In what is believed to be a world first, a California judge has granted a restraining order in a cyber-smearing case
which could have a major impact on this practice on the Internet. John Howard reports.
Cyber-smearing has been identified by the US Securities and Exchange Commission as a market manipulation method often
used by short sellers in the stockmarket.
The perpetrators take short positions, betting against the target companies, and then publish false statements about the
target on the Internet, attempting to drive down the stock price.
A Californian investor, Bryant Cragun asked for the order against Floyd Schneider, publisher of an Internet newsletter
called The Truthseeker. Cragun and a firm with which he is associated, ZiaSun, told the court Schneider initiated false
statements earlier this month in an effort to drive down ZiaSun's stock value.
Daniel Pascucci, the lawyer who represented Cragun, said " This is the first restraining order of its kind that has been
issued anywhere."
"Not only did Judge Sammartino restrain the defendant from any further actions, she also ordered a full and complete
retraction of the false statements."
A civil suit for damages is now likely.
The precedent set in this US court case will have international legal ramifications for those cyber-surfers who publish
false statements about others on the Internet.