Credit Suisse First Boston
has filed a $1 million lawsuit against a New Jersey man and 10 others who it accuses of posting defamatory comments about one of the firm's analysts on a
The lawsuit, filed Tuesday, accuses Chuan Chang, a retired scientist from New Jersey, and 10 other Internet users identified only by their screen names of libeling the global investment firm and its analyst by posting false and critical statements on the Yahoo! ELN Finance Message Board.
Officials at the Santa Clara, Calif.-based headquarters of Yahoo Inc. declined to comment on the lawsuit.
The lawsuit's allegations center around comments posted by the group of defendants from March 9 through July 8 on a Yahoo! message board dedicated to
a specialty pharmaceutical company based in Ireland, whose American Depository Receipts hit a 52-week high on Monday of $52.563. The company's receipts were trading at $39.625 on March 9. Credit Suisse First Boston has a hold rating on Elan.
The analyst -- who was not identified in the suit -- reportedly remained critical of the company's stock even as its price rose steadily over the past few months, prompting some of the message board users' comments assailing the analyst.
In the lawsuit, first reported by
, Credit Suisse claims its "business reputation and professional and other economic interests have been injured" and asks for compensatory damages of no less than $1 million, as well as an injunction prohibiting Chang and the other defendants from posting such comments in the future.
"We were trying to do the right thing," said Pen Pendleton, a spokesman for Credit Suisse First Boston, of the lawsuit. He declined to comment further.
Chuan Chang, the only defendant named in the suit, said he was shocked to learn of the lawsuit, which he called "ridiculous."
"This kind of criticism and praise of analysts goes on all the time on every message board, so why us?" asked Chang, when reached Wednesday at his home in Colt's Neck, N.J.
Chang said he has used Yahoo! chat boards for years, but scaled back his activity significantly after learning of the lawsuit on Tuesday. He also warned others on the Elan message board to be careful about what they write.
"Anybody would become wary with something like this; it limits my ability to practice free speech," Chang said. "That is what makes Yahoo! so valuable. In a sense, its existence is justified by the free interchange of information."
David Kaplan, a Wahington D.C. real estate broker and chat board user who was not named in the suit, said he was outraged by the lawsuit. He said the postings he read of the Credit Suisse analyst, although critical, were truthful and called the suit a "blatant effort" to curtail criticism of analysts.
Kaplan, who is trying to organize a conference of Elan investors in Dublin this fall, said the defendants with whom he communicated were shocked by the firm's legal action. He has set up an "Elan 11 Defense Fund" in Washington D.C.
Elan's stock has surged recently on expectations that the company may soon release a vaccine to treat Alzheimer's disease. On Tuesday, company officials said its product appeared safe for treating patients in early tests on humans. Elan hopes to begin tests on the drug's effectiveness in stopping Alzheimer's by the end of next year.
Shares of Elan fell 1 1/2, or 3%, to close Wednesday at 50 1/2.