Friday, April 03, 2009

Censorship as a Message Board Business Model

So you'd think that stock message boards would be agog with shock and outrage at word that has pissed away $1.25 million on a member of its board of directors, in ostensible "consulting" fees. For a company of its miserable financial condition, that's pretty outrageous, and sure enough the boards are alive with talk--everywhere but at something called Investor Village.

What you see there, instead, are posts about the bailout, about Bernie Madoff, the horrific scourge of naked short selling, Merrill Lynch bonuses--but not a word about the payout, made to a departing director named James V. Joyce. The reason is that any critical mention of Overstock is being actively suppressed, with dissenters under threat of expulsion, their posts deleted.

In a continuation of the Stalinist phenomenon I explored in a post a few days ago, this ostensibly neutral message board has kicked off one of the few critics of the company, and deleted all of his recent posts. More details can be found here. As a result, the amount of critical commentary about the company is down to zero.

A screen capture of the bottom of one of the deleted posts, thoughtfully recorded by the person who posted it, can be found below.

"Let's have a discussion of this [the $1.25 million payola] on the merits," it says. Perish the thought! Small wonder the genius who operates IV, Ralph "Kramden" Kidd, would actively rid his message board of such heresy.

This kind of stupidity turns message boards like Investor Village, and a handful of others catering to stock touts, into a closed-loop ignorance-reinforcement mechanism, practicing what is known as "incestuous amplification." At a time when investors are being ripped off right and left, it's about as great a menace to investor wealth as any small group of amateurs could devise.

Why would a message board do something quite so cowardly? Well, duhhhh.... here's a hint, contained in an email sent to members at about the time the offending words were being blotted out:

For the several hundred of you who have already purchased your Premium Memberships, we do appreciate your willingness to step up early and support us in this way—even those of you who don't wish to use the premium site and just want to support us financially—and there are many of you. [emphasis added]
That brings me to the subject of this post--IV's sugar daddies. I mean, golly, who would want to support someone else's message board financially? Who out there have such warm hearts and open wallets? (And by the way, if you believe that "hundreds" of people are paying for something they can get for nothing, there's a bridge over the East River I'd like to sell you.)

One warm-hearted type that come to mind (pardon me while I retch) is Patrick Byrne, Overstock's CEO. He and his paid hatchet man Judd Bagley both use IV to advance Byrne's agenda. Both have the most to gain from IV's censorship spree, and both have rejoiced when previous critics--such as white collar crime-fighter Sam Antar--were kicked off.

Byrne posts on Investor Village as "Hannibal," and Bagley as "De Daumier Smith," mainly for the purpose of manipulating Overstock's share price upwards by personally attacking critics of the company like myself and Antar.

I'm not sure it would be terribly legal for corporate officials to make under-the-table "contributions" to a message board. But when have legal niceties or obsolete concepts like "ethics" ever stopped Patrick Byrne?

UPDATE: Overstock's latest proxy statement was released on Friday, showing that Joyce was paid $360,000 a year for "consulting" and $75,187 in "expenses," on top of his $1.25 million golden parachute. Typically, not a word on these amazing numbers appeared--or will appear--on Ralph Kidd's stock touting forum.

© 2009 Gary Weiss. All rights reserved.

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