Malicious Net rumour sends AgriBioTech shares tumbling

As agricultural firm, AgriBioTech, saw its share price plunge 25 per cent this week after unfounded negative comments about the company were posted on a Yahoo message board.

The incorrect allegations were posted anonymously by a disgruntled shareholder, who claimed: "The company is to declare bankruptcy due to massive accounting fraud," and added: "Companies with unclosed buyout clauses are trying to back out."

A note at the end of the message said the allegations were false, but it was not enough to prevent panic selling on Wall Street. AgriBioTech's chief executive, DR Thomas, openly blamed the rumours for the financial loss, calling the perpetrators "scumbags" in a conference call.

The incident has called into question whether Yahoo can be found responsible for defamation. But Stephen Dooley, a solicitor at London-based Sidley & Austin said: "There have been cases where an Internet carrier has been found liable for defamatory material, but I strongly believe Yahoo will not be held responsible in this case. If it was a newspaper, the situation would be different because it undergoes an editorial process, but the quantity of material carried on Yahoo message boards makes it very difficult to monitor."

Some share dealers who have posted messages on the board since the event, doubt the impact of the rumour, saying there were other factors at play. One broker said: "To suggest that a message board entry triggered this drop, or that the drop was retail bailing is beyond ridiculous."