You people know who you are.
Stock Message-Board Poster Slapped With Restraining Order by the court (posted earlier)
By Beth Kwon
Staff Reporter
1/31/00 10:12 PM ET
A California court Monday issued a temporary restraining order
against an Internet message-board poster who made caustic
postings about a bulletin-board stock.
Message-board posters reacted angrily to the decision against
Floyd Schneider and predicted a chilling effect on
message-board stock discussions. The temporary restraining
order was issued on behalf of Bryant Cragun, a shareholder in
ZiaSun Technologies (ZSUN:OTC BB), who has also been a
target of Schneider. And it followed a preliminary injunction
filed last week against Schneider by the U.S. District Court in
Washington state. That case was brought by ZiaSun.
Schneider says he'll abide by the restraining order, issued by
California Superior Court in San Diego, which orders him to
retract press releases and "any statements" implying ZiaSun's
employees are "disreputable, dishonest, unscrupulous or
engaged in criminal behavior." Says Schneider: "It's either that
or going to jail."
"We don't mind criticism, but we don't like when people are
twisting the truth to this level," said Mark Harris, ZiaSun's vice
president of investor relations.
Schneider, who goes by "the Truthseeker" and "Floydie," started
posting vitriolic missives about ZiaSun, an Internet services
company based in Solana Beach, Calif., in November 1998.
"ZSUN is a very bad deal," Schneider posted on Silicon
Investor on Dec. 7, 1999. Schneider has suggested that
ZiaSun and its officers are "Satan bound" and that one of
ZiaSun's vice presidents was a "stuttering liar." Schneider also
posted press releases on his Web site, TheTruthseeker.com,
reiterating a strong sell recommendation. (He says he hasn't
had a position in the stock.)
Last June, the company sued Schneider for engaging in a
"cybersmear" campaign. Last week's injunction prevents him
from posting "false and defamatory statements" about ZiaSun
and its officers. But it didn't keep Schneider quiet. "It just says I
can't post anything that's not the truth," Schneider said then.
"I'm very careful."
Regardless of the facts of the matter, experts say the preliminary
injunction and temporary restraining order were surprising.
"I don't assume that the defendant's an angel here, but this is a
very unusual type of remedy," says Lyrissa Lidsky, a professor at
the University of Florida who specializes in cases dealing with
message boards. "The merits of the case haven't been
adjudicated yet. Usually under First Amendment doctrine, a
preliminary injunction is treated as what's called a 'prior
restraint,' and it's particularly disfavored under the First
Amendment. There's a heavy presumption that prior restraints
are unconstitutional. Now that two courts have done it is even
more surprising. It sounds like a dangerous precedent is being
set."
The message-board community was disheartened. "It's
muzzling of dissent," posted Janice Shell, herself a Net
vigilante who says she tries to expose questionable stocks, on
Silicon Investor. "I'd have preferred that Floydie be a bit more
circumspect in his accusations, but this really goes too far."
The only defense for message-board posters, says Jared
Silverman, a New Jersey lawyer and former chief of the New
Jersey Bureau of Securities, is the truth. "Basically what the
case says is that people who start making accusations through
various Internet methods, be it chat boards or whatever, should
be very careful of what they say because they could be held
accountable for it."
As for the message-board community, it could result in quieter
boards. "I think it's a very bad precedent," says Jeffrey Mitchell,
a Silicon Investor poster who's worked alongside Shell. "It's
silencing John Doe. If you put something out on a message
board, you're screwed," he says.
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