The small investor gets screwed yet again.... http://online.wsj.com/article/SB20001424052748703523204575130093464131302.html MARCH 19, 2010 Web Site Barred From Fast Release Of Ratings NEW YORKâA federal judge ruled that the Web site Theflyonthewall.com misappropriated the "time-sensitive recommendations" of several banks by immediately publishing news of analyst rating changes often before those recommendations are fully shared with clients. In an order Thursday, U.S. District Judge Denise Cote in Manhattan ruled in favor of Barclays PLC's Barclays Capital, Morgan Stanley and Bank of America Corp.'s Merrill Lynch. The judge also found the Web site infringed the copyrights of Barclays and Morgan Stanley, ordering $6,750 and $6,000 in damages, respectively. The banks demonstrated that "the misappropriation of their recommendations by Fly and others has also had a profound effect on their business model," the judge said. The firms have objected to the systematic publication of their recommendations and have taken steps in recent years to limit access to their research beyond their clients, asking clients not to distribute research reports to others. It isn't clear if the ruling will have a broader impact on larger, more traditional financial-news outlets that consider ratings changes news that can affect stock prices. "It bears noting that it does not matter to the firms whether the unauthorized distribution is through a small internet company like Fly or through media giants like Bloomberg, Thomson Reuters or Dow Jones," the judge said. "The damage is caused not by the identity of the publisher, but by the timely and systematic unauthorized redistribution of the firms' recommendations, whatever the medium." A spokeswoman for Dow Jones & Co., a unit of News Corp. and the publisher of The Wall Street Journal, declined to comment. A Thomson Reuters Corp. spokeswoman declined comment, saying they don't comment on third-party litigation. Bloomberg LP spokeswoman Judith Czelusniak declined to comment to Reuters. In her order, Judge Cote noted at least one mainstream publisher of financial news has said it is watching the litigation closely and will adjust its practices based on its evaluation of the outcome of the litigation. As part of her decision, the judge ordered that Theflyonthewall.com be enjoined from disseminating premarket analyst recommendations in the U.S. for up to a half hour after the opening of the New York Stock Exchange or 10 a.m. Eastern time, whichever is later. The Web site also has to wait two hours to publish recommendations released during the trading day, the judge ruled. Theflyonthewall.com can seek to have the publishing restrictions lifted in a year, the judge said. Glenn Ostrager, a lawyer for Theflyonthewall.com, said the site plans to appeal. "We believe that the decision is at variance with existing case law" he said. Spokespersons for Morgan Stanley, Barclays and Merrill Lynch said they were pleased with the decision and said it was important protection of their intellectual property.
nice and fair... Fly should just release the news without any comments. just put that pepper image. should be enough for us. or code those firms with pictures. for example downgrade from merryl lynch should be displayed as a picture of pile of shit with red arrow down. without any comments or references to the bank. upgrade-opposite and so on.
I completely agree. I must have missed the part here where it says "as long as the freedom of the press does not have a profound effect on a company's business model".. Maybe the Framers of the Constitution wrote it in invisible ink? A Constitutional Literalist would say it wasn't Congress, it was a court. But then I would say it is not the court's job to make law.
It does call into question any news outlet that might try to let its viewers know why a stock is on the move. Bloomberg and CNBC come to mind. I'm somewhat torn because although I understand that these analysts have proprietary material and there are copyright issues, on the other hand analyst recommendations tend to have adverse effects on a stock price as soon as the news is disseminated, and they know it, which is why they give their clients first crack at the information. Plus, FOTW doesn't copy the whole text, they just give the up or down rating, and sometimes the target price.
I guess the banks were getting tired of pesky traders interfering with their efforts to front-run the moves that are artificially manufactured by their ridiculous upgrades/downgrades. Its the easiest $$ on the street. Just about the time news outlets can release the rating info, the trading arm of the bank will be covering their position. Anyone ready to start up "EliteTrader Research LLC? Maybe then we will all truly achieve "elite trading". Why isn't crap like this treated as insider information?
These "research reports" should be only allowed for issuance after market hours, if this two hour window is upheld. You still won't have a level playing field, as there will still be a group of insiders who know about the pending information release ahead of time. At least those entities would have to factor in overnight market risk while they front-run.
i was asking same question for many years...all those ridiculous upgrades\downgrades if allowed,should be released like they said 2 hours before market open and available for everyone at same time. otherwise it is pure inside trading or pump and dump. i specially like "sidoti" firm..their specialty is upgrade\downgrade @ 9:32-9:35. what a bunch of crooks..here is a perfect example-