Video: CNBC update on complaints about contest

updated 6/8/2007 5:35:22 PM ET 2007-06-08T21:35:22

Business news channel CNBC said Friday it is investigating several ways people may have cheated in a $1 million stock-picking contest that ended last month.

CNBC had said last week that it was looking into allegations from several contestants that improper trading had occurred, and on Friday the network said it was focusing on three specific areas:

  • Some contestants were able to change the trades they had entered on the contest's Web site after 4 p.m., when the actual stock market closed.
  • Others may have been able to use computer programs to bypass security measures on a Web site used by the contest.
  • CNBC has asked a securities expert to look into accusations that some contestants may have engaged in illegal market manipulation.

CNBC's statement came after BusinessWeek posted a story on its Web site early Friday saying that one of the contest's finalists, Jim Kraber of New York City, had complained to the network in mid-May about his strong suspicions that cheating was occurring, but was rebuffed at the time.

(CNBC is a unit of NBC. MSNBC.com is a joint venture of Microsoft and NBC Universal News.)

BusinessWeek said that as many as four top contestants in the contest, in which 375,000 people took part, may have exploited a flaw in the design of the game that allowed players to change their stock picks after the markets closed. That would have allowed players to take advantage of market-moving information such as earnings announcements that would have emerged after trading closed at 4 p.m.

In the contest, participants were given $1 million in fictional "CNBC Bucks" to trade in an imaginary stock portfolio, based on the actual closing prices of stocks traded on the New York Stock Exchange, Nasdaq Stock Market and American Stock Exchange.

The winner would receive $1 million in real money and an opportunity to appear on CNBC, which is part of NBC Universal, a unit of General Electric Co.

In addition to the securities expert hired to look into the market manipulation accusations, CNBC said it had also retained two experts in computer security to look into the late-trading cases and the possibility that some users hacked into the contest's systems.

CNBC said in its statement that it still hoped to announce a winner some time before the July 8 date stated in its contest rules, but considered it "more important" to make sure the winner was abiding by the contest's rules.

Despite discovering that some contestants had gamed the system with late trades, CNBC spokesman Kevin Goldman said the network has "every reason to believe the integrity of the contest is intact, and if we find there are people who didn't play by the rules, they will be disqualified."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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