Hi Gum,
Take a look.
The Cyberlaw Encyclopedia
Journal of Online Law
NEW YORK (CNNfn) - Barbara Andre started
buying stock on the Internet after her broker lost
$25,000 of her retirement savings through poor
investments.
The 50-year-old Ohio housewife figured she could
make smarter trades herself by reading electronic
message threads on Silicon Investor, a website for
individual investors.
"I can type in the name of a stock and find threads
that tell me everything I need to know about a
company," Andre said. "It's another tool to help in my
stock selections."
Online trading message forums are growing more
popular as investors switch from traditional brokerages
to electronic services. Discussion groups on Silicon
Investor and Motley Fool -- and in investing forums on
services like America Online and CompuServe --
attract millions of people.
Investors can post questions to other participants to
find out if they should buy a certain tech stock or get
tips on playing options. They also share opinions on
whether the market is turning bearish.
But threads are raising questions the U.S. court
system and Congress are trying to answer: Do
Internet discussions need more policing? How do
websites prevent people from trying to manipulate
stock prices through their comments for personal
gain? And who is responsible if a company is libeled?
Recent legislation and court cases suggest that the
authors of the messages -- rather than the websites --
will be held accountable, industry pros say.
"A lot of this will be played out in 1998," said Jill
Frankel, a senior analyst with International Data Corp.
in New York. "I would not be surprised if more court
cases are filed."
The Communications Decency Act of 1996 allows
websites to regulate comments without being held
liable, said Lawrence Greenberg, general counsel at
Motley Fool.
Before the law took effect, websites couldn't make
any rules about the content without being held
responsible for all of the comments, Greenberg said.
Now, sites can establish guidelines without fear of
liability. The new law was intended to crack down on
indecent or criminal comments, he said.
"If you didn't have the freedom of the
Communications Decency Act, it would be very
difficult for providers of cyberspace forums to provide
good discussion," Greenberg said. "The way the law
seems to be developing is that individuals are going to
be held responsible for their own expression."
In one closely-watched case, Zeran vs. America
Online, an Ohio man sued AOL because a posted
message -- advertising offensive T-shirts about the
bombing of the Alfred P. Murrah Federal Building in
Oklahoma City -- was falsely attributed to him.
Kenneth Zeran was swamped with hate mail and
threatening phone calls -- even though he didn't write
the message. An appeals court in 1997 ruled AOL
wasn't responsible.
"The First Amendment is based on the idea that
more discussion is better than less," Greenberg said.
In another recent case filed in September 1997,
Presstek Inc. (PRST), a Hudson, N.H. firm, sued
three men for allegedly writing libelous comments in
discussion threads to profit from "short-selling" of the
company's stock. In a short sale, an investor bets the
price will fall. If the price falls below the betting price,
the investor makes a profit.
Presstek claimed unfair business practices and
defamation. The suit is pending. One of the
defendants contacted by CNNfn declined comment.
Efforts to reach the other two men for comment were
unsuccessful.
One posted message accused Presstek of hiding
Nazi gold, the lawsuit said. Another claimed that the
company was the subject of a grand jury probe. Both
were false.
Bob McDaniel, general counsel at Presstek, said
the company fielded many inquiries from worried
investors as a result of the messages.
"I don't think Internet discussions should be
regulated any more than a discussion in a restaurant or
on an elevator," McDaniel said. "It wasn't our intention
to have a quieting effect on discussions as much as it
was to clean up the discussions so they were fair."
Both Silicon Investor and Motley Fool have
tightened their guidelines.
Silicon Investor, for example, prohibits vulgar
words, harassing notes, personal attacks, and
copyright infringement, said Jill McKinney, the site's
webmaster.
Each Silicon Investor user has to register and give
his e-mail address, McKinney said. The site staff isn't
able to read the 8,500 new messages posted every
day, but it encourages users to police the discussions
and make complaints when they see a problem, she
said.
"We're in constant touch with our Internet content
attorneys in San Francisco," McKinney said. "There
are case-by-case issues that we have to
double-check. It's still being fine-tuned in the courts."
Investors should use common sense to protect
themselves when they read threads, McKinney said.
People shouldn't believe everything they read and
should do their own research.
"The theory on which Silicon Investor was founded
is that individual investors, when given the tools they
need, can make decisions better than a broker can,"
McKinney said.
For Andre, the Ohio housewife, making her own
decisions has paid off. She's recouped half of the
losses caused by her broker.
"My broker bought stock in three companies that
went bankrupt," Andre said. "Because I find postings
on Silicon Investor, I save money. If I see a stock that
looks interesting, I'll do my own research and then buy
it. I think the Internet is growing up
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