FOOL ON THE HILL: An Investment Opinion
CS First Boston goes after a group of message board posters that have been taking shots at an analyst. Though it's extraordinarily unlikely that CS First Boston is really looking to get any money out of this, there just might be something of value in the case anyway if it has a positive effect on message board quality.
Anyway, in response to the news of the lawsuit, here at Fool HQ we've received a few requests for comments on "what this all means to our First Amendment rights and the future of message board discussions." If you want to learn how this affects you, here's the three word summary: Play nice, kids.
To make a long story short, Elan message board posters took umbrage to Maris's maintenance of a "hold" rating on their favorite stock. As any investor knows, since actual "sell" ratings are about as welcome in Wall Street brokerage firms as rats in a dark elevator, a "hold" rating is universally interpreted as a thinly disguised code for a sell declaration. This, the holders of Elan, do not appreciate.
In the opinion of CS First Boston, some of the posters apparently went a bit overboard in the method they chose to express their disagreements with Mr. Maris. According to today's Wall Street Journal article, the defendants posted statements saying Mr. Maris was "spinning misleading statements to fool uninformed investors" and was "lying" and "evil even to his customers."
I'm just going to take a shot in the dark here, and offer my own conjecture that the poster(s) of these thoughts might not have done a lot of research into the facts of their accusations regarding Mr. Maris's mindset before posting their thoughts publicly. These types of comments are not the kinds of things that one should make lightly, but the anonymity afforded by Internet discussion has created in some people's minds a license to say basically whatever they feel like without consequence -- that they are somehow empowered to do so by virtue of the fact that they have a modem and a screen name.
If the facts play out as alleged, CS First Boston might have a little bit of a case here. To make the argument that it or its analyst has been slandered and defamed by being linked with lying and evil isn't all that illogical. Based upon the very limited facts that I have, and not having seen a copy of the complaint itself, I wouldn't dismiss CS First Boston's ability to prevail on this claim in a court of law. The questions raised by that interpretation are, "So what?" and "Why bother pursuing this in the first place?"
CS First Boston claims that the "false and defamatory" posts have caused "actual, incidental and consequential damage to its reputation and professional and other economic interests," a claim which I find utterly silly. My offhand guess into the amount of damages that CS First Boston could prove before a jury as a result of random messages on a Yahoo! chat board is somewhere between a penny and a quarter. (Wall Street brokerage houses and analysts just don't make the most sympathetic plaintiffs in front of a jury.) The only true damage to its reputation that CS First Boston is likely to incur out of this episode is the resulting fall-out of being publicly laughed at for filing this case in the first place. So why bother anyway?
You have to imagine that the analyst in question was so disturbed by what he chose to read on the message board that he might have lost some perspective on things. Having been a litigator at one time in my life (the foolish, as opposed to Foolish, years), I think litigation is one of the things in life that you seriously want to avoid whenever possible, and at all times unless there is real money to be made by choosing otherwise.
There simply isn't going to be any extra money in the coffers of CS First Boston at the end of this episode, no matter how the case is resolved. Just the opposite in fact. Actual monetary damages seem to be fictional, punitive damages are a pipe dream, and hiring lawyers to pursue this kind of matter costs in the neighborhood of $250 an hour or so. Nevertheless, CS First Boston is choosing to spend money on this matter for some reason.
If the purpose of this suit is to shut up the posters on the Yahoo! message board, I've got to say that I would weigh the odds of that very differently than those at CS First Boston seem to have. At bottom, I just don't get this one -- nevertheless, I wish CS First Boston luck on its pursuit.
Here's why. Message boards on the Internet are too often cesspools of inane accusation and totally unnecessary and insupportable hostility. They really don't have to devolve into scenes out of the Lord of the Flies just because there often appear to be no grown-ups around. I don't know that that was the case here, but it could have been. Assuming that Mr. Maris is not the embodiment of evil (an assumption I am willing to make), CS First Boston has a claim I wouldn't mind seeing recognized.
While that claim won't result in any extra money in First Boston's coffers, the effect on general message board quality through a successful slander suit could be positive. There is no question that any disagreements that any posters have with the quality, value, and honesty of any individual's analysis can be presented without coming anywhere close to slander. I say that, however, with complete ignorance as to whether the individuals in this matter are in any way in the wrong.
In the meantime, while we wait to see how this one plays out, if you want to engage your First Amendment rights to the fullest extent with no fear of having a Wall Street firm or publicly traded company pursue legal action against you, just remember to aim your hostility toward the analysis, not the analyst. It's pretty much as simple as that.