Transparency and Trust are the Keys to Online Success

TrustOn Thursday April 1st, the Ontario Securities Commission (OSC) – the Canadian equivalent to the SEC, put forth allegations against an online investor relations forum for seeding fake conversations throughout their investor message board community. The allegations describe a scenario of more than 24,000 fraudulent posts made by 670 different accounts. The papers filed by the OSC go into detail on how employees at Agoracom were required to posts under several different aliases and on occasion, conversed with themselves on the forums using different aliases. Agoracom has denied the charges and says they are without merit.

The founders of Agoracom are set to appear in front of the OSC at the end of April, where we assume we will all hear more details of the allegations and the defense of Agoracom. I, like many others, await more details before passing judgment on what really happened and to what degree fraud was committed (if at all).

In light of this recent situation, I wanted to take this opportunity to talk about the problems with message boards and the importance of transparency and trust and being successful online.

Similar to Yahoo!Finance message boards, Agoracom uses alias for all members. As you can see from the screenshot below, there no real names listed and there is no further information available on the site on who these people are.


The BIG problem here is the complete lack of transparency. Who are these people? What are their backgrounds, their day jobs, etc? In their current format message boards like this can’t be trusted if anyone can create an alias and “pretend” to be an investor.

The reason why social media works, is because of the trust that is built up over time between real people. This would never work if everyone used an alias and you didn’t know who they were. The best practice across all social media channels is to use your full name in your profile and/or links to further details about yourself.

What would Facebook be like if everyone used an alias? It only works because it’s real people connecting with real people. A great example of this can be seen in some of the Facebook pages used by companies to connect with investors. See TVI’s Facebook page (disclosure: TVI is a Q4 client)

TVI Facebook

Seeking Alpha is a great example of transparency, a part of their success has come from how transparent the community is, people connecting with people.


On Twitter there are many users that have an alias for the account name, however most people provide their real name within their profile. There are certainly many automated accounts and many fake accounts, however the people with the most influence and benefit to the company are those that are real people being transparent. I know in my own work with social media, being transparent and authentic is absolutely critical to connecting with people online and building trust.

Sure there are Twitter accounts today that are based on aliases and stock promoters are using them to create “fake awareness”. I hope the actions from the OSC sets a precedence that other regulators can use as an example to control this type of fraud.

Social media is about connecting real people. This is true across every line of business using social media, including marketing, public relations and investor relations. Transparency and trust are required to be successful.

I don’t think that these allegations apply to any PR or IR firm tweeting on behalf of a client, as tweeting for a client is very different than pretending to be an investor:

  • When posting for a client it is being done under the company account and is being used to assist in the distribution of content and to build a following through engagement with stakeholders. There is nothing underhanded in this approach and this is within regulations and ethics.
  • If an IR firm creates an alias account and then pretends to be an investor engaging in discussions with the company and other investors then this is simply lying and is not ethical in any way. Perhaps a case can be made that this is not securities fraud, but it certainly is business fraud and should not be tolerated by companies, regulators or investors.

On a related note, in 2007 Whole Foods’ CEO John Mackey was caught posting messages on Yahoo! Under the name “rahodeb”:

Investigations were launched by the FTC (to block an acquisition) and by the SEC. Ultimately both agencies did not pursue the issue and Mr. Mackey got off. In his own defense Mackey said that he had the right to post under an alias because everyone else did on the message board. Mackey also said that he thought the posts of one man under an alias would never be able to move to the stock and that this was not his intention. However, with posts such as this one posted in Jan 2005, it’s hard to believe his intentions were ethical:

“13 years from now Whole Foods will be an $800+ stock before splits”
John Mackay, CEO of Whole Foods posting as “Rahodeb”.

There are other stories about the CEO of using aliases on message boards to spread misinformation, attack his critics and even leak information.

Neither the CEO of Whole Foods or was charged by the SEC for these types of postings. However, it seems the SEC wasn’t doing much enforcement during this period (too many stories to mention here) and I have to wonder if these events happened today would the current SEC react in the same way? Their recent increased judgments related to Reg FD seem to suggest they would react differently.

If the OSC needs to set the precedent that companies and by extension IR agencies can’t create fake investor accounts, then I think this is good for all companies and investors.

As I said early in this post, we’ll all know much more about Agoracom and OSC at the end of this month. Until then I reiterate, I am waiting to get all the details before passing judgment.

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