Investment Adviser Roberts Did Not Defame Sabratek, Judge Says- Stock adviser Mark Roberts,
whose newsletter ``Off Wall Street' is circulated widely among
investment firms, did not defame Sabratek Corp. when he suggested
that company management was defrauding investors, a judge ruled
today.
Roberts wrote disparagingly about Niles, Illinois-based
Sabratek, a maker of medical devices, in four editions of ``Off
Wall Street' last year. He called management ``disingenuous' and
suggested the company was falsifying sales figures.
The company and its chairman, K. Shan Padda, sued, calling
the articles defamatory and claiming they drove share price down
by a third. Also, in a stock fraud claim, the company alleged that
Roberts had himself short-sold the stock, betting that the price
would fall so he could personally profit.
U.S. District Judge Harold Baer dismissed the suit, ruling
that Sabratek had put forth no facts to support its claims and
that Roberts' comments were merely opinion and not defamatory.
``All that is alleged is that Roberts made negative and
allegedly false statements in his newsletter,' Baer wrote.
``There is no allegation that any shareholders did in fact sell
their shares or were influenced by Roberts' statements.'
Sabratek filed for bankruptcy in January. Its stock, which
rose as high as 30 1/2 in June, was trading at .15 late Wednesday.
In its suit, Sabratek complained of numerous comments
appearing in ``Off Wall Street' beginning last March. Roberts
said that Padda was ``not credible' and remarked, ``We think that
it is more likely that Sabratek stuffed someone with (their
product) to make a decent showing for the quarter.'
Roberts, who sells yearly subscriptions to his Cambridge,
Massachusetts-based newsletter for $30,000, was also accused of
telephoning investors and urging them to sell shares. He allegedly
called Padda a ``pathological liar' and ``fraud.'
Meanwhile, Roberts was selling Sabratek shares short, hoping
to profit from an anticipated price decline, the lawsuit alleged.
Sabratek shares eventually fell sharply as the company lost some
$90 million in market value.
In his ruling, Baer said the lawsuit was long on accusations
but short on facts. ``These conclusory allegations provide scant,
if any, specificity about the facts on which plaintiffs base their
beliefs,' the judge said.
In addition, Baer noted that while assertions of fact may
form the basis of a defamation claim, expressions of opinions do
not. He classified Roberts' comments as opinions.
``When the defendant's statements, read in context, are
readily understood as conjecture, hypothesis, or speculation, this
signals the reader that what is said is opinion, not fact,' Baer
said.
--David Glovin in U.S. District Court in New York (212) 732-9245,
or at dglovin@bloomberg.net, through the New York newsroom (212)
893-3665/ep |
