State officials in Massachusetts and a New Jersey biotechnology firm are seeking unspecified financial penalties against three men accused of posting defamatory Internet postings about Biomatrix (Ridgefield, NJ), a developer and manufacturer of hyaluronan polymer-based products, and two divisions of Genzyme (Cambridge, MA)—Genzyme Tissue Repair and Genzyme Surgical Products. The move follows a ruling in July by a superior court judge in New Jersey that found the men had defamed Biomatrix and two top officials—the first time a court has ruled online material capable of libel. Analysts and industry officials say biotechnology companies are particularly susceptible to attacks by cyber-hoaxers because the value of companies—the majority of which don't have products—are difficult to assess by non-professional investors. However, some are unconvinced that the depreciation in stock was due to the hoaxers.
On August 22, Massachusetts Secretary of State William Galvin announced he was seeking a “cease-and-desist” order against the men, and that he would be turning over the results of an investigation by his Internet fraud unit to the US Attorney General, the Federal Bureau of Investigation, and the Securities and Exchange Commission, according to Brian McNiff, a Galvin spokesman in Boston.
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