Seeking Alpha (SA), an online news and opinion forum primarily focused on financial markets, made the news itself about six months ago when an anonymous post incurred the legal wrath of biopharmaceutical company NanoViricides (NNVC). On February 11, 2014, a contributor using the pen name “Pump Terminator” published a rather scathing review of the drug company, including discussion of suspected questionable trading and management activity and shareholder violations, ultimately recommending the stock as a “strong sell.” According to a March press release announcing their decision to take action against SA, NNVC alleges that the post was “defamatory, malicious and libelous,” contained “factual inconsistencies,” and directly contributed to a 23% drop in their stock price on the day that the piece was published. NNVC, which focuses primarily on research and development of antiviral drugs, filed a pre-action disclosure petition against SA, demanding that they disclose the identity of the anonymous poster so that they could pursue a libel case against him or her. The author of the post self-identified as a short-seller of the stock, further arousing NNVC’s suspicions that the negative coverage was a premeditated attempt to manipulate the market and ultimately profit from the sharp decline in share price. When SA chose not to remove the offending post from their virtual bulletin board, NNVC denounced the investment analysis website as being a “complicit agent in the criminal act(s) perpetrated by the article author and collaborators-in-action.”
At the end of June, New York Judge Cynthia S. Kern dismissed NNVC’s suit against SA, releasing them from any obligation to divulge the identity of “Pump Terminator,” as the court had determined that the post was not defamatory and was considered “protected opinion and not actionable as a matter of law." The court found that NNVC did not sufficiently demonstrate that that article in question could be constituted as defamation. The post contained clear disclosure that its content reflected the author’s own opinions, and any facts that were presented were accompanied by links to sources which readers were encouraged to review in order to reach their own conclusions. Furthermore, as the courtnoted, the fact that the author’s opinions were published in the “unique context of the Internet,” and considering such fora are often rife with hyperbole and “the repository of a wide range of casual, emotive, and imprecise speech,” the greater context of the statements signals to the reader that the article must consist of the author’s personal opinion. The author’s repeated use of phrases such as “we believe” and “it seems to us” clearly reinforces this point, even without the court’s having to figure out a way to apply foundational constitutional principles to this contemporary situation.
Presumably, investors take anonymous opinion pieces like this with a grain of salt, and do not rely on recommendation to make any drastic trading decisions. The nature of Seeking Alpha’s crowdsourcing platform is summed up by the website’s tagline: "Read. Decide. Invest." It is a forum based on what the site’s editor-in-chief describes as a Socratic approach that encourages independent (and sometimes anonymous) investors to freely express their opinions, debate ideas, and make informed choices based on their own due diligence. Clearly expressing the court’s support for the rights of a free press, Justice Kern concluded her decision by emphasizing that “[I]t is paramount in an open and free society that we protect the anonymity of those whose ‘publication is prompted by the desire to question, challenge and criticize the practices of those in power without incurring adverse consequences.’” In addition to being an important and precedent-strengthening ruling for Seeking Alpha, this decision allowing pseudonymous posts is an important free speech victory.
At the end of June, New York Judge Cynthia S. Kern dismissed NNVC’s suit against SA, releasing them from any obligation to divulge the identity of “Pump Terminator,” as the court had determined that the post was not defamatory and was considered “protected opinion and not actionable as a matter of law." The court found that NNVC did not sufficiently demonstrate that that article in question could be constituted as defamation. The post contained clear disclosure that its content reflected the author’s own opinions, and any facts that were presented were accompanied by links to sources which readers were encouraged to review in order to reach their own conclusions. Furthermore, as the courtnoted, the fact that the author’s opinions were published in the “unique context of the Internet,” and considering such fora are often rife with hyperbole and “the repository of a wide range of casual, emotive, and imprecise speech,” the greater context of the statements signals to the reader that the article must consist of the author’s personal opinion. The author’s repeated use of phrases such as “we believe” and “it seems to us” clearly reinforces this point, even without the court’s having to figure out a way to apply foundational constitutional principles to this contemporary situation.
Presumably, investors take anonymous opinion pieces like this with a grain of salt, and do not rely on recommendation to make any drastic trading decisions. The nature of Seeking Alpha’s crowdsourcing platform is summed up by the website’s tagline: "Read. Decide. Invest." It is a forum based on what the site’s editor-in-chief describes as a Socratic approach that encourages independent (and sometimes anonymous) investors to freely express their opinions, debate ideas, and make informed choices based on their own due diligence. Clearly expressing the court’s support for the rights of a free press, Justice Kern concluded her decision by emphasizing that “[I]t is paramount in an open and free society that we protect the anonymity of those whose ‘publication is prompted by the desire to question, challenge and criticize the practices of those in power without incurring adverse consequences.’” In addition to being an important and precedent-strengthening ruling for Seeking Alpha, this decision allowing pseudonymous posts is an important free speech victory.