JOURNAL'S LIBEL PENALTY SETS RECORD.

Byline: Iver Peterson The New York Times

A federal jury in Houston awarded $222.7 million to a local bond brokerage firm Thursday in a libel suit over a 1993 article in The Wall Street Journal. The award is nearly four times greater than the previous record award for libel.

The brokerage firm, MMAR Group Inc., contended in its suit that the article made false statements that drove away its clients, causing the firm to close within a month of the article's appearance. The jury set $200 million in punitive damages and $22.7 million in compensation against Dow Jones & Co., the publisher of The Wall Street Journal. Dow Jones earned $190 million last year.

Dow Jones said in a statement that it would ask the judge to set aside the award.

Most libel cases against media companies are reduced, reversed on appeal, or settled out of court. According to a study by the Libel Defense Resource Center, 60 percent of all libel verdicts from July 1994 to June 1996 were reduced, remanded back to the trial court or overturned outright on appeal.

Still, the award against Dow Jones is certain to keep a public focus on recent jury verdicts punishing media companies. Earlier this year, ABC News lost a trespass and deception jury trial over its behind-the-scenes reports about the Food Lion grocery chain, and, last summer, Knight-Ridder Inc. was forced to settle a $24 million libel award after losing most of its appeals.

``This is more than a message about trends in libel law, this is vengeance,'' said Sandra Baron, executive director of the Libel Defense Resource Center, which is supported by libel law firms and by media companies, including Dow Jones and The New York Times Co.

The previous record libel award was $58 million, which came in 1991 against the A.H. Belo Corp. of Dallas. That award was settled out of court for an undisclosed amount.

The Wall Street Journal article at the center of Thursday's award described how MMAR of Houston had become a powerhouse selling mortgage-backed securities. The story said that MMAR Group was reckless in dealing with its clients, that it had contributed to some $50 million in losses by a Louisiana state pension plan, and that it was under investigation by regulatory agencies.

After a two-week trial, the Houston jury found that five of eight statements in the article about MMAR Group that the jury was permitted to weigh were false and defamatory.

The article's reporter, Laura Jereski, also was ordered to pay $20,000.

Dow Jones' case was hurt after a director of the Louisiana State Employees Retirement System said in a deposition that MMAR was not responsible for losses at the fund in the early 1990s, as the article had reported, and that the pension plan had in fact made money from its account with the bond firm.

The Wall Street Journal disputed the verdict. ``We were chronicling the difficulties of this company; we did not cause them,'' Paul E. Steiger, the paper's managing editor said. ``We will seek to have the judge set aside the award, and we are optimistic, based on applicable law, that it will not stand.''