Is this investment report a financial promotion?
According to the FCA, "a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity (i.e. a financial promotion) unless:
- he is an authorised person; or
- the content of the communication is approved for the purposes of section 21 by an authorised person; or
- the communication is exempt under an order made by the Treasury under section 21(5) – the Financial Promotion Order (as amended)."[1]
For a communication to be considered a financial promotion, the communication must contain an element of invitation or inducement, amongst other things[2]; for a communication to be considered an invitation or inducement, the communication must “have the purpose or intent of leading a person to engage in investment activity".[3]
The communicator of the communication is anonymous, and, therefore, the purpose of the communicator, and the purpose of the communication itself, is unclear. The FCA recognises that the matter cannot be without doubt.[4] That said, the purpose of the Stockhub platform is to help a person to make better investment decisions (i.e. it’s not lead a person to engage in investment activity). Indeed, the purpose of the platform is reflected in the platform's monetization strategy (i.e. donations). In other words, the owner of the platform does not benefit from a person engaging in investment activities in the said investment; the owner benefits from a person making better investment decisions. Accordingly, it is the view of the Stockhub company that the said investment report is NOT a financial promotion.
Does this investment report violate any copyright laws?
According to the Copyright, Designs and Patents Act 1988, "Fair dealing with a work for the purpose of criticism or review, of that or another work or of a performance of a work, does not infringe any copyright in the work provided that it is accompanied by a sufficient acknowledgement (unless this would be impossible for reasons of practicality or otherwise) and provided that the work has been made available to the public.
Factors that have been identified by the courts as relevant in determining whether a particular dealing with a work is fair include:
- does using the work affect the market for the original work? If a use of a work acts as a substitute for it, causing the owner to lose revenue, then it is not likely to be fair
- is the amount of the work taken reasonable and appropriate? Was it necessary to use the amount that was taken? Usually only part of a work may be used
The relative importance of any one factor will vary according to the case in hand and the type of dealing in question.
The reason for using the work is for review purposes, and, therefore, it is the view of Stockhub that using the work falls into the fair dealing category provided that 1) the used work is accompanied by a sufficient acknowledgement and 2) the work has been made available to the public.
It is the opinion of Stockhub that using the work does not act as a substitute for the work; if anything, it acts as a complement. The work is a financial promotion, whereas the output of using the work is an investment research report.
Additional useful information: facts cannot be copyrighted.
This question is still being investigated.