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Abstract: We assess the impact of spam that touts stocks upon the trading activity of those stocks and sketch how profitable such spamming might be for spammers and how harmful it is to those who heed advice in stock-touting e-mails. We find convincing evidence that stock prices are being manipulated through spam. We suggest that the effectiveness of spammed stock touting calls into question prevailing models of securities regulation that rely principally on the proper labeling of information and disclosure of conflicts of interest as means of protecting consumers, and we propose several regulatory and industry interventions. Based on a large sample of touted stocks listed on the Pink Sheets quotation system and a large sample of spam emails touting stocks, we find that stocks experience a significantly positive return on days prior to heavy touting via spam. Volume of trading responds positively and significantly to heavy touting. For a stock that is touted at some point during our sample period, the probability of it being the most actively traded stock in our sample jumps from 4% on a day when there is no touting activity to 70% on a day when there is touting activity. Returns in the days following touting are significantly negative. The evidence accords with a hypothesis that spammers "buy low and spam high," purchasing penny stocks with comparatively low liquidity, then touting them - perhaps immediately after an independently occurring upward tick in price, or after having caused the uptick themselves by engaging in preparatory purchasing - in order to increase or maintain trading activity and price enough to unload their positions at a profit. We find that prolific spamming greatly affects the trading volume of a targeted stock, drumming up buyers to prevent the spammer's initial selling from depressing the stock's price. Subsequent selling by the spammer (or others) while this buying pressure subsides results in negative returns following touting. Before brokerage fees, the average investor who buys a stock on the day it is most heavily touted and sells it 2 days after the touting ends will lose close to 5.5%. For those touted stocks with above-average levels of touting, a spammer who buys on the day before unleashing touts and sells on the day his or her touting is the heaviest, on average, will earn 4.29% before transaction costs. The underlying data and interactive charts showing price and volume changes are also made available.
spam, stock, tout, markets, e-mail, Internet, cyberlaw, SEC, unsolicited, commercial, manipulation, timing, consumer protection, pink sheets, efficiency
Abstract: The generative capacity for unrelated and unaccredited audiences to build and distribute code and content through the Internet to its tens of millions of attached personal computers has ignited growth and innovation in information technology and has facilitated new creative endeavors. It has also given rise to regulatory and entrepreneurial backlashes. A further backlash among consumers is developing in response to security threats that exploit the openness of the Internet and of PCs to third-party contribution. A shift in consumer priorities from generativity to stability will compel a response from regulators and markets and, if unaddressed, could prove decisive in closing today's open computing environments. This Article explains why PC openness is as important as network openness, as well as why today's open network might give rise to unduly closed endpoints. It argues that the Internet is better conceptualized as a generative grid that includes both PCs and networks rather than as an open network indifferent to the configuration of its endpoints. Applying this framework, the Article explores ways - some of them bound to be unpopular among advocates of an open Internet represented by uncompromising end-to-end neutrality - in which the Internet can be made to satisfy genuine and pressing security concerns while retaining the most important generative aspects of today's networked technology. This is a working paper. The final version of the paper may be found online without registration or charge at http://www.harvardlawreview.org/issues/119/may06/zittrain.pdf.
cyberlaw, internet, generativity, drm, digital rights management, security, intellectual property
Abstract: As the Internet becomes part of daily living rather than a place to visit, its rough edges are smoothed and its extremes tamed by sovereigns wanting to protect consumers, prevent network resource abuse, and eliminate speech deemed harmful. The tools are now within reach to permit sovereigns with competing rulesets to play down their differences - whether by countenancing global privatization of some Internet governance issues through organizations like ICANN, coming to new international agreements on substance and procedure to reduce the friction caused by transborder data flows, or by a "live and let live" set of localization technologies to shape the Internet to suit the respective societies it touches. These shifts will help ease the tension between the certitudes that the Internet is global, while the imposition of regulation is almost always local. Such cures for the longstanding dilemmas of Internet jurisdiction and governance eliminate the originally cherished aspects of a global Internet as well - urging us to consider the iatrogenic effects of bulldozing online activity to conform more to the boundaries of the physical world that preceded it, and explaining why, in the United States and elsewhere, there are contradictory policies emerging about the Internet's future.
internet, jurisdiction, governance, cyberlaw, ICANN, localization, zoning, control
Abstract: Individuals have long had the desire but little ability to control the dissemination of personal information about their health. Law has been a weak instrument for such control, given the articulate and powerful interests that insist upon maintaining and enhancing access and use of others' personal information, with sensitive medical data proving only a sporadic exception. Technology has so far only made exploitation of personal information easier. The evolving federal framework for the protection of electronic medical records is, at the moment, one in which individuals are third-party beneficiaries of what are likely to be flexibly-interpreted, ponderously-enforced fair information practices created in the shadow of a Congressionally-mandated networking of sensitive medical data. This networking promises to greatly lower the costs of accessing and using medical data for any number of purposes?including ones not central to health care, such as direct marketing. It is ushering in what some call the "Era of Promiscuous Publication." The danger this era portends is that what is gained in efficiency of health care provision may be lost in erosion of privacy. Privacy advocates could learn a new approach to this problem from an unlikely teacher: publishers of intellectual property?specifically the American music industry. The music industry until recently feared ruin from the unauthorized swapping and rebroadcasting of high-quality audio reproductions among its customers, a phenomenon enabled by increasingly cheap networks, cheap data storage, and cheap processors?again, the Era of Promiscuous Publication. Despite access to a sympathetic Congress and extensive enforcement resources, the music industry has found recourse to law largely unavailing against this tide of technological progress. The industry is now embarking on a different strategy?changing the technology itself. At the core of the technological response lies the idea of "trusted systems": computer databases of the rights and privileges of specific entities vis-a-vis information, linked to hardware and software that recognize and enforce those rights. If fully deployed, trusted systems could trump the Era of Promiscuous Publication with what I call an "Era of Trusted Privication": one in which a well-enforced technical rights architecture would enable the distribution of information to a large audience?publication?while simultaneously, and according to rules generated by the controller of the information, not releasing it freely into general circulation?privication. In my view there is a profound relationship between those who wish to protect intellectual property and those who wish to protect privacy. Their common desire to control the distribution of information, and the music industry?s potential success at regaining control through the implementation of trusted systems, offer several lessons to privacy advocates seeking to protect the privacy interests increasingly threatened by the advent of the Era of Promiscuous Publication. The paper explores these lessons first by mapping out the problem presented to the music industry by the advent of fast, cheap, and perfect copies, along with the music industry?s legal and technological strategies for regaining control. Second, it describes the similar problem faced by privacy advocates in the arena of medical privacy, the legal solutions that have been and might be attempted, and a hypothetical technological solution that demonstrates the enforcement power of the trusted system. Finally, it looks beyond the enforcement potential of the technological solution to demonstrate how thinking in terms of privication architectures might help negotiate the allocation of rights to medical data to account for the interests of individual "producers" of personal data in ways that need not disparage the legitimate interests of the sophisticated institutional players who wish to consume that data.
Abstract: The online availability of pornography and unauthorized intellectual property has driven Internet growth while giving rise to efforts to make the Net more regulable. Early efforts to control the Internet have targeted the endpoints of the network - the sources and recipients of objectionable material - and to some extent the intermediaries who host others' content. Recently attention has shifted to intermediaries near would-be recipients of content. The U.S. Commonwealth of Pennsylvania permits its attorney general to obtain a court order requiring Internet service providers to block Pennsylvanians' access to Internet locations designated as containing illegal pornography. If successful, this approach could be employed for other regulatory purposes, such as controlling the online distribution of copyright-infringing materials. While the Pennsylvania law suffers from a number of technical limitations and Constitutional vulnerabilities, with some adjustments to Internet architecture and data carriage practices this approach could become a comprehensive scheme for widespread content control that overcomes a number of enforcement barriers and jurisdiction-related objections.
internet, cyberlaw, routing, packets, data, copyright, pornography, law
Abstract: Microsoft has brilliantly exploited its current control of the personal computer operating system (OS) market to grant itself advantages towards controlling tomorrow's operating system market as well. This is made possible by the control Microsoft has asserted over user "defaults," a power Microsoft possesses thanks to a combination of (1) Windows' high market share, (2) the "network effects" that make switching to an alternative so difficult for any given consumer or computer manufacturer, and (3) software copyright, which largely prevents competitors from generating software that defeats network effects. The author suggests a much-reduced term of copyright for computer software--from 95 years to around five years--as a means of preventing antitrust problems before they arise.
Abstract: Current tax law makes it difficult to enforce sales taxes on most Internet commerce and has generated considerable policy debate. In this paper we analyze the costs and benefits of enforcing such taxes including revenue losses, competition with retail, externalities, distribution, and compliance costs. The results suggest that the costs of not enforcing taxes are quite modest and will remain so for several years. At the same time, compliance costs are also likely to be low. There are benefits to nurturing the Internet but they tend to diminish over time. When tax costs and benefits take this form, a moratorium provides a natural compromise.
Abstract: Current tax law--and the current technical architecture of the Internet--make it difficult to enforce sales taxes on most Internet commerce. This has generated considerable policy debate. In this paper, we analyze the costs and benefits of enforcing such taxes including revenue losses, competition with retail, externalities, distribution, and compliance costs. The results suggest that the costs of not enforcing taxes are quite modest and will remain so for several years. At the same time, compliance costs are also likely to be low as Internet infrastructure evolves to make enforcement easier, and states coordinate to harmonize their statutes. There are benefits to nurturing/subsidizing the Internet but they tend to diminish over time. When tax costs and benefits take this form, a moratorium provides a natural compromise.
Abstract: The brief but intense history of American judicial and legislative confrontation with problems caused by the online world has demonstrated a certain wisdom: a reluctance to intervene in ways that dramatically alter online architectures; a solicitude for the collateral damage that interventions might wreak upon innocent activity; and, in the balance, a refusal to allow unambiguously damaging activities to remain unchecked if there is a way to curtail them. The ability to regulate lightly while still curtailing the worst online harms that might arise has sprung from the presence of gatekeepers. These are intermediaries of various kinds - generally those who carry, host, or index others' content - whose natural business models and corresponding technology architectures have permitted regulators to conscript them to eliminate access to objectionable material or to identify wrongdoers in many instances. The bulk of this Article puts together the pieces of that history most relevant to an understanding of the law's historical forbearance, describing a trajectory of gatekeeping beginning with defamation and continuing to copyright infringement, including shifts in technology toward peer-to-peer networks, that has so far failed to provoke a significant regulatory intrusion. I argue that the U.S. Supreme Court's Grokster decision upholds this tradition of light-touch regulation that has allowed the Internet to thrive. The decision thus is not a landmark so much as a milestone, ratifying a continuing detente between those who build on the Internet and those in a position to regulate the builders. Grokster may have achieved such a fit with its ancestors by avoiding a set of now-pressing issues about gatekeepers. This avoidance is revealed by looking at Grokster's outcome: a loss for Grokster Ltd. that has no practical impact on the distribution and use of the sort of PC software that got Grokster Ltd., in trouble. The most recent peer-to-peer technologies eliminate a layer of intermediation from the networks they create; there are often no longer central websites or services that can be blamed, and then shut down or modified, to dampen the objectionable activities that they enable. Even decentralized Internet service providers may prove unable to intercede much as new overlay networks cloak users' network identities in addition to their personal ones. The loss of these natural points of control will cause those with challenged interests to foreground a new and less palatable set of intermediaries: software authors. These authors may be asked to write their software in such a way that it can be recalled or modified after it has been obtained by a user and then put to an undesirable purpose. They may even be asked to program their software to disable the installed software of others. Control over software - and the ability of PC users to run it - rather than control over the network, will be a future battleground for Internet regulation, a battleground primed by an independently-motivated movement by consumers away from open, generative PCs and toward more highly regulable endpoint platforms.
cyberlaw, internet, generativity, drm, digital rights management, security, intellectual property, grokster
Abstract: The production of most mass-market software can be grouped roughly according to free and proprietary development models. These models differ greatly from one another, and their associated licenses tend to insist that new software inherit the characteristics of older software from which it may be derived. Thus the success of one model or another can become self-perpetuating, as older free software is incorporated into later free software and proprietary software is embedded within successive proprietary versions. The competition between the two models is fierce, and the battle between them is no longer simply confined to the market. Claims of improper use of proprietary code within the free GNU/Linux operating system have resulted in multi-billion dollar litigation. This article explains the ways in which free and proprietary software are at odds, and offers a framework by which to assess their value - a prerequisite to determining the extent to which the legal system should take more than a passing, mechanical interest in the doctrinal claims now being pressed against GNU/Linux specifically and free software generally.
Free Software, Microsoft, GNU, Linux, Unix, Proprietary Copyright
Abstract: This book explores the past, present, and future of the Internet. It explains why some crucial, commonplace ingredients of the Net such as the generic, reprogrammable PC are likely soon to be replaced, not just complemented, by a new range of information appliances and corresponding Web 2.0 platforms that create new gatekeepers and new opportunities for regulation. It says that this future is, on balance, undesirable, even as the market is bringing it about, and it makes recommendations about how to avoid this future. The electronic version of the book is made available under a Creative Commons Attribution Non-Commercial Share-Alike 3.0 license. It is otherwise published by Yale University Press and Penguin UK.
Future, Internet, Cyberlaw, Generative, Tethered, Appliances, Steril, Google, Facebook, Apple, Iphone
Abstract: The authors are collecting data on the methods, scope, and depth of selective barriers to Internet access through Chinese networks. Tests from May 2002 through November 2002 indicate at least four distinct and independently operable methods of Internet filtering, with a documentable leap in filtering sophistication beginning in September 2002. The authors document thousands of sites rendered inaccessible using the most common and longstanding filtering practice. These sites were found through connections to the Internet by telephone dial-up link and through proxy servers in China. Once so connected, the authors attempted to access approximately two hundred thousand web sites. The authors tracked 19,032 web sites that were inaccessible from China on multiple occasions while remaining accessible from the United States. Such sites contained information about news, politics, health, commerce, and entertainment. The authors conclude (1) that the Chinese government maintains an active interest in preventing users from viewing certain web content, both sexually explicit and non-sexually explicit; (2) that it has managed to configure overlapping nationwide systems to effectively - if at times irregularly - block such content from users who do not regularly seek to circumvent such blocking; and (3) that such blocking systems are becoming more refined even as they are likely more labor- and technology-intensive to maintain than cruder predecessors.
Internet, China, cyberlaw, Asia, filtering, blocking, pornography, government
Abstract: China's Internet filtering regime is the most sophisticated effort of its kind in the world. Compared to similar efforts in other states, China's filtering regime is pervasive, sophisticated, and effective. It comprises multiple levels of legal regulation and technical control. It involves numerous state agencies and thousands of public and private personnel. It censors content transmitted through multiple methods, including Web pages, Web logs, on-line discussion forums, university bulletin board systems, and e-mail messages. Our testing found efforts to prevent access to a wide range of sensitive materials, from pornography to religious material to political dissent. We sought to determine the degree to which China filters sites on topics that the Chinese government finds sensitive, and found that the state does so extensively. Chinese citizens seeking access to Web sites containing content related to Taiwanese and Tibetan independence, Falun Gong, the Dalai Lama, the Tiananmen Square incident, opposition political parties, or a variety of anti-Communist movements will frequently find themselves blocked. Contrary to anecdote, we found that most major American media sites, such as CNN, MSNBC, and ABC, are generally available in China (though the BBC remains blocked). Moreover, most sites we tested in our global list's human rights and anonymizer categories are accessible as well. While it is difficult to describe this widespread filtering with precision, our research documents a system that imposes strong controls on its citizens' ability to view and to publish Internet content. This report was produced by the OpenNet Initiative, a partnership among the Advanced Network Research Group, Cambridge Security Programme at Cambridge University, the Citizen Lab at the Munk Centre for International Studies, University of Toronto, and the Berkman Center for Internet & Society at Harvard Law School.
Internet web filtering, government, China, ONI points of control
Abstract: This essay responds to Orin S. Kerr, Searches and Seizures in a Digital World, 119 Harv. L. Rev. 531 (2005), http://ssrn.com/abstract=697541. Professor Kerr has published a thorough and careful article on the application of the Fourth Amendment to searches of computers in private hands - a treatment that has previously escaped the attentions of legal academia. Such a treatment is perhaps so overdue that it has been overtaken by two phenomena: first, the emergence of an overriding concern within the United States about terrorism; and second, changes in the way people engage in and store their most private digital communications and artifacts. The first phenomenon has foregrounded a challenge by the President to the very notion that certain kinds of searches and seizures may be proscribed or regulated by Congress or the judiciary. The second phenomenon, grounded in the mass public availability of always-on Internet broadband, is leading to the routine entrustment of most private data to the custody of third parties - something orthogonal to a doctrinal framework in which the custodian of matter searched, rather than the person who is the real target of interest of a search, is typically the only one capable of meaningfully asserting Fourth Amendment rights to prevent a search or the use of its fruits. Together, these phenomena make the application of the Fourth Amendment to the standard searches of home computers - searches that, to be sure, are still conducted regularly by national and local law enforcement - an interesting exercise that is yet overshadowed by greatly increased government hunger for private information of all sorts, both individual and aggregate, and by rapid developments in networked technology that will be used to satisfy that hunger. Perhaps most important, these factors transform Professor Kerr's view that a search occurs for Fourth Amendment purposes only when its results are exposed to human eyes: such a notion goes from unremarkably unobjectionable - police are permitted to mirror entirely a suspect's hard drive and then are constitutionally limited as they perform searches on the copy - to dangerous to any notion of limited government powers. Professor Kerr appreciates this as a troublesome result - indeed, downright creepy - but does not dwell upon it beyond suggesting that the copying of data might be viewed as a seizure if not a search, at least so long as it involves some physical touching or temporary commandeering of the machine. This view should be amplified: If remote vacuum cleaner approaches are used to record and store potentially all Internet and telephone communications for later searching, with no Fourth Amendment barrier to the initial information-gathering activity in the field, the government will be in a position to perform comprehensive secret surveillance of the public without any structurally enforceable barrier, because it will no longer have to demand information in individual cases from third parties or intrude upon the physical premises or possessions of a search target in order to gather information of interest. The acts of intruding upon a suspect's demesnes or compelling cooperation from a third party are natural triggers for judicial process or public objection. If the government has all necessary information for a search already in its possession, then we rely only upon its self-restraint in choosing the scope and depth of otherwise unmonitorable searching. This is precisely the self-restraint that the Fourth Amendment eschews for intrusive government searches by requiring outside monitoring by disinterested magistrates - or individually exigent circumstances in which such monitoring can be bypassed. Taken together, the current areas of expansion of surveillance appear permanent rather than exigent, and sweeping rather than focused, causing the justifications behind special needs exceptions to swamp the baseline protections established for criminal investigations. This expansion stands to remove the structural safeguards designed to forestall the abuse of power by a government that knows our secrets.
cyberlaw, internet, fourth amendment, security, computers, searches, seizures
Abstract: Ubiquitous computing means network connectivity everywhere, linking devices and systems as small as a thumb tack and as large as a worldwide product distribution chain. What could happen when people are so readily networked? This short essay explores issues arising from two possible emerging models of ubiquitous human computing: fungible networked brainpower and collective personal vital sign monitoring.
ubiquitous human computing
Abstract: In the spring of 1998, the U.S. government told the Internet: Govern yourself. This unfocused order - a blandishment, really, expressed as an awkward "statement of policy" by the Department of Commerce, carrying no direct force of law - came about because the management of obscure but critical centralized Internet functions was at a political crossroads. This essay reviews Milton Mueller's book Ruling the Root, and the ways in which it accounts for what happened both before and after that crossroads.
ICANN, Internet Governance, cyberlaw, IETF
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