The problem with a judge's ruling

Andrew Ross Sorkin of the New York Times writes Tuesday about the recent judge ruling that prevents a Web site from writing about changes in stock recommendations from Wall Street firms.

Sorkin writes, “While the ruling applies only to theflyonthewall.com, a small Web site with several thousand subscribers, the decision could presage a larger effort by Wall Street banks to limit the distribution of news about their research.

“News organizations like Bloomberg, CNBC, Dow Jones and The New York Times routinely report on stock upgrades and downgrades as soon as they get their hands on the reports. The research often breaks news or can turn into news.

“By the logic of Judge Cote, the next time Intel’s stock price spikes as a result, let’s say, of an upgrade by Morgan Stanley, the press should have to wait several hours to report on what was behind the big move.

“In that spirit, the decision seems contrary to rules about fair disclosure (not to mention fair play) that have long applied to public companies. For years, the Securities and Exchange Commission has tried to stamp out ‘whisper numbers’ about earnings and other ‘guidance’ that corporate executives pass along to friendly analysts, who then pass that information to select clients. The S.E.C. even adopted Regulation Fair Disclosure, or Reg FD, to put a stop to the whispers.”

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