On-Line Service Is Subject to Libel Regulations, Judge Rules : Communications: The ruling could broadly affect expression on computer networks.

In a ruling that could broadly affect expression on computer on-line services, a New York state judge on Thursday said Prodigy Services Co. is a publisher subject to the rules of libel.

The ruling came as part of a $200-million suit brought by Stratton Oakmont Inc., an investment bank that is angry about things said about it on a Prodigy bulletin board last fall.

State Court Judge Stuart Ain’s decision allows Stratton Oakmont to proceed with its libel suit, which was filed in his court in Mineola, N.Y., last November.

“This is a groundbreaking case for the computer bulletin board industry,” said Jacob Zamansky, attorney for Stratton Oakmont. “It establishes for the first time what a computer bulletin board’s responsibility is for libel.”

Prodigy spokesman Brian Ek said the company is disappointed by the ruling and is considering options, including an appeal.

Stratton Oakmont alleges that a Prodigy subscriber made libelous statements, including accusations of fraud, about the firm at least twice last October, around the time it was helping a company with an initial public offering.

Stratton Oakmont initially named a subscriber in the suit but later dropped him because someone else had used the man’s name in making the statements.

Prodigy maintains it is a “common carrier,” like a phone company or bookstore, and therefore not responsible for the contents of what it carries.

In 1991, a federal judge in New York threw out a libel suit against CompuServe, another large on-line service, that involved a newsletter distributed electronically. The judge said that since CompuServe was the conduit for the newsletter but did not edit its content, it could not be held accountable for libel.