SLAPP Lawsuits - Should Activists Short Sellers Worry?

what are slapp lawsuits?

What is a SLAPP Lawsuit?

Based on the sources, SLAPP stands for "strategic lawsuit against public participation." In summary:

  • SLAPP lawsuits refer to lawsuits filed by companies against critics, including activist short sellers, in an effort to intimidate or silence them.
  • They are often filed in response to short sellers releasing negative reports about a company, alleging things like defamation.
  • However, these lawsuits typically have little legal merit as short reports are usually constitutionally protected opinions or factual statements.
  • Many states have anti-SLAPP statutes to quickly dismiss these meritless SLAPP cases and protect defendants' free speech rights.

As an activist short seller, SLAPP lawsuits are something you should be aware of, for a few reasons:

  • You may face SLAPP cases when you publish negative reports on companies, as a way for them to retaliate. Anti-SLAPP laws can help get them dismissed.
  • You can use anti-SLAPP statutes preemptively as a defense strategy if sued for a short report. Cite protected free speech.
  • SLAPP cases, even if meritless, can tie up time and resources. Factor that cost into decision to publish a report.

In summary, knowledgeable activist short sellers should anticipate potential SLAPP lawsuits, understand anti-SLAPP laws as a defense, and weigh risks of lawsuits into analyses. The sources indicate courts often see through meritless SLAPP cases, but they can still impose burdens.


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