Financial news service Theflyonthewall.com Inc has asked a U.S. federal judge to lift a ban on its reporting hot news about analyst research from three Wall Street banks, saying the ban has cost it subscribers and could threaten its survival.
In a Wednesday filing, Theflyonthewall.com asked U.S. District Judge Denise Cote to lift her March 18 injunction while it appeals to the U.S. 2nd Circuit Court of Appeals in New York.
Alternatively, the Summit, New Jersey-based company asked for permission to report research that is first published by a mainstream news service. It said these services include Bloomberg LP, CNBC television, Dow Jones Newswires, The New York Times, Thomson Reuters and The Wall Street Journal.
Cote had ruled in favor of Bank of America Corp's Merrill Lynch unit, Barclays Plc and Morgan Stanley in concluding that Theflyonthewall.com engaged in systematic misappropriation and got a free ride from quickly publishing 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.
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 also 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 implicates its rights under the First Amendment to the U.S. Constitution.
As a result of the injunction, defendant has begun to receive cancellations from its subscribers, and could face substantial adverse financial consequences as time passes, Theflyonthewall.com said in a court filing. Defendant is presented with the day-to-day challenge to remain in business during the pendency of its appeal.
Barclays spokesman Mark Lane had no immediate comment. Bank of America and Morgan Stanley did not immediately return calls seeking a comment. A lawyer for Theflyonthewall.com also did not immediately return a call.
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)