Seeking Alpha Strikes A Victory For Free Speech

Jul. 07, 2014 11:18 AM ET231 Comments
Eli Hoffmann profile picture
Eli Hoffmann


  • The NY Supreme Court dismissed NNVC's petition to compel Seeking Alpha to reveal the identity of a pseudonymous contributor who criticized the company and its management.
  • In its ruling, the court affirmed that investors' needs are best served by the free exchange of information and opinion, which includes their ability to contribute anonymously.
  • The ruling is a huge victory for SA, its contributors and its readers.

I would like to briefly discuss a recent NY State Supreme Court ruling and the exceptional precedent it sets for Seeking Alpha and its contributors.

In February, SA Contributor Pump Terminator published the following article: NanoViricides: House Of Cards With -80% Downside, 'Strong Sell' Recommendation. Pump Terminator disclosed he was short NNVC, and that the article reflected his own opinion and that he wasn't receiving compensation for publishing the article, in accordance with our editorial policy. Pump Terminator had much to say about NNVC and its management team; you can read his short case in the article linked above. You might have guessed that Pump Terminator isn't the author's real name. Seeking Alpha has always allowed and continues to allow contributors to use a pseudonym; I've written about that previously here.

NanoViricides (NNVC), the subject of the article, was not happy. It petitioned the New York courts to compel Seeking Alpha to reveal the identity of Pump Terminator so that it could bring a libel claim against the author. NNVC alleged that the article, "contains defamatory statements about NNVC presented as fact and published for the sole purpose of destroying NNVC's reputation and driving down its stock price." The details of NNVC's claim, and the specific statements it claimed were defamatory, can be found in the court disposition linked above.

Justice Cynthia Kern denied NNVC's petition and granted our cross-motion to dismiss the petition. Go read the whole ruling, but here are some of Justice Kern's key points:

… the alleged defamatory statements identified in the petition constitute protected opinion and are not actionable as a matter of law. As an initial matter, the immediate context of the statements would lead a reasonable reader to likely believe that the author was conveying his or her opinion about NNVC's business practices and its stock value.

She notes that the article:

contains the phrases "we believe" and "it seems to us" or the relevant equivalent over 15 times.

She also notes that the author links directly to source material,

giving readers the opportunity to review the underlying "facts" and form their own opinion.

Justice Kern also had an interesting and perceptive comment about the unique nature of Seeking Alpha's website and community:

Seeking Alpha's website's tagline is "Read. Decide. Invest." This clearly gives the impression that the website is designed to give people a place to express their opinions and for the reader to then form his or her own assumptions based on the posted article.

Finally, quoting an earlier New York state court decision, she notes that…

It 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."

Of all similar rulings this is remarkably clear in its message. The court has maintained a very high bar for future plaintiffs, who will have to be able to present a clear case of defamation to support such petitions. The ruling also affirms that SA articles and comments are seen by the courts as 'protected opinion' and not verifiable fact. And, significantly, the court throws its support behind Seeking Alpha contributors and their anonymity as a manifestation of free speech and the ability to openly question and criticize the practices of those in power.

NNVC had been pursuing this case for a number of months and refused to back down. Despite the great expense involved, we saw this as an opportunity to defend our position and establish an important precedent. The ruling we got was exactly what we had hoped for. We assume, as has been the case in our victory over Deer Consumer Products (OTC:DEER), that court precedent will function as a strong deterrent against future litigators in pursuing meritless cases. We are thrilled that the courts have backed our decision to allow pseudonymous posts, which we believe enhance the value of Seeking Alpha as a contributor network for equity research.

Readers who own a stock that gets negative coverage on Seeking Alpha (or those who are short a stock that gets positive coverage) sometimes get upset and insist we pull the article. We almost never do, except in cases of clear-cut material errors that render the author's thesis moot, or if we find out that the author was dishonest in his disclosure. What this court ruling affirms - which is basic to our philosophy - is that there is no objective way to identify a "hatchet job" or "pump job," and that in the overwhelming majority of cases investors' best interests are served by platforms like Seeking Alpha which allow for the free exchange of information and opinion, and leave it up to readers to form their own opinion.

We are excited that Seeking Alpha has emerged as the crowd-sourced platform of choice for investment research and opinion, and that the U.S. courts continue to support the Socratic approach captured in our tagline, "Read. Decide. Invest."

If you have an opinion on a stock, why not write it up and become a Seeking Alpha contributor too! Click here for more details.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

This article was written by

Eli Hoffmann profile picture
Seeking Alpha mourns the loss of Eli Hoffmann, beloved manager, friend and guiding light. Please read the testaments, below. ------------------ I am Seeking Alpha's COO and Editor-in-Chief. My love for the stock markets goes back to when I was a kid. Who else remembers combing through the stock quotes at the back of the business section of your local paper?I joined Seeking Alpha in 2006 and launched Wall Street Breakfast and Market Currents, now known as Breaking News, our top-of-class short-form breaking news for investors. In 2010 I became editor-in-chief and in 2015 I became CEO. In March 2020, David Jackson, our founder, stepped back in as CEO and appointed me COO.I live in Jerusalem with my wife and a bunch of exceptional kids. Most days, you'll find me making the commute from Jerusalem to Raanana. Occasionally I get to work from my home-office, from where I keep an eye on the beautiful Judean Hills. (Note: Until further notice, I am ONLY working from Jerusalem, with all my kids standing on my head. I look forward to getting back to a more normal schedule together with everyone else.)

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