PR Newswire has enacted new restrictions on recipients of primary feed of press releases to head off what officials have identified as a potential problem: using information contained in those releases to make stock trades just before news breaks about major developments in the world of business.
The service is “going the extra mile to ensure its service is not abused by high-frequency traders—at any time during the trading day and in the moments after the closing bell,” New York Attorney General Eric Schneiderman told the Associated Press
Only 20 or so organizations receive PR Newswire’s direct feed, and they’re almost all news organizations, but that feed is then distributed to thousands of recipients. Traders who get that information seconds before other people could take advantage of it, so PR Newswire is essentially making organizations promise that none of their employees will use such information in high-frequency trading.
In addition, PR Newswire is asking companies who release information about earnings and other business developments to do so after the U.S. stock exchanges close at 4:01 p.m. Eastern time. Seemingly, reporters on deadline wouldn't like that request very much.
A statement from PR Newswire says they won't mind, though. The organizations says its "recommendation should have no effect on the media, and only a very minor procedural impact on communicators from public companies." Many companies already scheduled releases about finances for 4 p.m.; this change only pushes it back by one minute.
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If you’re in charge of issuing press releases for a publicly traded company, take note.