Aiful Forces Lehman To Retract "Insolvent" Claim

[Mulboyne]

[floatr][/floatr]Bloomberg: Lehman Analyst Walter Altherr Stops Aiful Coverage
Lehman Brothers Holdings Inc. stopped covering Japan's consumer lenders and retracted past research on the industry after Aiful Corp. threatened to sue over a report by analyst Walter Altherr that said it was "arguably insolvent". "All previous ratings and forecasts should no longer be relied upon," Keiko Sugai, a Tokyo-based spokeswoman for Lehman, said in a phone interview, declining to comment on the reason. Aiful, Japan's biggest consumer finance company by assets, has fallen 35 percent, closing at a record low today, since Altherr said June 23 that the lender is "arguably insolvent" on a parent basis. Credit-default swaps on the lender, which increase as investor perceptions of credit quality deteriorate, rose to a three-month high after the report...Akio Katsuragi, president of Lehman Brothers Japan Inc., told Aiful director Tsuneo Sakai on Aug. 1 that Altherr would no longer cover the company and that Lehman would retract all reports he wrote on Aiful and delete them from its Web site, Hirofumi Haruguchi, an Aiful spokesman in Tokyo, said in a telephone interview. Still Considering Lawsuit "We consider the action positively," Haruguchi said. "That's what we've been demanding of Lehman." Aiful is still considering whether to file a lawsuit against Lehman over the report, Haruguchi said...In addition to Aiful, Lehman will also drop coverage of Acom Co., Takefuji Corp. and Promise Co., Sugai said...more...

Related FG Threads: Sarakin On The Retreat and Lehman Defrauded In Japan?

[kamome]

Is this some kind of defamation suit? If so, Aiful would have to prove that the reports were false. The only way to do so would be to open up the books in a public courtroom and show how it is still solvent. Would Aiful really be willing to do that?

[Mulboyne]

Is this some kind of defamation suit? If so, Aiful would have to prove that the reports were false.

Not under Japanese law.

[bolt_krank]

What's the suit about ? What are they suing for ?

[kamome]

Not under Japanese law.

So how do you defend against a defamation suit in JP? Is it a strict liability tort?

Under US law, truth is the defense you use against a defamation suit, which puts the plaintiff in the position of having to rebut the facts presented with its own facts showing that the statement is not true.

[Mulboyne]

Under US law, truth is the defense you use against a defamation suit...

However, Japan chose to model its first defamation law - introduced in 1875 - on the French system which had no truth defence because it's main target was seditious libel. The basis for civil defamation suits arrived with the adoption of the Civil Code in 1898 (although there had been ad hoc cases before). A statement can be deemed defamatory if it "lowers a persons's social standing". In criminal cases, the original Criminal Code said "a person who injures the honour of another by publicly alleging facts shall be punished, regardless of whether such facts are true". (Quotations from Mark D.West). The Occupation introduced a version of truth defence for matters of public interest in criminal cases but there is still no truth defence in civil cases.

It's been left to the courts to fill the gaps between the differing civil and criminal treatments and West says that truth and free speech now play bigger roles in practice. If Lehman could establish that it was a matter of public concern then they would have a better defence but, although it probably would qualify as such in the U.S., it might not in Japan.

[pheyton]

There have been rumors here in the States that Lehman's in on the verge of collapse. It may not matter what Aifuru decides to do.

[kamome]

However, Japan chose to model its first defamation law - introduced in 1875 - on the French system which had no truth defence because it's main target was seditious libel. The basis for civil defamation suits arrived with the adoption of the Civil Code in 1898 (although there had been ad hoc cases before). A statement can be deemed defamatory if it "lowers a persons's social standing". In criminal cases, the original Criminal Code said "a person who injures the honour of another by publicly alleging facts shall be punished, regardless of whether such facts are true". (Quotations from Mark D.West). The Occupation introduced a version of truth defence for matters of public interest in criminal cases but there is still no truth defence in civil cases.

It's been left to the courts to fill the gaps between the differing civil and criminal treatments and West says that truth and free speech now play bigger roles in practice. If Lehman could establish that it was a matter of public concern then they would have a better defence but, although it probably would qualify as such in the U.S., it might not in Japan.

That's very interesting. Thanks, Mulb. I don't understand why civil and criminal cases have different standards, but TIJ. What was that Mark West source you were quoting from?

[Mulboyne]