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CCBN Charges Thomson Financial with Ethical Violations
Posted On August 5, 2002
CCBN (, an Internet-based investor communications firm, has filed a lawsuit against Thomson Corp., alleging that "Thomson Corporation … and its Thomson Financial, Inc. subsidiary breached its fiduciary duty by using confidential information from CCBN board meetings to compete against the firm." Thomson Financial ( is "the largest outside shareholder in CCBN, owning approximately 10 percent of the company, investing in CCBN when it was founded in 1997. At the time, Thomson insisted upon and received two seats on CCBN's board of directors. Thomson Financial continued to be represented on the board until April 2002."

The suit charges Thomson Financial with having "misappropriated CCBN corporate opportunities and improperly used their dominant market power to injure and steal [CCBN's] business." In light of the current business climate with regard to ethical practices of board members, no publicly traded company can afford to have its corporate values questioned. Thomson has issued a brief statement denying all allegations contained in the 155-paragraph complaint. Richard Harrington, chief executive of the Toronto-based Thomson, says that the firm intends to "vigorously defend itself against this baseless claim."

The lawsuit filed in the U.S. District Court for the District of Massachusetts charges "that Thomson has consistently engaged in unfair trade and business practices; misrepresentation; breach of contract; and monopolization in violation of the Sherman Antitrust Act." Jeffrey P. Parker, chairman and CEO of CCBN, claims that Thomson designees on CCBN's board received sensitive information and used it "to create a directly competitive business." Perhaps even more egregious is the allegation that Thomson "stole by breaking into password-protected sites." (A copy of the complaint can be found at

The nature of its business and connections within the public relations and investor relations communities may have led CCBN to choose a very public approach to addressing its grievances, though Parker says the firm resorted to litigation only after 7 to 8 months of attempts to resolve the issue. (Representatives at Thomson Financial declared that they were "surprised to see the lawsuit as they were in negotiations up until last week" to resolve the dispute.)

In this era of full disclosure, "coming clean with issues" is part of our new society. Parker believes that "it is important for other institutions to be aware of actions that Thomson has taken against CCBN" to understand how Thomson operates as a major market power. CCBN maintains the position that, since Thomson's interest in CCBN was more than a mere investment and the directors appointed represented Thomson, their duty of loyalty as directors of CCBN was to the shareholders of that company. Parker says, "If Thomson can prevail, then all CEOs will have to look at their boards" as competitors, requiring members to file non-compete and confidentiality agreements.

The suit claims that, despite assurances that Thomson Financial "had no plans to offer IR communication services to corporations," early in 2000 Thomson Financial began to systematically use its position on the board "to delay CCBN from pursuing its own plans" and to obfuscate the fact that "Thomson Financial would soon be competing with CCBN in the provision of services to CCBN's core IR market."

The charges are as follows:

In July 2001, CCBN management told its board that it was acquiring the assets of, Inc., the operator of the StreetFusion event calendar, a smaller competitor in the IR field. According to Parker, "Thomson Financial hired numerous employees to develop for Thomson Financial an IR calendar to compete directly against CCBN with the use of the information they had acquired while employed at"

Without informing CCBN, in July 2001 Thomson purchased 20 percent of Wall Street Source (WSS), a CCBN competitor that offers market information, an IR calendar, and other IR products and services.

Thomson acquired, a small company with whom CCBN had been in discussions.

In April 2002, Thomson Financial announced that it would partner with two other firms that compete with CCBN—Fair Disclosure Financial Network (FDFN) and CCN, LLC (CCN)—to provide conference call summaries and transcripts as part of a product line that competes directly against CCBN's StreetEvents.

Thomson's "First Call Events" contains elements of WSS,, StreetFusion, FDFN, and CCN data. The suit alleges that First Call Events is "identical" to StreetEvents and its pricing structure "designed to further harm CCBN." Most recently, Thomson Financial's strategic relationship with PR Newswire, a leading news release service for corporations, expanded to include Web site hosting and Webcasting. Parker insists that "if PR Newswire was open to an alliance, Thomson Financial's responsibility was to present that opportunity to CCBN."

The lawsuit further alleges that Thomson Financial's tying access to its Earning Estimates services (in which it has a 90-percent market share) to its own online investor relations services is anti-competitive. Parker says that "Thomson is pursuing a strategy that allows them to limit and control how information is disseminated." It's no secret to those in the business that Thomson is a rather aggressive competitor, but the merits of the case will have to be decided by the courts.

Barbie E. Keiser is an information resources management consultant located in the metropolitan Washington, D.C., area.

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