September 07, 2008

Nucor loses appeal in libel suit

It is reported that Charlotte based Nucor Corp has lost an unusual NC Court of Appeals case in which the steelmaking giant sued an analyst for libel after he issued a critical report about the company.

A superior court judge dismissed Nucor's lawsuit in April 2007, and last week, the N.C. Court of Appeals upheld the trial court's decision. Nucor can appeal to the N C Supreme Court.

Mr Tumazos who worked for Prudential Equity Group, issued a sell rating on Nucor stock along with the report in December 2006. According to court documents Nucor objected to metals market analyst Mr John C Tumazos' report that said that “Alienated customers may file antitrust lawsuits and Nucor needs to wake up from its monopoly dreams."

Analysts and advocates said that it's rare for companies to sue analysts for libel but such cases can be dangerous for both parties, making companies look bad or keeping analysts from issuing honest opinions.

Mr Jon Stokes of the CFA Institute, an industry group that sets standards for financial analysts said that "It is something we hear about, unfortunately. It has the potential to put a chilling effect on analysts."