2HRS2GO: Court ruling a boon for stock message boards

4 min read

COMMENTARY--Most observers of tech legal issues are focusing on the Microsoft antitrust trial right now, but the first favorable step for another legal case of greater importance took place recently.

Today's Wall Street Journal reports a federal judge in California last week dismissed a lawsuit filed by Global TeleMedia International (NasdaqOTC: GLTI) against a pair of Internet message-board posters. It's far more relevant than anything that happens with Microsoft (Nasdaq: MSFT); regardless of how the appellate court rules on Bill Gates' company, the reality is that the ultimate fate of Microsoft is already being decided in the technology marketplace.

On the other hand, the judge's ruling against Global TeleMedia has the immediate effect of letting you speak your mind about publicly traded companies. Not only is it more wide-reaching on an individual level than anything involving Microsoft and antitrust, but it's also an issue that could only be solved in court.

Global TeleMedia describes itself as a provider of communications services in Asia and Australia, and a proponent of smart cards for e-commerce, in case anyone cares. Few people do, judging by the company's stock price and its over-the-counter trading status.

But let's be thankful that someone cared enough to set up a Raging Bull message board for GLTI. And especially thankful that Global TeleMedia is sensitive enough to sue over online ravings.

A look at an Internet message board for any publicly traded stock would show postings from hype-sters, children, morons, manic depressives, lunatics, would-be comedians and other folks whose utterances are easily ignored. Raging Bull's GLTI community is no different; today's GLTI posts include insults, self-congratulatory remarks, speculations and a favorite quote of the Hannibal Smith character from that literary television classic, "The A-Team."

In its lawsuit, Global TeleMedia accused two Raging Bull posters of spreading damaging lies about the company. But a statement is only a lie if it's masquerading as fact.

Only the most brain-addled folks could mistake online postings for anything other than opinion, conjecture and fluff. Yet Global TeleMedia somehow sees parallels between a widely read news outlet and a Web discussion devoted to an obscure company.

"We look at the chat room as no less than the front page of a newspaper," CEO Jonathon Bentley-Stevens said, according to the Journal. "And if someone had paid for an advertisement (similar to the postings) on the front page, that's an actionable offense."

Actually, it's not. You can advertise scathing opinions. Just ask any political media consultant.

Global TeleMedia isn't alone in its misconceptions. One lawyer quoted by the Journal has seen about 120 lawsuits filed by publicly traded companies against anonymous Internet critics.

I'll reiterate what I've said before: Instead of worrying about idiot critics online, companies should silence them with superior performance. Suing people for Internet scribblings only draws attention to them.

But I'm glad Global TeleMedia filed this lawsuit because now we have a precedent: Being publicly traded makes you a target.

"The point is that (Global TeleMedia) is not a matter of public interest merely because of media attention or sensation, but rather because it has had over 18,000 public investors and is the topic of literally thousands of Internet postings," wrote U.S. District Judge David O. Carter.

That only makes sense. If you want to accept the money from investors, you should be willing to bear their criticism.

Companies know that, of course. But because there are any number of thin-skinned, self-important executives in the world, defamation lawsuits appear. They know they won't win, but they're hoping to use a legal bludgeon to silence criticism. It's less bloody than hiring someone to break a message-board poster's typing fingers.

The Global TeleMedia dismissal might be appealed, and it may be overturned in higher courts, though I doubt it. It's not a complicated debate.

Last week's ruling won't discourage corporations for now. E*Trade (NYSE: ET) just filed suit against someone who posted under the CEO's name. As if ET shareholders would think it's the real Christos Cotsakos.

And that's the real offense in this whole debate. When a publicly traded firm sues an online poster, it's an insult to investors' intelligence. The company thinks shareholders are dumb enough to believe everything they read on a message board.

People who buy your stock deserve more respect than that. 22GO

• An opinion leader speaks out
• Lawsuits seem small-minded
• Yahoo! Finance's new Ignore is bliss
• The perils of message-board anonymity
• Message-board growth catches Feds' eye>