Post by jannikki on Mar 6, 2006 18:04:01 GMT -4
Financial Press: Public Service or Destructive Bias
Location: Blogs Dave Patch's Blog
Posted by: dpatch 3/6/2006 9:25 AM
Financial Press: Public Service or Destructive Bias
In a speech provided to CNBC last Thursday Securities and Exchange Commission Chairman Christopher Cox addressed the issue of issuing subpoenas to members of the financial press. Specifically, the three subpoenas that were recently issued to Dow Jones columnists Herb Greenberg and Carol Remond and CNBC Host James Cramer and the unspoken one issued to TheStreet.com.
The firestorm that has ensued since the columnists received these Federal subpoenas has been created within the press and has become very self-serving in it’s reporting. An overwhelming bias against the Regulators makes it more difficult to understand the true nature of what may be transpiring in our markets and further implies some level of destructive reporting stemming from the financial press.
In politicking fashion, Cox stated that “financial journalists play a vital role in the operation of our capital markets and I want to make sure that the legitimate actions of the Securities and Exchange Commission in enforcing our securities laws don't chill the actions of legitimate journalists who in many cases are key to uncovered fraud where it occurs and in almost all cases are key to publishing and spreading across the country the information and material information about the financial operations of America’s companies”. Not the intended uses of the adjective; legitimate.
This statement once again became the rally cry to more financial press chest thumping and outrage.
What the financial press avoided in this interview was the flip side of what the Chairman had to say and his focus on legitimate vs. illegitimate journalists.
Cox stated “financial journalists share a public trust…when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.” Cox used the analogy of the “dirty cop” to illustrate his point. Not a single media release repeated these comments or the Commission’s sentiments.
In the police community, crimes by officers can be covered up in what has been labeled the “blue wall of silence”. Does the financial press have a similar wall of silence where good journalists will turn a blind eye to those journalists who may have abused their public responsibilities?
Instead of illustrating the extent of Cox’s communication, the financial press chose to focus on what was presented positively about their profession and used that to continue to provide biased reporting on the circumstances involving the subpoenas. Specifically:
According to SEC policy, any enforcement officer without the approval of the Commission can initiate investigations. These investigations are considered “informal” and have no subpoena entitlements. Once an investigation brings on the need for subpoenas, the Enforcement team must approach the Commission for approval to bring the investigation to formal status.
This is where the SEC is at this time in their investigation into Gradient Analytics and most likely others. Cox, in his comments to CNBC, proceeded to identify that the issue of subpoenas to the financial press was at the center of “cases before the Commission right now and before our enforcement division.” Cases, as in plural, and subpoenas which represent formal investigations.
These subpoenas represent an investigation into alleged improprieties that have been amongst the complaints lobbied for years against the cozy relationships between the financial press and the Hedge Fund Industry. With the SEC now investigating such allegations, the press is working overtime lobbying public opinion to pressure the agency to cease its investigation into this matter. The financial press hoping public outcry will evolve over constitutional rights issues.
So how does this conflict of interest between financial journalists and Hedge Funds exist?
CNBC commentator Charles Gasparino identified that much of the “rumors” and “scoops” that are generated from the financial press stem from communications with the Hedge Fund industry. Gasparino further stating that this is the case due to the level of diligence a short seller will undertake before entering into a short position.
The quick interpretation is, the financial press has been brainwashed into this idea that short sellers are the most intelligent traders in the market because of their implied risks in taking a stock short. “Short Sellers are rarely wrong” according to most of the financial press and thus the journalists rely heavily on what a short seller has to say. Then again, you can’t be wrong if you rig the score.
I guess that then begs the question of how smart the financial press is. Certainly a smart short seller can dupe any idiot reporter into believing their story hook, line, and sinker and running with it. What better way to be right all the time, force the negativity into the market through the press.
A perfect example of this type of media control transpired merely a day after the Cox interview with CNBC.
On Friday, NY Post columnist Roddy Boyd published an article titled “Trash Stalkers”. The article was 95% biased to the allegations of Bank of America Analyst’s Jerry Treppel and David Maris and against the management of Biovail. Both Trepel and Maris’ names are listed in the $4.6 Billion Biovail Lawsuit against Gradient Analytics, BofA, and Hedge Fund SAC Capital.
Boyd’s article was a clearly intended smear campaign against Biovail in order to discredit the company and the lawsuit. Boyd using the NY Post to accuse the firm of acting illegally through the actions of private investigators hired by the company. A smear campaign that was later picked up the support and repeated by Wall Street Journal Columnist Jesse Eisinger. The fact that Biovail disputes the accusations was a 5 percent on the side note provided by Boyd.
The irony in Jesse Eiginger picking up the torch is that Eisinger himself is listed in the Biovail lawsuit for being provided inside information about a much earlier SEC Investigation into Biovail. Eisinger allegedly received this insight from Maris prior to the SEC even making the company aware of the investigation. Eisinger contacting the company to discuss the SEC charges provided to him by Maris.
The relationship between Eisinger and Maris must then raise doubts about Eisinger’s objectivity in this matter. Clearly Maris would be a resource for information to Eisinger and like any cop on the beat, you do not give up your sources.
Also unreported by the financial press was an incident involving Mr. Eisinger almost a year ago. Eisinger was arrested on May 25, 2005 for trespassing in an elderly gated community in Nevada. Allegedly Mr. Eisinger had illegally obtained the phone and bank records for the site dedicated to the fight against illegal shorting abuses (www.ncans.net) and was on a research mission. Mr. Eisinger was intent on finding out the identity of the Author behind the site and had taken the less than acceptable tact’s he now goes on record as being opposed to.
Boyd in another example has also created a cozy relationship with the parties involved in this matter. Boyd’s relationship involves Hedge Fund manager David Rocker who is listed as a defendant in the Overstock lawsuit against Rocker Partners and Gradient Analytics.
According to Boyd, Rocker went to such lengths as to show Boyd his account statements pertaining to the funds interests Overstock.com. Boyd has subsequently followed up on the lawsuit by taking every possible opportunity to smear Overstock CEO Patrick Byrne and his public campaign against the “short and distort” tactic of manipulation. Boyd, in all of his publications, refers to the lawsuit but has yet to identify to his readers that the SEC is in fact in a formal investigation into Gradient Analytics and probably David Rocker based on finding during the informal investigation phase of their efforts.
The SEC Commission ruled on this investigation moving to formal and allowed the use of subpoenas. They must have seen something that interested them.
As Chairman Cox presented last week, “financial journalists play a vital role in the operation of our capital markets” yet, “when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.”
The subpoenas issued against such journalists are a first step in understanding the full nature of objectivity these financial journalists exercise when drafting negative articles against these shorted companies. The press must provide a service to the public that is in the best interests of the public and like analysts, cannot be involved in a conflict of interest where their sources have become sources for financial gain.
Hedge Funds taking large short positions in stocks should not be the provider of the negative bias that then gets disseminated through the financial press. With the financial press rarely publishing their sources of material for the stories the public fails to be disclosed of the nature of who and why these articles are published. A recipe for fraud.
If you think back to the analyst’s conflicts of interest, it was the financial press that first exposed this fraud. They did so off the heels of many Hedge Funds that were losing money to the ever-increasing value of stocks in the marketplace. The Hedge Funds went to members of the press and provided them with the stories that later became the careers of the financial press.
The question the SEC must now address, and do so without political pressures of the press, is to what extent this allegiance has become a conflict in itself.
Is the financial press too cozy with the Hedge Funds and thus providing biased reports that are ultimately a disservice to the general public?
thesanitycheck.com/Blogs/DavePatchsBlog/tabid/66/EntryID/134/Default.aspx
Location: Blogs Dave Patch's Blog
Posted by: dpatch 3/6/2006 9:25 AM
Financial Press: Public Service or Destructive Bias
In a speech provided to CNBC last Thursday Securities and Exchange Commission Chairman Christopher Cox addressed the issue of issuing subpoenas to members of the financial press. Specifically, the three subpoenas that were recently issued to Dow Jones columnists Herb Greenberg and Carol Remond and CNBC Host James Cramer and the unspoken one issued to TheStreet.com.
The firestorm that has ensued since the columnists received these Federal subpoenas has been created within the press and has become very self-serving in it’s reporting. An overwhelming bias against the Regulators makes it more difficult to understand the true nature of what may be transpiring in our markets and further implies some level of destructive reporting stemming from the financial press.
In politicking fashion, Cox stated that “financial journalists play a vital role in the operation of our capital markets and I want to make sure that the legitimate actions of the Securities and Exchange Commission in enforcing our securities laws don't chill the actions of legitimate journalists who in many cases are key to uncovered fraud where it occurs and in almost all cases are key to publishing and spreading across the country the information and material information about the financial operations of America’s companies”. Not the intended uses of the adjective; legitimate.
This statement once again became the rally cry to more financial press chest thumping and outrage.
What the financial press avoided in this interview was the flip side of what the Chairman had to say and his focus on legitimate vs. illegitimate journalists.
Cox stated “financial journalists share a public trust…when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.” Cox used the analogy of the “dirty cop” to illustrate his point. Not a single media release repeated these comments or the Commission’s sentiments.
In the police community, crimes by officers can be covered up in what has been labeled the “blue wall of silence”. Does the financial press have a similar wall of silence where good journalists will turn a blind eye to those journalists who may have abused their public responsibilities?
Instead of illustrating the extent of Cox’s communication, the financial press chose to focus on what was presented positively about their profession and used that to continue to provide biased reporting on the circumstances involving the subpoenas. Specifically:
According to SEC policy, any enforcement officer without the approval of the Commission can initiate investigations. These investigations are considered “informal” and have no subpoena entitlements. Once an investigation brings on the need for subpoenas, the Enforcement team must approach the Commission for approval to bring the investigation to formal status.
This is where the SEC is at this time in their investigation into Gradient Analytics and most likely others. Cox, in his comments to CNBC, proceeded to identify that the issue of subpoenas to the financial press was at the center of “cases before the Commission right now and before our enforcement division.” Cases, as in plural, and subpoenas which represent formal investigations.
These subpoenas represent an investigation into alleged improprieties that have been amongst the complaints lobbied for years against the cozy relationships between the financial press and the Hedge Fund Industry. With the SEC now investigating such allegations, the press is working overtime lobbying public opinion to pressure the agency to cease its investigation into this matter. The financial press hoping public outcry will evolve over constitutional rights issues.
So how does this conflict of interest between financial journalists and Hedge Funds exist?
CNBC commentator Charles Gasparino identified that much of the “rumors” and “scoops” that are generated from the financial press stem from communications with the Hedge Fund industry. Gasparino further stating that this is the case due to the level of diligence a short seller will undertake before entering into a short position.
The quick interpretation is, the financial press has been brainwashed into this idea that short sellers are the most intelligent traders in the market because of their implied risks in taking a stock short. “Short Sellers are rarely wrong” according to most of the financial press and thus the journalists rely heavily on what a short seller has to say. Then again, you can’t be wrong if you rig the score.
I guess that then begs the question of how smart the financial press is. Certainly a smart short seller can dupe any idiot reporter into believing their story hook, line, and sinker and running with it. What better way to be right all the time, force the negativity into the market through the press.
A perfect example of this type of media control transpired merely a day after the Cox interview with CNBC.
On Friday, NY Post columnist Roddy Boyd published an article titled “Trash Stalkers”. The article was 95% biased to the allegations of Bank of America Analyst’s Jerry Treppel and David Maris and against the management of Biovail. Both Trepel and Maris’ names are listed in the $4.6 Billion Biovail Lawsuit against Gradient Analytics, BofA, and Hedge Fund SAC Capital.
Boyd’s article was a clearly intended smear campaign against Biovail in order to discredit the company and the lawsuit. Boyd using the NY Post to accuse the firm of acting illegally through the actions of private investigators hired by the company. A smear campaign that was later picked up the support and repeated by Wall Street Journal Columnist Jesse Eisinger. The fact that Biovail disputes the accusations was a 5 percent on the side note provided by Boyd.
The irony in Jesse Eiginger picking up the torch is that Eisinger himself is listed in the Biovail lawsuit for being provided inside information about a much earlier SEC Investigation into Biovail. Eisinger allegedly received this insight from Maris prior to the SEC even making the company aware of the investigation. Eisinger contacting the company to discuss the SEC charges provided to him by Maris.
The relationship between Eisinger and Maris must then raise doubts about Eisinger’s objectivity in this matter. Clearly Maris would be a resource for information to Eisinger and like any cop on the beat, you do not give up your sources.
Also unreported by the financial press was an incident involving Mr. Eisinger almost a year ago. Eisinger was arrested on May 25, 2005 for trespassing in an elderly gated community in Nevada. Allegedly Mr. Eisinger had illegally obtained the phone and bank records for the site dedicated to the fight against illegal shorting abuses (www.ncans.net) and was on a research mission. Mr. Eisinger was intent on finding out the identity of the Author behind the site and had taken the less than acceptable tact’s he now goes on record as being opposed to.
Boyd in another example has also created a cozy relationship with the parties involved in this matter. Boyd’s relationship involves Hedge Fund manager David Rocker who is listed as a defendant in the Overstock lawsuit against Rocker Partners and Gradient Analytics.
According to Boyd, Rocker went to such lengths as to show Boyd his account statements pertaining to the funds interests Overstock.com. Boyd has subsequently followed up on the lawsuit by taking every possible opportunity to smear Overstock CEO Patrick Byrne and his public campaign against the “short and distort” tactic of manipulation. Boyd, in all of his publications, refers to the lawsuit but has yet to identify to his readers that the SEC is in fact in a formal investigation into Gradient Analytics and probably David Rocker based on finding during the informal investigation phase of their efforts.
The SEC Commission ruled on this investigation moving to formal and allowed the use of subpoenas. They must have seen something that interested them.
As Chairman Cox presented last week, “financial journalists play a vital role in the operation of our capital markets” yet, “when someone abuses that trust I think the American public and American investors have every right to expect that the full force of the law would be felt.”
The subpoenas issued against such journalists are a first step in understanding the full nature of objectivity these financial journalists exercise when drafting negative articles against these shorted companies. The press must provide a service to the public that is in the best interests of the public and like analysts, cannot be involved in a conflict of interest where their sources have become sources for financial gain.
Hedge Funds taking large short positions in stocks should not be the provider of the negative bias that then gets disseminated through the financial press. With the financial press rarely publishing their sources of material for the stories the public fails to be disclosed of the nature of who and why these articles are published. A recipe for fraud.
If you think back to the analyst’s conflicts of interest, it was the financial press that first exposed this fraud. They did so off the heels of many Hedge Funds that were losing money to the ever-increasing value of stocks in the marketplace. The Hedge Funds went to members of the press and provided them with the stories that later became the careers of the financial press.
The question the SEC must now address, and do so without political pressures of the press, is to what extent this allegiance has become a conflict in itself.
Is the financial press too cozy with the Hedge Funds and thus providing biased reports that are ultimately a disservice to the general public?
thesanitycheck.com/Blogs/DavePatchsBlog/tabid/66/EntryID/134/Default.aspx