Academic journal article ABA Banking Journal

Can They Say That on the Web? California Case Pits Banks vs. the Blogosphere

Academic journal article ABA Banking Journal

Can They Say That on the Web? California Case Pits Banks vs. the Blogosphere

Article excerpt

Like the changing of the tides or the annual return of the swallows to San Juan Capistrano, there are certain inquiries from bankers that can be relied upon to make a regular appearance in my e-mail inbox, waiting to be taken up and answered afresh. One of these recurring questions is a bit of a stumper: What can I do to stop someone from saying bad things about my bank?

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Thanks to a fascinating piece of litigation in California involving a disgruntled bank employee, a series of anonymous postings on a Craigslist forum, and a state statute that makes it a crime to spread false statements about a bank that affect its solvency or financial standing, we will soon have a better idea of what can and cannot be said about a bank in a public forum.

Most bankers asking the question assume that the federal banking code includes a provision to restrict members of the public from making negative statements--especially intentionally false statements--that could affect the solvency of a federally insured institution. They are surprised to learn that this provision doesn't exist, and that they should look to state law for potential relief in this area.

Indeed, it is state law--Section 756 of the California Financial Code--that is at the heart of the litigation that is pending in California's First Appellate District--Summit Bank v. Rogers. At issue in the case are a series of highly derogatory statements about a bank that were posted on Craigslist's "Rants and Raves" forum by a disgruntled former employee. …

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