Wednesday, March 24, 2010

Financial site must observe delays in "republishing" certain information: a potential problem for bloggers?

From Bill Boushka

According to young finance writer Andrew Ross Sorkin (New York Times, March 23), (link here) a number of banks have gone to court to keep stock market research out of the hands of ordinary people (or ordinary investors) for some time after it is known effectively to insiders. They had sued a webmaster for “The Fly on the Wall” (link) to stop "quick publishing" of tips and advice on their business, and recently the banks won.

The judge ruled that the site cannot publish "opening bell" news on these companies until 10 AM Eastern time ( 30 minute delay) and that during the trading day a 2 hour delay must be observed to stop publishing tips and advice on their business. It's important to note that the information is "published" to some people "privately" before average investors know about it; but the information is in some sense "classified".

Perhaps the ruling contradicts the efforts of financial reform considered in the Senate now.

While Sorkin focuses on the delivery of information to layers of investors, the ruling could have implications for blogging in general. What if a blogger discloses a “spoiler” of a plot of a movie in order to make an argument about a political issue, and a movie studio were to claim that his doing so undermined ticket or even DVD sales for the movie, for people whose “dinner was spoiled” by knowing the ending? Would it matter how long it had been since the movie had been released or distributed? Will there exist “layers” in who can publish what and when?

Note from the picture (Burruss Hall) that I visited Virginia Tech yesterday. More comments later with one of my more “personal” posts. But I suspect that financial reporting (and the significance of a story like this one) gets taught there. Would make for a good essay test question.

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