Financial news service Theflyonthewall.com Inc has urged a Manhattan federal judge to lift a ban on its quickly reporting hot news about analyst research from three Wall Street banks, saying the ban has cost it subscribers and could threaten its survival.
The company made its request to U.S. District Judge Denise Cote, who last month issued an injunction requiring it to wait two or more hours before publishing research from Bank of America Corp's Merrill Lynch unit, Barclays Plc and Morgan Stanley.
Such a delay constitutes irreparable harm of the highest order, Theflyonthewall.com President Ron Etergino said in a court filing.
He said the order puts the Summit, New Jersey-based company at a distinct competitive disadvantage in the online financial news business, and will cause substantial adverse financial consequences as time passes.
In her March 18 ruling, Cote said the company engaged in systematic misappropriation and got an improper free ride in quickly publishing the three banks' analyst upgrades and downgrades.
Such analyst research can move stocks higher and lower, and be critical to traders as well as to the news media they depend on for fast, and often instantaneous, news dissemination.
Theflyonthewall.com on Wednesday asked Cote to lift her injunction while it appeals to the U.S. 2nd Circuit Court of Appeals in New York.
Alternatively, it sought permission to report research first published by one of six mainstream news services: Bloomberg LP, CNBC television, Dow Jones Newswires, the New York Times, Thomson Reuters and the Wall Street Journal.
Bank of America spokesman Bill Halldin declined to comment. Barclays spokesman Mark Lane also declined to comment as did Morgan Stanley spokeswoman Sandra Hernandez. A lawyer for Theflyonthewall.com did not immediately return a request for comment.
CHALLENGE TO STAY IN BUSINESS
In issuing her injunction, Cote ordered Theflyonthewall.com to wait until 10 a.m. to report research from the three banks that was issued before the market opens, and at least two hours for research issued later. She said the service could apply in one year to lift the injunction.
But Theflyonthewall.com said the order gives competitors under no such constraints an unfair advantage, and raises issues under the First Amendment to the U.S. Constitution.
As a result of the injunction, defendant has begun to receive cancellations from its subscribers, lawyers for the company said in a separate filing. Defendant is presented with the day-to-day challenge to remain in business during the pendency of its appeal.
Theflyonthewall.com has said it employs 30 people, and charges $50 a month, or $480 annually, for its services.
The case is Barclays Capital et al v. Theflyonthewall.com Inc, U.S. District Court, Southern District of New York, No. 06-04908.
(Reporting by Jonathan Stempel; Additional reporting by Grant McCool; Editing by Lisa Von Ahn, Richard Chang and Steve Orlofsky)