Stroock Special Bulletin
“'Hot News' Doctrine Protects Investment Firms’ Actionable Equity Recommendations”
On March 18, 2010, the United States District Court for the Southern District of New York issued its decision in Barclay Capital Inc. et al. v. theflyonthewall.com, applying the "hot news" theory of misappropriation to prevent the redistribution of financial service firms' equity research recommendations until one half hour after the opening of the NYSE or 10:00 a.m., whichever is later. The decision is likely to have far-reaching implications for the dissemination of financial information of many different types, where such information could be positioned as "hot news."
However, it is not yet clear how that will play out in the future. On the one hand, the decision reaffirms the viability of a "hot news" based cause of action. On the other hand, it calls into question the limitations that courts are prepared to place on services, both mainstream and internet, to republish financial information, such as research recommendations already publicly disclosed through various mediums. For example, could the publication of the numerical value of an index be positioned as an "actionable" market indicator such that the use or republication of the index value is protectable, and, if so, to what extent?
This Stroock Special Bulletin looks at these questions and the implications of the decision to the protection of actionable market information.