22 February 2017

Judge rules that company reporting on business debt cannot use shield law

A Manhattan Supreme Court Justice has ruled that company's may not use New York's Shield Law to protect against the disclosure of confidential sources when providing information about distressed businesses to high-end institutional subscribers.

By Kathryn Higgins


Delivering her ruling late last week, Manhattan Supreme Court Justice Carol Edmead concluded that analysts at subscriber-only services like Reorg Research could not claim protection under the state’s Shield Law, which she said was designed for the protection of ‘professional journalists’ when disseminating information to the general public.

A question of public interest

The ruling came despite Wall Street Journal managing editor and ProPublica founder Paul Steiger writing and affidavit of support of Reorg Research in the case, which he described as a ‘journalistic organisation’: ‘o force disclosure of the confidential sources would seriously harm the ability of Reorg Research—and by fear of precedent, all journalistic organizations—to produce and unearth information of great value to the public interest,’ he wrote.

Justice Edmead, however, ruled that Reorg employees could not claim protection under the state’s Shield Law for their work providing the organisation’s 375 subscribers with information about the financial health and indebtedness of companies, as these subscribers (who each pay between $30,000 and $120,000 to receive Reorg’s ‘up-to-the-minute’ alerts) do not constitute the general public. Reorg general counsel has signaled the company’s intention to appeal the decision.

Sources: Corporate Counsel; New York Law Journal

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