Is information leaking from

Coyote Network

(CYOE)

?

Last Thursday afternoon, Coyote, a network supplier and provider of phone services based in Westlake Village, Calif., announced a $10 million financing "commitment" that appeared to ease its cash shortage. On PR Newswire, the release is time-stamped at 3:55 p.m. A company spokesman says the news was released at 4:00 p.m.

Trouble is, people perusing the

Yahoo! Finance

message boards knew about the deal well ahead of time. At midday Thursday, a writer using the alias "eggmn" offered the following information: "a very reliable source tells me that the company will close on a $10mil financing BEFORE next friday."

Anyone who bought on the tip would have turned a quick profit: Shares jumped from below 5 to close at 5 3/4 as almost 1 million shares traded.

According to Coyote's latest 10-Q released last week, both the

Securities and Exchange Commission

and the

Nasdaq

are inquiring about its activities, after

TheStreet.com

reported on Dec. 9 that it could not find a headquarters, business license or active tax records for one of its main customers. Shares have slipped from 14 1/4 on Dec. 8 to 5 1/4 on Monday.

This is not the first time that message boards have offered accurate news ahead of the company. On the morning of Feb. 10 Coyote announced plans to acquire

Apollo Telecom

, an international telecom services company based in Salt Lake City, and boost its stake in the Italian concern

Systeam S.p.A

to 60% from 9%.

The deals generated little surprise among Internet chatters.

In a post titled "What's cookin'..." on the evening of Feb. 3 "GenXXXXX" wrote: "Expect ... news of a merger and an increase in its ownership in an already owned company."

Coyote spokesman Tony Squeglia says the company will look into the message postings.

"When we have news to announce, we announce that news publicly through our news releases and through our filings," Squeglia said. An official for the Securities and Exchange Commission declined to state whether it is investigating these messages; Coyote says it has not been contacted. Yahoo! does not moderate its boards and declined to comment on any particular board.

The two predictions of deals might be a little too specific for comfort.

An SEC spokesman said generally the SEC brings civil actions against people suspected of insider trading, or refers the matter to the U.S. attorney for criminal proceedings.

To be sure, the investment bulletin boards on

Yahoo! Finance

and

Silicon Investor

are rife with misinformation, hype and bizarre exchanges, even on the best of days. Recently, the boards devoted to Coyote have exploded with feverish speculation about Coyote and

Crescent Communications

.

David Zlotnick, an independent attorney based in San Diego, says that Internet bulletin boards are treated as any other form of communication. Any potential legal case likely would involve the writer rather than people who read the message and acted on it, he says. Zlotnick is not currently involved in any legal matter with Coyote.

Zlotnick sued

Diana Corp.

, Coyote's predecessor, on behalf of bond holders in a subsidiary several years ago. The case was settled.

Who are these guys posting messages?

On Feb. 8, GenXXXXX claimed not to be a Coyote insider (usually meaning a company officer or key employee) but to "work with one." In a different message, GenXXXXX claims to own 5,000 shares.

Yahoo! reveals personal information about participants only if it is forced under a subpoena or similar legal measure. A Yahoo! official declines to state whether the company has been involved in any case of potential insider trading.

GenXXXXX might be in trouble even if he or she doesn't work for Coyote. In several recent cases the SEC has argued that third parties might be breaking the law if they act on private information, even if they are not technically company insiders, Zlotnick says. "That's the kind of gray area that courts are struggling with now," he says.

Internet bulletin boards have seen a few uncanny predictions in the past. For example,

TSC

writer Erle Norton reported that someone known as "Molson DE" spelled out

plainly

Nortel's

(NT)

acquisition of

Bay Networks

just four days before the deal was announced in June.

"My college roommate is an accountant for BAY and they submitted their final paperwork to the CFO this morning," said Molson DE. "I am a buyer tomorrow."

Nortel still declines to comment on the incident.