NEW YORK (Reuters) - Research firm Morningstar Inc (MORN.O) has been sued for allegedly gaining unauthorized access to a Web-based service that helps clients send the most up-to-date mutual fund prospectuses to investors, according to court documents filed on Monday.
The lawsuit, filed in Massachusetts state court by NewRiver Inc, seeks to stop Morningstar from accessing its online warehouse of updated prospectuses, and asks for unspecified trebled damages.
Andover, Massachusetts-based NewRiver is accusing Morningstar of using “screen-scraping” technology and copying thousands of documents.
“We think the lawsuit has one purpose: to discourage Morningstar from competing with NewRiver,” said a spokeswoman for Chicago-based Morningstar, which launched its own service in late 2008.
“We did not use any NewRiver technology, data or information to create or market our product,” she said. “We did not access the data through password-protected sites.”
Morningstar acknowledged accessing NewRiver’s data for “benchmarking” purposes to see if its own information was up to date.
NewRiver’s service, for which it obtained a patent in 1998, checks the U.S. Securities Exchange Commission’s online EDGAR site for updates to prospectuses and stores them on its electronic repository for use by brokerage houses.
The company handles about 1,000 prospectus updates every night, Chief Executive Russell Planitzer said, and clients pay up to $500,000 per year for a subscription.
Although prospectuses are available from the SEC’s website at no cost, they are updated often and difficult to send immediately to investors for compliance purposes.
The lawsuit claims Morningstar gained access to NewRiver’s data warehouse more than 130,000 times between May 1 and December 3 last year from Internet addresses in Chicago and China.
NewRiver’s service is not password-protected. Rather, subscribers are given a specific, proprietary website address for a prospectus, which they then share with clients.
Morningstar shares were up 30 cents at $34.97 in afternoon Nasdaq trade.
Reporting by Phil Wahba; Editing by Lisa Von Ahn