A well-known financial news aggregator is being ordered by a federal judge to delay publication of prominent financial analysts' buy and sell recommendations to allow the well-to-do the first crack at capitalizing on that trading research.

The 3-year-old litigation, brought by Barclays Capital, Merrill Lynch, Morgan Stanley and others, rests on the so-called "hot news" doctrine the Supreme Court first recognized in a 1918 case concerning the unauthorized and immediate republication of wire service reports.

A New York federal judge said Theflyonthewall.com breached the doctrine, which allows suits for re-reporting time sensitive "hot news." Research that Theflyonthewall.com re-posted or alluded to on its site was designated for the banks' clients that earn the firms not less than $50,000 to $100,000 in trading commissions yearly, U.S. District Judge Denise Cote ruled.

Thursday's ruling comes as rightsholders are invoking the hot news doctrine to counter a swell of news regurgitation sites. In July, for example, The Associated Press defeated All Headline News in a court battle requiring the aggregator to stop rewriting and publishing AP stories.

Theflyonthewall.com, which has deals with Bloomberg, Thomson Reuters and about 5,000 paying clients in all, claimed it obtained the research through reporting, by having "hefty relationships with people in the know." The New Jersey company claimed that, since at least 2006, it was a legitimate media outlet in a case weighing how far researchers can go to block redistribution of their findings and conclusions.

Judge Cote tipped the scales of justice on the side of the banks and their clients. The ruling, which is being appealed, could have ramifications for other real-time, financial news sites.

"We believe that the decision is at variance with existing case law, and will appeal the decision to the Second Circuit Court of Appeals," Theflyonthewall.com's attorney, Glenn Ostrager, said in a Friday e-mail. "We fully expect that the financial press will vigorously support Theflyonthewall with *amicii *briefs to the Circuit Court on the grounds that the recommendations are news which the financial press regularly reports."

Theflyonthewall.com's practices, the judge wrote, were interfering with the banks' ability to profit (.pdf) from their research. The banks' clients were also being harmed by not getting exclusive, pre-market access to market-moving news, Cote wrote.

"The firms’ intellectual capital, and their substantial investment in producing high-quality equity research is ultimately justified only by the role that research plays in driving commission revenue," Cote ruled. "The greater the perception of value, the more that clients are willing to pay to gain and retain access to that research by directing their trading business to the firm."

But Cote did not altogether bar Theflyonthewall.com from distributing the banks' findings.

She wrote that the hot news doctrine, in combination with the "goal" of intellectual property, "is to provide an incentive for the production of socially useful information without either under- or overprotecting the efforts to gather such information."

For research acquired before the market's 9:30 a.m. East Coast opening, Theflyonthewall.com must wait until at least 10 a.m. before it publishes that information, the judge said. It must also wait two hours to publish the banks' buy-and-sell reports it obtains during the intra-day trading cycle.

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