Jin Lee/Bloomberg News

A federal appeals court has ruled that a breaking news Web site was not misappropriating stock research when it published headlines about upgrades and downgrades, dealing a blow to Wall Street banks and a victory to the investing public.

A panel of judges on the United States Court of Appeals for the Second Circuit in Manhattan ruled that Barclays, Morgan Stanley and Bank of America could not control who broke news regarding its stock research.

The decision, issued on Monday, reverses a controversial lower court decision last year that required theflyonthewall.com Web site to wait until 10 a.m. to publish news about Wall Street research that was issued before the 9:30 a.m. opening bell. The ruling effectively gave the banks’ clients a half-hour edge in seeing market-moving research before everyone else.

“A firm’s ability to make news — by issuing a recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how,” wrote Judge Robert D. Sack in the court’s 71-page opinion.

The banks had argued that publishing headlines about a bank’s upgrade or downgrade of a company was tantamount to stealing intellectual property.

U.S. Court of Appeals for the Second Circuit ruling in Banks v. The Fly on the Wall

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