Blinkx rebuttal of blog allegations

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Blinkx has today published an extended rebuttal of the allegations against the company made in a blog a few weeks ago. Those allegations called into question the ethics and business practices of the company and resulted in a major fall in the share price. As the blog author had been commissioned by investors, it has been suggested that this was a typical shorting attack, and might be market abuse (we understand more than one person has complained to the FCA on the issue). ShareSoc did an extensive review of the case in previous newsletters.

The document published this morning is 14 pages of dense text and you may find it heavy going. So here are two extracts from the start and end of the document that summarises the key points:

“The Company has been able to confirm and verify that the blog contains materially misleading information, uses selective data, makes erroneous assumptions about current and past practices, and reflects either a fundamental misunderstanding of the online advertising ecosystem and economics or is a deliberate attempt to use partial, incorrect and misleading information to arrive at subjective and malformed conclusions.”

“The blog is rife with numerous factual errors and materially misleading information. Since its original publication, the blogger was forced to correct and update the blog and make further disclosures around conflicts of interest that still remain vague and opaque. In addition, we know that the blog was aggressively marketed to the institutional investor and analyst community, and that following its publication, the blogger continued to promulgate his opinions with retail investors. This leads us to question the motivations of both the blogger and the sponsors of his research, and in our opinion may indicate the use of expert network techniques to influence shareholder sentiment and share price. Ultimately, the misapprehensions in the blog could easily have been corrected through publicly available diligence or by asking blinkx for comment.”

You can read the full report here: http://www.blinkx.com/corporate/blog

The company is also holding a meeting for investors and analysts today which will be recorded and made available on their web site.

Comment: Let us hope that this is the end of this matter and that the company is now able to pursue its business affairs without further distraction. Lively debate and analysis of companies is healthy, but publishing unverified facts and dubious comments which are distributed around bulletin boards without even checking with the company is another matter altogether. This kind of activity simply brings the market into disrepute and puts people off investing in AIM stocks.

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