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To: StockDung who wrote (2515)	6/12/1999 12:43:00 AM
From: Coachman	Read Replies (1) \| Respond to of 10354

Net Worth Defamation on the Internet By Alissa Arford-Leyl Before the Internet came along, defamation wasn't something that the average person had to worry about committing. But with the structure of the Internet, making public statements is easier than it has ever been. Journalists are taught about defamatory language and its consequences, but does the average Internet user understand what constitutes a libelous remark? Defamation Defamation consists of the related torts of libel (written statements) or slander (oral statements), which involve a false statement tending to injure the reputation of another. We briefly touched on this in the November 1997 column, Legal Aspects of the Internet. The Internet is informal and instantaneous, and has numerous outlets for publicly expressing opinions. These characteristics allow users to make defamatory remarks that they may otherwise be incapable of making. Bulletin boards, mailing lists, forums, newsgroups, and even e-mail are subject to the laws of defamation. You can be sued for libel if another person can prove that you have distributed defamatory statements about them in a public area. The statements need not be distributed to a large group of people, even if one person aside from the plaintiff and defendant sees the defamatory statement it can be considered libel. Any statements that may damage a reputation or name with false information are considered libelous remarks. The burden of proof is on the plaintiff to prove that the statements in question are false. The defendant does not need to prove that the remarks are true. Libelous remarks Let's say that you receive a shipment from your parts supplier and numerous items appear to be missing. You are so mad that you immediately go and post a negative remark on a Web bulletin board. You write that the company in question is incompetent and can't be trusted to ship orders correctly. A few hours later you realize that this is only the first of two shipments, and there is a letter notifying you to expect another shipment with the rest of the items. Now you've posted an inaccurate message on a public bulletin board that will definitely not be good publicity for the company. If the company decides to pursue legal action, it will be easy for them to prove that your statement is false and defamatory. The best thing to do in this case might be to post another message and admit your error. Communicating on the Net Sharing your opinions and communicating with others over the Internet is a fun thing to do, so obviously you shouldn't stop! You just need to think about what you're writing and realize the consequences of defamation. Sometimes it's easy to write a defamatory statement when you are angry about something that has just happened. However, before you hit the send or submit button on your next e-mail or posting, read over what you've written and make sure that you aren't using offensive language or statements that you know to be false. If you are writing about something controversial, be sure to preface the thought with, "I think ..." or "In my opinion ..." These phrases may not totally absolve blame, but at least readers will know it is an opinion and not a proven fact. Most companies are probably not going to pursue legal action over defamatory remarks made on the Internet. They may respond with the facts or they may dismiss the comments as lacking credibility. Nevertheless, carelessly publicized opinions not only damage the subject's reputation, but also the integrity of the writer. Basically, the bottom line is that you are publishing what you write when you put in on the Internet. So write your messages with care, as though they are going to appear in your local newspaper. Just because it's easy to convey your opinions on the Internet with a certain realm of anonymity, it doesn't mean that you don't have to be responsible for your statements. The laws of defamation work the same way for each medium.

To: StockDung who wrote (2515)	6/12/1999 12:45:00 AM
From: Coachman	Respond to of 10354

Online stock talk fuels lawsuit By Dan Goodin Staff Writer, CNET News.com September 17, 1997, 4:55 p.m. PT Underscoring a problem attorneys say will only become more prevalent, a company today sued three individuals for allegedly using the Internet to manipulate stock prices. The suit, filed in federal court in New Hampshire, accuses three people in separate states of using the Internet to drive down the stock price of Presstek, a graphic arts company located New Hampshire. The suit alleges that the individuals were short-selling, which means they stood to gain from a drop in the company's stock. "By issuing postings, the defendants have been able to broadcast false statements to millions of potential stock purchasers and investors," the suit alleged. "Prior to the advent of the Internet, the pooling of such resources was a difficult, high-risk, if not impossible task." The suit, which makes claims for defamation and unfair business practices, is not the first such action to be filed against end users on the Internet. But it does appear to be the first time a company has sued individuals alleged to have used the Net to manipulate its stock. Attorneys and securities enforcers agreed that the use of the Internet to manipulate stock prices is a problem that appears to be getting worse. And in many cases, there is little companies can do. "It's a matter of concern for virtually all public companies," said Tower Snow, a securities attorney with Brobeck, Phleger & Harrison in San Francisco. He added that high-tech and emerging growth companies can be especially hard hit by rumors spread on the Net because their stock tends to be more volatile. "They really don't have much protection in terms of what's posted in chat rooms and on bulletin board systems," Snow said. Helane Morrison, an assistant administrator in the Security and Exchange Commission's San Francisco office, said the agency already has placed Internet fraud on its radar screen, with agency enforcers regularly surfing the Net looking for fraud and encouraging members of the public to report any fraud they encounter. Nevertheless, Morrison acknowledged that enforcement may be tricky. "We can't prevent people from speaking on the Internet in the first place, but we try to warn investors that they shouldn't give extra credence to comments they read on the Internet, especially from anonymous sources, just because [they are] on a computer." Last week, the SEC successfully prosecuted the publisher of an Internet newsletter for hyping stock without disclosing he stood to financially gain from the recommendations. The publisher, Theodore R. Melcher Jr. received a year in federal prison in connection with articles he wrote about Virginia computer company Systems of Excellence. But with so many online forums discussing stocks, the SEC's battle is at best uphill. Motley Fool and Silicon Investors are two of the better-known platforms devoted to discussing what stocks are hot, and what stocks are on their way down, but there are countless other chat rooms and bulletin boards on the Internet and private online services. What's more, federal law prohibits systems operators from disclosing online members' identities without a court order. It also may be difficult to sue someone merely for opining that a particular stock may be a good or bad buy, attorneys warn. "There's a balancing of interests here between anonymity vs. responsibility," said Jim Brelsford, an attorney at Hosie, Wes, Sacks & Brelsford in Menlo Park, California, who represents online companies that host investment forums. Still, he said, companies are becoming increasingly aggressive about going after online statements they find objectionable. "I think we're going to see more of these claims," Brelsford said, "because it's imaginable that [these sites] can and will affect prices in the market."

To: StockDung who wrote (2515)	6/12/1999 12:46:00 AM
From: Coachman	Read Replies (1) \| Respond to of 10354

But many public companies are most concerned about a type of online attack that has become so popular in recent months that stock market regulators have given it a name: "cybersmearing." The tactic involves the anonymous posting of messages -- ranging from personal attacks on executives to leaks of inside information -- on Internet financial message boards. Complaints about such digital broadsides were almost nonexistent six months ago but now come in almost every day, according to officials at the Securities and Exchange Commission. And dozens of companies are trying to flush out the anonymous posters by filing lawsuits and subpoenaing records from Yahoo and other companies that manage the online forums. "It's become an epidemic among our clients," said Christopher Wolf, an attorney at Proskauer Rose, a Washington-based firm that represents giant companies such as NBC, United Parcel Service and MCI/WorldCom. Just in the last few months, Wolf has filed suits on behalf of six companies, including two that have seen inside information leaked onto the Internet. So far, the biggest penalty levied against an online critic came last month, when a Huntington Beach, Calif., man was ordered to pay $8.3 million to a company and executive he was accused of defaming in dozens of online postings. Using the cryptic pseudonym "PMMK1," Jonathan Grossman heaped scorn on David Norris, apparently a onetime business partner who later became chief financial officer at American Eco Corp., a Houston-based manufacturing company. The postings accused Norris of breaking securities laws and leaving a trail of troubled companies. They also spread rumors that he "left his wife and three kids ... not once but twice for another woman." Neither Grossman nor Norris could be reached for comment. In fact, Grossman never even defended himself in court, which legal experts say might be the only reason he lost his case. But American Eco executives said the postings "damaged (the company's) reputations with the investment community and caused investors to short its publicly traded shares by creating doubts about statements made by management." Such attacks are hardly unusual on freewheeling message boards operated by companies such as America Online and Excite. Yahoo, a Santa Clara, Calif., company that runs the most popular portal site on the Net, operates financial forums on 8,426 companies, including all the companies listed on every major stock exchange. Like most operators, Yahoo posts rules that prohibit "unlawful, harmful ... defamatory, libelous ... or otherwise objectionable" postings. But in reality, the company does little to police the boards and is under no legal obligation to do so. Stock market regulators marvel that anyone pays attention to anonymous postings. But online investors, who are an increasingly powerful force in the stock market, flock to such forums, and many public companies say they are surprised at how much damage an anonymous posting can cause. "A lot of customers, clients and competitors read the message boards," said John Stark, chief of the Office of Internet Enforcement at the SEC. "Companies say they are suddenly getting calls from major accounts asking questions about the postings, as well as calls from the media." That was partly why Chatsworth, Calif.-based Cohr Corp. took the unusual step of issuing a news release two months ago saying that a series of critical postings on Yahoo were unfounded and the work of a disgruntled former executive. Like many companies, Cohr discovered the identity of the person doing the posting by filing a "John Doe" lawsuit, which enabled the company to subpoena records from Yahoo. Like most of its competitors, Yahoo ordinarily refuses to yield the identities of its users unless compelled to do so by court order.

To: StockDung who wrote (2515)	6/12/1999 12:46:00 AM
From: Francois Goelo	Read Replies (1) \| Respond to of 10354

Defamation on the Internet, courtesy of Coachman: Before the Internet came along, defamation wasn't something that the average person had to worry about committing. But with the structure of the Internet, making public statements is easier than it has ever been. Journalists are taught about defamatory language and its consequences, but does the average Internet user understand what constitutes a libelous remark? Defamation Defamation consists of the related torts of libel (written statements) or slander (oral statements), which involve a false statement tending to injure the reputation of another. We briefly touched on this in the November 1997 column, Legal Aspects of the Internet. The Internet is informal and instantaneous, and has numerous outlets for publicly expressing opinions. These characteristics allow users to make defamatory remarks that they may otherwise be incapable of making. Bulletin boards, mailing lists, forums, newsgroups, and even e-mail are subject to the laws of defamation. You can be sued for libel if another person can prove that you have distributed defamatory statements about them in a public area. The statements need not be distributed to a large group of people, even if one person aside from the plaintiff and defendant sees the defamatory statement it can be considered libel. Any statements that may damage a reputation or name with false information are considered libelous remarks. The burden of proof is on the plaintiff to prove that the statements in question are false. The defendant does not need to prove that the remarks are true. Libelous remarks Let's say that you receive a shipment from your parts supplier and numerous items appear to be missing. You are so mad that you immediately go and post a negative remark on a Web bulletin board. You write that the company in question is incompetent and can't be trusted to ship orders correctly. A few hours later you realize that this is only the first of two shipments, and there is a letter notifying you to expect another shipment with the rest of the items. Now you've posted an inaccurate message on a public bulletin board that will definitely not be good publicity for the company. If the company decides to pursue legal action, it will be easy for them to prove that your statement is false and defamatory. The best thing to do in this case might be to post another message and admit your error. Communicating on the Net Sharing your opinions and communicating with others over the Internet is a fun thing to do, so obviously you shouldn't stop! You just need to think about what you're writing and realize the consequences of defamation. Sometimes it's easy to write a defamatory statement when you are angry about something that has just happened. However, before you hit the send or submit button on your next e-mail or posting, read over what you've written and make sure that you aren't using offensive language or statements that you know to be false. If you are writing about something controversial, be sure to preface the thought with, "I think ..." or "In my opinion ..." These phrases may not totally absolve blame, but at least readers will know it is an opinion and not a proven fact. Most companies are probably not going to pursue legal action over defamatory remarks made on the Internet. They may respond with the facts or they may dismiss the comments as lacking credibility. Nevertheless, carelessly publicized opinions not only damage the subject's reputation, but also the integrity of the writer. Basically, the bottom line is that you are publishing what you write when you put in on the Internet. So write your messages with care, as though they are going to appear in your local newspaper. Just because it's easy to convey your opinions on the Internet with a certain realm of anonymity, it doesn't mean that you don't have to be responsible for your statements. The laws of defamation work the same way for each medium.

To: StockDung who wrote (2515)	6/12/1999 12:47:00 AM
From: Coachman	Respond to of 10354

Online stock talk fuels lawsuit By Dan Goodin Staff Writer, CNET News.com September 17, 1997, 4:55 p.m. PT Underscoring a problem attorneys say will only become more prevalent, a company today sued three individuals for allegedly using the Internet to manipulate stock prices. The suit, filed in federal court in New Hampshire, accuses three people in separate states of using the Internet to drive down the stock price of Presstek, a graphic arts company located New Hampshire. The suit alleges that the individuals were short-selling, which means they stood to gain from a drop in the company's stock. "By issuing postings, the defendants have been able to broadcast false statements to millions of potential stock purchasers and investors," the suit alleged. "Prior to the advent of the Internet, the pooling of such resources was a difficult, high-risk, if not impossible task." The suit, which makes claims for defamation and unfair business practices, is not the first such action to be filed against end users on the Internet. But it does appear to be the first time a company has sued individuals alleged to have used the Net to manipulate its stock. Attorneys and securities enforcers agreed that the use of the Internet to manipulate stock prices is a problem that appears to be getting worse. And in many cases, there is little companies can do. "It's a matter of concern for virtually all public companies," said Tower Snow, a securities attorney with Brobeck, Phleger & Harrison in San Francisco. He added that high-tech and emerging growth companies can be especially hard hit by rumors spread on the Net because their stock tends to be more volatile. "They really don't have much protection in terms of what's posted in chat rooms and on bulletin board systems," Snow said. Helane Morrison, an assistant administrator in the Security and Exchange Commission's San Francisco office, said the agency already has placed Internet fraud on its radar screen, with agency enforcers regularly surfing the Net looking for fraud and encouraging members of the public to report any fraud they encounter. Nevertheless, Morrison acknowledged that enforcement may be tricky. "We can't prevent people from speaking on the Internet in the first place, but we try to warn investors that they shouldn't give extra credence to comments they read on the Internet, especially from anonymous sources, just because [they are] on a computer." Last week, the SEC successfully prosecuted the publisher of an Internet newsletter for hyping stock without disclosing he stood to financially gain from the recommendations. The publisher, Theodore R. Melcher Jr. received a year in federal prison in connection with articles he wrote about Virginia computer company Systems of Excellence. But with so many online forums discussing stocks, the SEC's battle is at best uphill. Motley Fool and Silicon Investors are two of the better-known platforms devoted to discussing what stocks are hot, and what stocks are on their way down, but there are countless other chat rooms and bulletin boards on the Internet and private online services. What's more, federal law prohibits systems operators from disclosing online members' identities without a court order. It also may be difficult to sue someone merely for opining that a particular stock may be a good or bad buy, attorneys warn. "There's a balancing of interests here between anonymity vs. responsibility," said Jim Brelsford, an attorney at Hosie, Wes, Sacks & Brelsford in Menlo Park, California, who represents online companies that host investment forums. Still, he said, companies are becoming increasingly aggressive about going after online statements they find objectionable. "I think we're going to see more of these claims," Brelsford said, "because it's imaginable that [these sites] can and will affect prices in the market."

To: StockDung who wrote (2515)	6/12/1999 1:04:00 AM
From: Coachman	Read Replies (1) \| Respond to of 10354

Internet Message Sparks Stock Slide (08/27/98, 1:04 p.m. ET) By Reuters You can't shout "fire" in a crowded theater, but you can write "sell" on an Internet message board. That's the costly lesson that seed company AgriBioTech learned this week when its stock fell more than 20 percent after someone posted negative comments about the company on a Yahoo message board. The poster, who was identified only by a screen name, acknowledged at the bottom of the message that the damaging comments made about the company and its top executives were not true, but AgriBioTech said the rumors were enough to cause the stock to drop. While freedom of speech protects the right to express opinions, it does not give people license to incite panic. Tuesday's comments about AgriBioTech caused the equivalent of a panic in AgriBioTech's stock and led to record trading volume of about 6.3 million shares, said John Francis, a co-founder and director of AgriBioTech. Francis said the company's reputation was damaged by the comments made on the Internet, which the company has said repeatedly are false. "When you have a force like an Internet where people can anonymously come out and say anything they want, that's an issue that is going to have to be dealt with," Francis said. "We live in a free society and we believe in the system. We think the system will ultimately prevail. Will we weather the storm? Yes. Is our credibility damaged? Yes." The incident raised questions among investors and analysts about how Internet sites that deal with publicly traded companies are regulated. Users on one AgriBioTech message board called for more U.S. Securities and Exchange Commission oversight of Internet stock pages. "I think this board and others should be a target for the SEC to begin investigations into these lies posted," one user wrote on an AgriBioTech stock message board Wednesday. An SEC spokesman said the regulatory agency investigates allegations of fraud committed over the Internet or anywhere else, but would not confirm or deny the existence or nonexistence of any investigation into this incident. The agency offers a free guide on how to avoid investment fraud on the Internet. "It is common to see messages posted online urging readers to buy a stock quickly that is poised for rapid growth, or telling you to sell before it goes down," the SEC said in its guide on cyberfraud. "Often the writer claims to have inside information about an impending development or will claim to use an infallible combination of economic and stock market data to pick stocks," the SEC said. "In reality, the promoter may be an insider who stands to gain by selling shares after the stock price is pumped up by gullible investors, or a short seller who stands to gain if the price goes down." AgriBioTech trades on Nasdaq, which said it does not confirm or deny investigations. Mike Riley, producer of Yahoo Finance, which has thousands of message boards for discussion of publicly traded companies, said users need to make their own judgments on whether to trust information posted on message boards. "They are an unmoderated public forum, and in any environment like that you've got to take with a grain of salt what you see there," Riley said. "Yahoo doesn't claim any responsibility for what is posted there, obviously the companies that are discussed don't, and its up to the individual to make a judgment about the veracity of the things that are said." Thomas Smedinghoff, a partner at the Chicago law firm of McBride Baker & Coles and an expert on Internet law, said defamation is defamation regardless of the medium, but said Internet offenders often go unpunished because chat room operators can't always determine who posted messages. "The law of defamation applies to me whether I write or whether I post or whether I say it on television," Smedinghoff said. "The impact is potentially much greater and much quicker [on the Internet], but the law is going to be the same."