Thursday, October 30, 2003

Luskin Flashback

From the Street

The worst solution to the problem of manipulation on discussion boards is to shift the responsibility for enforcement from the regulators to the board sponsors. The host of an online discussion board is no more in a position to monitor and assure the quality of every posted message than a "common carrier" such as AT&T is to monitor every utterance made over its telephone network.

There is a long legal tradition of the exemption of common carriers from such unbearable burdens. Section 509(c)(1) of the Communications Decency Act, passed by Congress in 1996, states: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." Parts of the act were overturned by the Supreme Court, but this section still stands. At least two federal court decisions have enforced this statute in favor of America Online. This is analogous to the court rulings that have absolved newspapers and magazines from undue burdens in quality-assuring letters to the editor.


Discussion boards are valuable forums for sharing information and debating stocks and markets. The simple adaptation of regulations I have proposed would stop most of the worst abuses. But let's not do anything draconian that might have the effect of inhibiting the freewheeling, empowering nature of online discussion boards. Let's not destroy the village in order to save it.

The regulations he refers to are SEC or NASD rules preventing anonymous postings by professional brokers.

(from World O'Crap)