Free speech on Internet under question

Freedom of speech on the Internet? Think again. Agileminded investors who sought and made comments about their pet shares on Internet message boards will now have to be more vigilant about their use of words. That's because comments about a broker's report on the State's largest company, Elan, are now at the centre of litigation in the US.

Credit Suisse First Boston Corp has asked a federal judge to order a New Jersey investor, and 10 others, to pay $1 million for allegedly libelling the firm by posting critical messages about one of its analysts on the Yahoo! Inc message board, according to a Bloomberg report.

The suit, filed last Tuesday, accused Mr Chuan Chang, a retired scientist, and 10 unidentified computer users of defaming the global investment bank and its analyst by posting disparaging messages when discussing Elan. The company is working on a vaccine for Alzheimer's disease. The complaint did not identify the analyst or any of the other defendants - known only by screen names such as LA Broker and HealthcCareChick - who posted the messages on Yahoo's ELN finance message board between March and early July. The messages "included false statements defamatory of CSFB and one of its research analysts", according to the suit. It claimed the messages "are potentially injurious to the business of CSFB".

Elan's American Depository Receipts had risen from $39 11/16 on March, the times of the first posting cited in the suit, to $50 11/16 earlier last week. They finished at $493/8 on Friday.

Bloomberg quoted Mr Chang as saying the analyst soured on the stock even as it continued to climb. "An analyst trying to shut message boards down would be a terrible thing," he said. "It would prevent people from communicating freely on the Internet."

But Friday's Wall Street Journal said the defendants posted a statement saying the analyst was "spinning misleading statements to fool uninformed investors". Other statements were even more trenchant.

Credit Suisse First Boston is now seeking damages of "not less than $1 million" and an injunction prohibiting the defendants from posting libellous comments. The suit also alleges that the messages violated the Federal Telecommunications Act by trying to "threaten or harass" persons who received their messages, according to Bloomberg.

The suit did not identify the analyst, but the messages said it was Mr David Maris, who was appointed by Credit Suisse last November to cover pharmaceutical companies. Highly regarded, he was ranked number two in 1999 when he was at Bears Stearns Co.

In an interview with Bloomberg, he said his recommendations were sound. "I stand by my work for both its conclusions and its thoroughness," he said. He rated the company as a "hold" in February.

The ELN Yahoo message board was shut down for a period last week and some of the participants speculated that the suit may have been responsible. However, the message board was besieged with hundreds of messages over the weekend with participants debating the suit, and the great majority showed their support for the defendants. "The Elan 11 need to tell their real story to the world," said one.

Message boards are important tools for investors but comments are often frivolous and sometimes offensive. Obviously the messages should not libel anyone. And they should be brought to task if they do.

But they have a useful role to play by providing a platform for lively and serious debate on companies, their management, brokers' reviews and the performance of shares.