Defamation by investors solicitor - large companies
- Hits: 4411
Meet Gary. Gary was a small investor in listed public companies who held shares in a gold mining company RRR PLC. As an active investor, Gary used to be involved in online investment forums such as Interactive Investors.
For reasons only known to him, one day, Gary started to post defamatory posts about the company on a number of online investors’ forums. He also promoted his defamatory posts and speculative rumours via Twitter.
Over a number of weeks, Gary posted dozens of defamatory posts about the company, some of which created heated discussions about the accuracy and truthfulness of the posts, which was presumably what he had set out to do. After a while, Gary’s defamation against the company started to appear on the first page of Google search results. Even though he was a very small investor in a large gold mining company, the intensity of his comments was so high that some investors started to believe that the defamatory posts were actually true. This resulted in a decline in investment in the company and in a sharp reduction in the value of its shares.
Initially, the company took no action in relation to the defamation because the Board of Directors were yet to appreciate the potentially disproportionate damage that one small investor could cause a large PLC by posting defamatory comments on the internet. However, after they received numerous worrying messages from concerned investors, they were resolved to take action to save the company’s reputation.
It was important for the company to act immediately, yet delicately, due to the potential additional reputational damage that legal action against an investor could have caused. The company therefore chose Cohen Davis to handle the matter. Mainly, they chose us because of the unique and creative approach we take to handling online defamation matters of this nature and the due consideration and advice we give our clients in relation to reputational risks and reputational outcomes.
In these sorts of cases there is likely to be additional media interest, which needed to be handled delicately in order to protect the reputation of the company and to avoid negative publicity which could potentially result in a further decline in share prices. Eventually, we had no choice but to issue defamation proceedings against Gary in order to protect the investment of thousands of investors.
Gary accepted that all his allegations were unfounded, apologised and agreed to pay compensation which the company’s Chairman donated to a charitable cause. The lessons of this case to a company that suffers defamation on the internet are numerous: First, it is clear that a single investor can cause a huge amount of reputational and financial damage, even to a PLC, by posting untrue stories and unfounded speculations on the internet. Second, a PLC, despite its size, might become vulnerable to online defamation as much as a small, private limited company.
Third, the influence of online investment forums on individual and corporate investors must never be underestimated by companies of any size. Fourth, the cost of online defamation to a large, public company is likely to be far higher than it is to a small private company because it has much more to lose. And finally, the company’s board in this case did the right thing by instructing a niche law firm that specialises in online defamation and reputational law to handle this matter promptly and delicately from all angles.