Large brokerage firms estimate that more than 60% of all trades result from firm solicitations that are made when the brokerage firms change their recommendations. Bank of America, Morgan Stanley, and Barclays sued theflyonthewall.com for copyright infringement and misappropriation of stock research. The courts rules in favor of the firms on copyright infringement but sided with The Fly on the Wall on misappropriation. The firms argued that their clients are more likely to place a trade with them if they learn of the recommendation directly from the firms rather than elsewhere. The firms also estimated that more than sixty percent of all trades result from Firm solicitations, including those highlighting Recommendations. Here is a summary of what Fly on the Wall does:
Fly on the Wall employs 28 people, about half of whom are devoted to content production. Fly’s subscribers are predominately individual investors, institutional investors, brokers, and daytraders. These customers purchase one of three content packages on Fly’s website, paying between $25 and $50 monthly for unlimited access to the site. Fly has about 3,300 direct subscribers through its website, and another 2,000 subscribers who use third-party platforms to receive the service.
The cornerstone of Fly’s offerings is its online newsfeed, which it continually updates between 5:00 a.m. and 7:00 p.m. during days on which the New York Stock Exchange is open. The newsfeed typically streams more than 600 headlines a day in ten different categories, including “hot stocks,” “rumors,” “technical analysis,” and “earnings.” One such category is “recommendations.” There, Fly posts the recommendations (but not the underlying research reports or supporting analysis) produced by sixty-five investment firms’ analysts, including those at the plaintiff Firms.