron Technology Inc. (MU) before it was made public.” Greenlight plans to sue the blogger if the petition succeeds – making it a potentially groundbreaking legal case.

Key excerpts from the Bloomberg article state:

Greenlight said in a Nov. 25 filing with the U.S. Securities and Exchange Commission that it purchased 23 million shares of Boise, Idaho-based Micron, a maker of memory chips, in the third quarter. Eleven days earlier, Greenlight had disclosed the stake to the SEC and asked that the agency not publicly identify Micron as the investment in question.

A frequent contributor to the site, identified only as “Valuable Insights,” revealed the investment in a post on Nov. 14, before Greenlight disclosed its position to the SEC, the investment manager said in a petition filed yesterday in New York State Supreme Court in Manhattan. The hedge fund said in the petition that the website post drove up its costs.

Greenlight said in the petition it intends to sue “Valuable Insights,” identified on the site as a fund manager with more than 20 years of experience in the securities industry.

Seeking Alpha declined to identify the contributor in a letter dated Nov. 26, saying that submissions are made at the “sole responsibility” of the posting user, according to filings in the case.

Seeking Alpha said in the letter that it doesn’t pre-screen comments on its site and can’t guarantee their accuracy, integrity or quality, and that it’s not in a position to reveal its users’ identities without “clear and substantial grounds,” according to the filings.

Why it is difficult to sue for internet content….but not impossible

Website operators have legal immunity over what is said and posted on their sites. That means they are not held responsible for it in a court of law (except, generally, in cases that constitute defamation). Specifically, according to Section 230 of the Communications Decency Act, “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” That law was passed in 1996.

Online defamation lawsuits constitute a growing area in legal practice. If something posted about a person is deemed by a court to be a false and unprivileged statement of fact harmful to someone’s reputation – or, to cite recent cases, is “injurious,” interferes with one’s livelihood or possesses any number of related characteristics – the website can be required by law to remove the information and reveal the poster’s identity.

Tim Fernholz at Quartz said, “The hedge-fund manager maintains that only someone who was legally obligated to keep the information confidential could have written the Seeking Alpha post, and he wants to know the person’s true identity in order to sue. Since the author of the note isn’t a journalist relaying information from an anonymous source (a classic way big deals are leaked) but an investor, it’s possible the judge won’t follow the usual protections for anonymous speech and instead force Seeking Alpha to divulge the author’s identity,” he writes.

People who have successfully sued in response to online defamation (typically a series of anonymous posts about them) have been awarded millions of dollars in damages. The posters’ identities have become public, often in the news media.  It can be very difficult to take such a step and succeed.  But a firm like Greenlight Capital has the financial weight to see such a lawsuit through. While it is not a defamation suit, there may be similarities in terms of visibility. Greenlight can also utilize private resources to reveal the anonymous writer should legal channels fail to do so.

Cyber investigators increasingly active in private sector

Private investigators are increasingly active in such cases. Often such experts come out of law enforcement and the legal community. For instance, Kenneth Citarella is the Managing Director for Investigations and Cyber Forensics at Guidepost Solutions, an investigations and compliance firm that was established by Andrew J. O’Connell, a former federal prosecutor and Special Agent with the U.S. Secret Service.

For additional insight

The Electronic Frontier Foundation’s online defamation law guide for bloggers includes general information on this topic.