Wall Street loses appeal on "hot news" lawsuit

Reuters News
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Posted: Jun 20, 2011 10:39 AM
Wall Street loses appeal on "hot news" lawsuit

NEW YORK (Reuters) - A federal appeals court handed a major defeat to Wall Street banks in ruling that a financial news service did not misappropriate their analyst research for its website.

The 2nd U.S. Circuit Court of Appeals said Theflyonthewall.com Inc. did not violate copyright law through the alleged republication of "hot news" and headlines for its namesake site.

Monday's ruling is a defeat for Bank of America Corp's Merrill Lynch unit, Barclays Plc and Morgan Stanley, which argued that Theflyonthewall.com was getting a "free ride" by systematically misappropriating research, including upgrades and downgrades on stocks.

The appeals court ordered the lower court to dismiss the banks' misappropriation claim.

"A firm's ability to make news -- by issuing a recommendation that is likely to affect the market price of a security -- does not give rise to a right for it to control who breaks that news and how," Judge Robert Sack wrote for a three-judge appeals court panel.

The case is Theflyonthewall.com Inc v. Barclays Capital Inc et al, U.S. Second Circuit Court of Appeals, No. 10-1372.

(Reporting by Jonathan Stempel; Editing by Lisa Von Ahn)