A US federal court in New York dismissed three purported class action law suits filed by Harold Lanier, an individual trader, that argued that the multiple defendant stock exchanges violated their market data contracts with him under state law. Mr. Lanier claimed this breach occurred when the defendants made market data available to some customers more quickly than to other customers—as the court noted was also one of the principal allegations by Michael Lewis in his 2014 non-fiction book, “Flash Boys: A Wall Street Revolt.” The court ruled, however, that Mr. Lanier’s claims were pre-empted by federal law and that his charges must first be heard by the Securities and Exchange Commission. Moreover, even if not pre-empted, Mr. Lanier’s claims were inadequate to state a claim, said the court. According to the court, under federal law, the SEC has “pervasive rulemaking power to regulate securities communication systems,” and pursuant to that authority the Commission has enacted a rule (Regulation NMS; click here to access) that requires exchanges to “distribute quotation and transaction information on ‘terms that are fair and reasonable’ and ‘not unreasonably discriminatory’.” The court noted that, even with this requirement, the SEC has approved certain data feeds that offered speed advantages over other data feeds. However, the SEC has only required that exchanges transmit data at the same time to all recipients, not that all recipients receive the data at the same time, said the court. Thus, if Mr. Lanier were to prevail under his breach of contract claims, there would be a conflict between state and federal law, claimed the court. Accordingly, wrote the court, federal law must pre-empt.