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Free Speech, or Conduct? On Subpoenas to Journalists…

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 2/27/2006 9:49 AM

(UPDATE: This article just broke on Reuters, wherein the contention is that Cox rebuked the SF office of the SEC for issuing the subpoenas to Herb and Carol and not seeking Washington HQ's approval. Here's a question: is there any rule that mandates that the SF office get Washington's approval? If so, that was a goof. If not, this is a bunch of political BS and grandstanding. Anyone know the answer to this?)

 

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Today, in the matter of Carol Remond and Herb Greenberg, SEC Chairman Christopher Cox came out with a statement that the issuance of subpoenas to journalists was highly unusual, and that the Commission would have to consider the step further before proceeding. Here are the SEC’s comments:

“Until the appearance of media reports this weekend, neither the Chairman of the SEC, the General Counsel, the Office of Public Affairs, nor any Commissioner was apprised of or consulted in connection with a decision to take such an extraordinary step," SEC Chairman Christopher Cox said in a statement.

"The sensitive issues that such a subpoena raises are of sufficient importance that they should, and will be, considered and decided by the Commission before this matter proceeds further," Cox said.“

Now, folks, I may only be a holiday bunny, but it seems to me that there is a pretty clear issue here.

This isn’t about protecting 1st Amendment rights for journalists.

This is about conduct, specifically the investigation of whether there is any truth to the allegations, made in sworn testimony, that the journalists in question colluded with hedge funds and research analysts in timing their articles, in order to cause maximum downside impact on the targeted stock.

Conduct.

Not speech.

I don't have any idea whether the allegations are true, but then again, neither do any of the windbags claiming that this is a 1st Amendment issue. Nobody does, as we haven't seen all the evidence. But the SEC has seen a lot of it, and they felt justified in issuing subpoenas. Doesn't that give one pause, before whining and mewling about the big bad old government trampling the poor little journalists' cherished rights? Apparently for some, consideration of the facts isn't obligatory. Merely knee-jerk indignant outrage, and lots of ink.

Now, if the SEC is investigating a conduct issue related to these journalists' interactions with Gradient and Rocker, how, precisely, are they supposed to do so if journalist correspondence with the hedge funds and research outfit in question are off-limits?

Put another way, does carrying a press card excuse one from the rule of law, and allow one to collude to manipulate the price of a stock – with impunity? I’m not saying that the allegation is true, but if it is, does a press card equate to a "get out of jail free" card? I didn’t think so, but we will get to find out soon enough.

So while an irate NY press corps is acrimoniously wrapping itself in the flag, and proclaiming that the subpoenas are an outrage, let’s stop for a second and consider that at no point did any press member have to take an oath to be honest. In point of fact, the Abelow and HealthSouth matters very recently indicated that some journalists are more than happy to take money to write stories supporting whoever is paying them off. If one uses a simple common-sense percentage to allow for the range of human behavior, and one agrees that journalists are likely no more honest than priests, or cops, then it is reasonable to assume that at least 2% of the reporters are bent, and crooked.

If there are 500 financial reporters and journalists, that would mean 10 are bad to the bone.

That’s a pretty low percentage, BTW. Far lower than I think is correct. But play along.

So is it possible that 10 members of the US financial media machine have been eating forbidden fruits, and abusing their privilege as journalists? I would argue that it is not only possible, but that statistically speaking, it is a certainty.

But more to the point, is it the nature of what is being investigated that is making it so easy to get up on the collective press' high horse?

If the journalists in question were being investigated for being pedophiles, would there be an outcry, filled with outrage? How about if they were being investigated for trafficking narcotics? What about conspiring with a murder-for-hire ring? How about working with a terrorist cell?

Would everyone still be arguing that subpoenaing their records is an outrage?

Put another way, how much pedophilia or terrorism would a press pass buy?

I’m guessing none.

So why is investigating another crime, namely stock manipulation, suddenly an assault on freedom of speech and the sanctity of the press? Would it be different if there was a kid in a cellar that was going to run out of air and water within 48 hours? How about a reporter that knew about the next plane to go into a building? If that would not be protected, why would it make a difference, at an ethical level? Still an investigation into wrongdoing, not just invented, but supported by a ton of sworn testimony.

In the late 1980’s, they had to do the same thing, in the Wall Street Journal Foster Winans matter – and he was guilty, did 8 months of hard time. Winans was convicted of fraud in 1985 for tipping off brokers who traded stocks based on information he fed them about the paper's upcoming "Heard on the Street" column. Sound familiar?

So there is precedent.

I can’t help but think that the whole moral outrage that's being manufactured is a smoke screen, to convert a straightforward stock manipulation investigation into something else – an assault on God and Country.

Is anyone stupid enough to buy this?

Let’s examine Herb’s track record, and see if there's any basis for considering his alignment with the defendants with a jaundiced eye: Here's an analysis of his articles on NFI, for a one year period, along with trading patterns indicating front-running of his articles.

Folks, what we have is a regulator that is faced with a difficult choice, and who is being targeted as a bad guy by the press corps – I’m not sure why – as again, there is precedent for this type of action, and there is reason to investigate. They are trying to play the Commissioner of the SEC, force him to put the kabosh on discovery. Get him to intercede, to stop the investigation. And using public media outlets to do so.

So ask yourself a question.

Are Herb and Carol’s emails to Rocker and Gradient vital secrets that will divulge the source of valuable info on government malfeasance? No. Are they protecting sources that the bad old government wants to persecute due to information leaks? No. They are nothing more than possible evidence of their collusion with a hedge fund and a research company for the oldest reason in the world: money. So why is that being framed as an invasion into journalistic freedom?

Is it the role of journalism to engage in stock manipulation? If not, then there is no argument for this being a 1st Amendment issue. It isn’t. It is merely being spun that way so that the gathering of evidence is obstructed.

As an aside, Rocker’s attorneys are using a free speech argument to try to delay discovery in the civil suit, so this doesn’t come as a surprise. That anyone is taken in by these arguments, when Rocker has threatened to sue me for the same expression of free speech he argues covers colluding to doctor and front-run research reports, is astounding to me. Especially given that this patriot, this defender of free speech, this embracer of Constitutional rights, sued another message board poster once before in order to silence criticism – and it got thrown out of court.

Here’s a fun little story that Patrick told me. He indicated that per several of the affiants, when Gradient couldn’t convince a new prospective customer to open their checkbook and sign up, that they would ask what stock the prospect was short, and then issue a negative alert, coupled with a damaging article – to demonstrate their abilit to impact a stock's price. Once the PPS dropped 5% or more, the checks were cut. I’m sure the truth will come out in court, but if accurate, that doesn’t sound like 1st Amendment stuff to me. It sounds like a brazen, flagrant abuse of information and privilege - to manipulate stocks, for profit.

Now, Christopher Cox is well aware of the NFI/media/Rocker story, as a group of shareholders apparently brought it to his attention 3 years ago, when he was a state representative. Then, when he was made Chairman, he again received a number of letters about it. So he can’t claim ignorance.

What this is going to come down to is whether the Chairman of the SEC will cave to deliberate attempts by the Wall Street media machine to influence the progress of an investigation, and whether he is willing to throw hardworking staffers who are doing their job under the bus, in order to appease those Wall Street special interests.

This will be a marvelous opportunity to see whether the new Chairman is a lackey to Wall Street billionaires, or whether he is interested in pursuing his mandate to protect the investing public from the predations of Wall Street billionaires.

This isn’t about the 1st Amendment. It is about whether the outcome of investigations can be bullied or bought.

Simple.
Copyright ©2006 Bob O'Brien
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Comments (51)
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 10:16 AM
Bob-

My succinct thoughts welcome or not? Not all negative, FWIW.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 10:24 AM
Always. Just no pitchforks and such. Your case doesn't require it.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 1:49 PM
I think that it is much reminiscent of Milken, or the S&L thieves.

They had years to cover their tracks. But stealing billions must distract one. Both went down hard, and both protested that they were victims all along the way. Nothing new.

You can't take back the trades. When the SEC goes through the trading on NFI and OSTK, and looks at days like April 13, 2004 in NFI, and sees a Herb article every 4 hours, and likely 4 million FTDs sold to manipulate the price down, it will be obvious.

I think that they never expected the SEC to do anything. And they may be right. We shall see. I smell a lot more of a larger billionaire's access in this than Rocker's FWIW, but because they are interpenetrated with the same research and media groups, you see the result across both groups' positions.

I think that some of the NY press are crooked, and some are just biased. I think that the SEC has enough info to know which is which, hence specific subpoenas. I think the effort to stifle those is likely a result of billionaire phone calls, not righteous indignation from the press corps, although at the end of the day it will look the same.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By dave on 2/27/2006 2:14 PM
<>

Read my posts in Mark Faulk's blog about the x-clearing system. Most brokerages don't hold trust assets in their own name. Most brokerages are "introducing brokerages" who hold their assets at "clearing brokerages".

The clearing brokerage holds their assets at the DTC.

Case law is that clearing house brokerages are not liable to police the introducing brokerages. Even if they know their is rampant wrongdoing, they have no obligation to police it.

Why not take the transaction fees from the corrupt introducing brokerage - there is nothing to lose and no one auditing the system.

In terms of why don't reporters blackmail the dirty hedge funds, maybe the do and get paid or maybe because they don't want to wear cement shoes. We're talking big money here.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By whosyouruncle on 2/27/2006 2:16 PM
Patchie: Your comments reinforce my view that we should not jump to conclusions about the action by the SEC's new Chairman, Cox. As you say:"The SEC rarely subpoenas journalists or news organizations", and you ask "who have been served in the past, why, and how was that media response?"

It seems reasonable that, with the currently highly charged political sensitivity to pressuring reporters (the hullabaloo over the NYT reporter who preferred jail in the Cheney-aide CIA agent matter, e.g.), that Cox would want a full review of a lower-level issuance of a "rare" use of the SEC's power to do so. It could be that the SEC will pursue their other subpoenad sources first to flesh out, more specifically, what it wants from these reporters, and try to fend off the expected media condemnation of daring to meddle in their affairs. Certainly, knowing the SEC's track record on such "rare" past instances would be helpful in evaluating what now transpires.

On a related natter, the delay in Greenberg's comments on reporting the subpoena, was probably, imo, to let his employers try to quash its issuance, or to minimize or pre-spin any impact it might have, before he annouced it with his defiant "I'll fight this to the death" item. Bob L.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By dave on 2/27/2006 2:22 PM
If you haven't read this link on the clearing system, you should read it now.

http://www-rcf.usc.edu/~usclrev/pdf/072403.pdf

This post is a repeat. The sources for the following quotes are in my comments in Mark Falk's blog.

"Approximately ninety percent of all broker-dealers registered with the Securities and Exchange Commission (SEC) hire clearing brokers and utilize clearing arrangements."

"These firms are paid to clear trades, not to watch customers. Clearing firms will charge more or consider leaving the business if they are asked to police sales practices and that will end up hurting the average customer," says Sidley Austin Brown & Wood lawyer Henry Minnerop, who has represented most of Wall Street's clearing firms over the years." (Their customer is the brokerage.)

“Even if one accepts that the complaint sufficiently alleges that Bear Stearns did this with knowledge that these brokers were manipulating the securities at issue, the complaint does not establish Bear Stearns primary liability under § 10(b).”

"The most common form of misconduct leading to firm failure is the outright misappropriation of customers’cash and securities."

"The SEC and SROs do not actively monitor brokers’ financial
health; rather, the financial conditions of broker-dealers are largely selfreported."

"While some violations may be due to a failure to understand
the complexity of Rule 15c3-3, it is likely that some brokers deliberately
flout this rule in order to realize higher gains on customer assets"

"After 1978, “[a]ll customers who left negotiable
securities in their broker’s possession share the risks of misappropriation
and share ratably in remaining customer property.”
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rashomon on 2/27/2006 2:26 PM
But whereas the S&L scandal was just absolutely blatant fraud most of the hedge fund practices under scrutiny are entirely frustratingly (or profitably of course) gray. For example: I know you claim that NSS is easily provable outright fraud etc etc, but you have to ask why years after cases like Rhino etc there have never been any criminal charges brought for NSS? Is it conspiracy, ineptitude, or is there no bullet proof criminal case to be made for a multitude of valid legal reasons? Now Reg SHO enables the SEC to go after offenders but not criminally. So ethically you may be correct but you ultimately have no legal basis ... The practicers and participants of what strike common sense as abusive are usually (and there are definitely some stupid blatant violators) well versed in rules and regs and dont flagrantly violate. this is what you are up against. so what I am saying is the fight requires sophistication ... and I am not saying that you are incapable of it and I sympathize with your reactive stance given all the BS posturing and namecalling thrown at you ... but you cant let the whole theme of investigating hedge fund abuses and BD collusion become a circus

as I said before you GOTTA start talking to long-only mutual and pension funds. they should be a natural ally. but you cant go at them with the browbeating from the shadows technique.

Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 2:35 PM
Rash - it seems to be working so far. I think the reason you don't see any NSS cases is because the SEC is NOT chartered with going after participants. It is VERY rare that they do so. Very. Rare. Look at their track record over the last 10 years - in every instance, they have responded to the states bringing the case, and then stepped in after.

The SEC never has had criminal prosecution capability. I believe that the first draft of the bill that became the 1934 Act did, but that was omitted in the final draft due to Wall Street lobbying, as were most of the rules with any teeth.

This has been going on for a long time. Most people are unaware of the history of the Street and the SEC, thus mistakenly assume that they are on the side of the investor.

They never have been. Ever.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rashomon on 2/27/2006 2:40 PM
And let no one make the mistake of conflating morality or common sense with the law. The repercussions are incredibly dangerous. Now maybe the NSS movement is a moral crusade for the reform of the law or a moral crusade for the consistent and proactive application of the law. You probably see yourself as the latter, but in many respects you are the former because the laws and precedents dont yet exist and may never with the current securities law structure. You gotta realize what you are and firmly demarcate what you arent.. you know evolve out of the murky conspiracy theory territory ... acquire salient and achievable targets ...you have the grassroots groundswell and a lot of sympathy in certain areas of the govt. I'm not chastising, this is no easy feat.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rashomon on 2/27/2006 2:57 PM
Yes, the SEC has no criminal prosecution powers but I'm assuming evidence of NSS has been in the hands of the DOJ for years and NADA yet. I dont know, maybe the most important thing in process is the investigation of Refco ... maybe they are waiting for all the nodes of a RICO case to appear and issue sweeping indictments that will settle out who is criminally liable when someone naked shorts -- the investment advisor, the fund, the broker, the clearing house, the DTC etc etc. could happen. Plus, supposedly the SEC was hiring 1,000 investigators to investigate and oversee hedge funds but has that happened yet?
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By show us the numbers on 2/27/2006 3:04 PM
Kudlow did his nightly poll. Tonights question was did the SEC overstep it's bounds by being subpoena happy. Kudlow always shows his results at the end of the show. Tonight he says let's see how our poll did, and he acted surprised when more people voted that the SEC did not overstep its bounds. He usually shows the results of the polls but tonight Kudlow wouldn't show the numbers.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By anon on 2/27/2006 3:28 PM
Paddy says Linda T. OK'ed the peonas, and Kramer just got his poena.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By zockster on 2/27/2006 3:29 PM
Does anyone have a link to the Kudlow show? I heard Patrick was on it, and it was quite "spirited".
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By dave on 2/27/2006 3:29 PM
Rashomon, I answered that in the quotes above.

The case law is that a clearing organization simply clears (a mechanical process) and has no obligation to police the brokerages that they clear for. Even if their is blatant wrong doing that the clearing house is aware of, the clearing house is not to blame.

I'm not saying this is right, but the clearing houses have hired top notch legal teams to establish legal precedents that establish that.

If they are not to blame, then their incentive is to facilitate manipulative trading to increase volume which increases their fees.

Read about Adler Coleman, MJK Clearing and Refco Clearing which all imploded because introducing brokerages committed fraud, yet none of the execs. at the clearing houses have gone to jail or been exposed to damage claims.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By dave on 2/27/2006 3:32 PM
Look at the sorts of people we are dealing with. Adnan Khashoggi, one of the world's biggest arms dealers brought down the MJK Clearing. You want a cover up, look into MJK Clearing's collapse.

"With a long history of horse trading in Florida, Khashoggi will likely face increased scrutiny as the stock scam probe continues. Currently wanted for questioning in the collapse of a bank in Thailand, the debonair and free-wheeling CIA asset of yore, who haunted both Tampa and Miami in Florida for decades, is charged with the collapse of brokerages and MJK Clearing, the failure of which became the country’s largest securities service firm collapse."
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Scott on 2/27/2006 3:33 PM
After that rant by Kudlow at the end of the show, I sent Mr. Kudlow a respectful email discussing the issues and pointing him to this site.

Kudlow@CNBC.com
***SPECIAL ALERT*** By The Midas Touch co-author on 2/27/2006 3:36 PM
I just read that Cramer and TheStreet.com got subpoenas. Cramer is said to talk about it tonight on his show. He's on now.

http://www.thestreet.com/_yahoo/markets/marketfeatures/10270634.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By InTheKNow on 2/27/2006 3:37 PM
By: positive_punch
27 Feb 2006, 06:18 PM EST
Msg. 78049 of 78049
Jump to msg. #
TheStreet.com, Cramer Get Subpoenas in Gradient Probe

By Matthew Goldstein
Senior Writer
2/27/2006 6:01 PM EST

A regulatory investigation into allegations of collusion between short-sellers and a stock-research firm has led to the serving of subpoenas on TheStreet.com (TSCM:Nasdaq - commentary - research - Cramer's Take) and


http://www.thestreet.com/_yahoo/markets/marketfeatures/10270634.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Re: Free Speech, or Conduct? On Subpoenas to Journalists… By jcline on 2/27/2006 3:37 PM
Poll ...take the VOte:
http://moneycentral.msn.com/content/CNBCTV/Promos/P145743.asp
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By piddly_sum on 2/27/2006 3:46 PM
L I V E V O T E
RESULTS

Total Votes: 918
Did SEC overstep its authority by subpoenaing business journalists?

Yes
17%

No
83%
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By JLB on 2/27/2006 3:51 PM
Greenberg and Cramer are trying to put up a brave front. Personally, I think they're both acting scared shit. I'm watching them now and they remind me of a people who, when walking down a dark scary street, will whistle in order to calm their nerves.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By InTheKnow on 2/27/2006 3:54 PM
Wasn't it Richard M. Nixon that said "I'm No Crook"?
Re: Free Speech, or Conduct? Kudlow vote By cutty on 2/27/2006 3:56 PM
Did the SEC overstep it's Authority with subpoenas?

Last vote results: Polled 945 -

No / Yes 83% /17 %

Re: Free Speech, or Conduct? On Subpoenas to Journalists… By mhatmccane on 2/27/2006 4:31 PM
I'm sure everyone noticed the "free speech" accorded to Dr. Byrne by Kudlow. Not too biased. The poll results must have really upset Kudlow.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Anon on 2/27/2006 4:32 PM
Grubman also used free speech on his emails, lol.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 4:45 PM
Did you see Cramer throw the subpoena on the floor? Wonder how many full page articles we will see out of the NY press corps about that tomorrow? Wanna bet it isn't even mentioned?

Rarely have I seen this sort of arrogance displayed.

If I was a part of this network I would be very, very worried by now.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Anon on 2/27/2006 5:25 PM
You knew Kramer was kornered when he and his lawyer harassed dp.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By n-tres-ted on 2/27/2006 10:32 AM
Bob,

I think you are reading it right. This is the SEC chairman's call as to whether those records are discovered. We are fortunate that someone in the SEC San Francisco office was willing to go after hard evidence of illegal stock manipulation conspiracies. That is pivotal. When no one is ready to take the heat, nothing happens. It's not a question, necessarily, whether Cox is owned by big capital, but whether he is so sensitive to his press coverage that he is unwilling to ruffle press feathers to determine whether particular pressies are on the take. If a reporter is found to be taking bribes, that individual will be dumped overboard pretty quickly, I think. I would think Cox will see that he must pursue this, and that he has no reason to fear the press so much. Maybe someone else in the home office, such as the general counsel, may be influencing Cox. JMO
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rtway1 on 2/27/2006 10:46 AM
If Cox caves in to the media, you might as well give the keys to the government to the media. They will be defending our country, guarding our borders, giving us our allowance to live on, deciding what cars we drive, all because of the 1st amendment? This is certainly not the free country I thought I lived in, instead it is one run by a chosen few. The spirit of competition and fair play will be thrown out the window, and this country will go backwards.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 10:48 AM
///If there are 500 financial reporters and journalists, that would mean 10 are bad to the bone.

That’s a pretty low percentage, BTW. Far lower than I think is correct. But play along.

So is it possible that 10 members of the US financial media machine have been eating forbidden fruits, and abusing their privilege as journalists? I would argue that it is not only possible, but that statistically speaking, it is a certainty.///


I played along. Honestly I did.

And what are the odds of these 10 all being found by Rocker, whipped into shape, and ready to go on a moment's notice? I mean, wouldn't these 10 just as lilely work for a pumper on command?

I guess I have trouble with most arguments that go, x% of the population is Y, and therefore we'd expect that to support my argument because I say Mr. Z is Y, I don't like him, and the numbers bear me out. I did a piece on this at the other board. Mixing stats with foregone conclusions is a slippery slope.
http://boards.fool.com/Message.asp?mid=23736207

I owe you constructive/positive comments as well. Let me post them separately.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 10:56 AM
//If the journalists in question were being investigated for being pedophiles, would there be an outcry, filled with outrage? How about if they were being investigated for trafficking narcotics? What about conspiring with a murder-for-hire ring? How about working with a terrorist cell?

Would everyone still be arguing that subpoenaing their records is an outrage?

Put another way, how much pedophilia or terrorism would a press pass buy one?

I’m guessing none.//

Apologies. First this comment. Because writing articles about companies whose stock is ahead of the fundamentals is [HG's] in his job description, and taking advantage of children and planting anthrax on a bus is not. How close to the line should a reporter not tread when discussing a company mentioned to him by a short-seller? Price is a fleeting measure. The comments may be appropriate within only a short window of time.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 11:02 AM
I think that if the word gets out that someone is paying the best, that those offering the service are likely to gravitate there. You assume that Rocker found them. Why couldn't they have found him? Put another way, what are the odds that the same circle of journalists travel together, and that they go to the highest bidder? Based on the Biovail suit, it would appear that there isn't any exclusivity to their charms, any more than any other prostitute's.

As to mixing stats, you have to articulate a baseline assumption, and I expressed that as a percentage. Aside from dislike, do you have a better way of doing it? Are no financial journalists crooked? We have evidence that historically there are bad ones. So the number is greater than zero. What we are left at after we agree that it is more than zero is a valuation gap - you may think 1% is right, I may think 5%. Whatever. The point remains that there are bad priests, bad cops, bad judges, bad everything, and thus there are bad journalists.

Arguing that you think it is unlikely that all the hoes would be in the red light district is a different topic. I maintain if you are for sale, you are for sale.

And it is just as possible that there are areas of specialty, i.e. that those that work on the negative dont do much pumping - but to test that, we can examine NLY, and Herb's gushing endorsements of them along with Cramer, even though they are the worst performing company of their kind in terms of fundamentals. So I would say that there is ample evidence that they work both sides, if they work any.

I don't read the fool boards, and don't go there. If you would like to send me a message you posted there, my email is ncans.mgr@gmail.com - but I don't open attachments, so cut and paste it in the message body...
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rtway1 on 2/27/2006 11:03 AM
Let,s take Herbie and the media out of the picture for a monment. Cox has an obligation, yes an obligation, to the citizens of this country to clear up Reg. Sho. and show us how he or any one else can change the constitution by grandfathering a criminal offense. If you want to argue whether it was a criminal offense, let him prove to us and the world it wasn,t. Open up the books and get rid of this smoke screen. If you are not going to enforce Reg Sho Mr. Cox, get rid of it and all those other cumbersome laws that were created in the 1930,s. Remember them Mr. Cox, I bet someone in the press didn,t like those laws back then either. All we are asking is to get to the real numbers, or is that a violation of someones 1st amendments rights, even, more important, what about are rights, the guys and gals that elect you.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 11:09 AM
AWS: Sure, that is a great defense for the jury to hear.

Fortunately we have something called the law. Writing critical articles is fine and good. Colluding with hedge funds and research companies to tank the price of a stock is bad. And there are laws against it.

The SEC doesn't take this sort of a step "just to see what they can find." That is one of the canards being presented as fact. They hardly ever do this, because of the mantle of journalistic freedom. That those familiar with the investigation did should give you pause.

Apparently everyone is so willing to give Herb the benefit of the doubt that they are filtering out all available information. Look, he wrote 32 negative articles on NFI in one year, all alarming, most of them incorrect about the company's fundamentals, and when presented with facts showing his statement to be wrong, he ignored them. Concurently, we see frontrunning aplenty. He's been doing so for 3 years. And now we hear that he was material in Gradient and Rocker's schemes - that is the allegation, I believe.

What, precisely, WOULD constitute reasonable grounds to want to get to the bottom of this? Note that most bad guys don't present the SEC with video of themselves doing bad things.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 11:10 AM
The Winans case was indeed very colorful. As I remember it, the WSJ reporter passed the info to a gay lover, or somesuch affiliate, in order to gain affection.

//

Here’s a fun little story that Patrick told me. He indicated that per several of the affiants, when Gradient couldn’t convince a new prospective customer to open their checkbook and sign up, that they would ask what stock the prospect was short, and then issue a negative alert, coupled with a damaging article – to demonstrate the effect on a stock’s price of their impact. Once the PPS dropped 5% or more, the checks were cut. I’m sure the truth will come out in court, but if accurate, that doesn’t sound like 1st Amendment stuff to me. It sounds like a brazen, flagrant abuse of information and privilege to manipulate stocks.///

This is where I think the case gets interesting. If this is true, the demonstration was likely shown to more than a few observers...and decent witnesses should be found who'd come forward by now. To use your mathematical example...if they showed 30 clients, and employee turnover in financial companies is 15% a year, and a decent portion of them are disgruntled, someone probably took good notes who is angry at a former boss. Someone should have heard the call to [XYZ] reporter to "get a move on it!" The call to arms should be independent from other chit-chat with reporters because the timing here is so compressed. Minutes, not days. Am I right? Continuing with this line of thinking, the press lackey would also have to know his role in the process to be guilty. In the unlikely event that $$ changed hands, there should also be a link between the behavior and a promotion (for good work) or somesuch reward down the road.

My question - there should be, if the number crushing game is fair - some reporters who were fired who would blackmail Rocker et al for hush money. Such is human nature, and the reality of $4500/month NY rents. Is that in the cards too?
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rvac106 on 2/27/2006 11:11 AM
Requesting information from a reporter would be an unusual step, in that most of the time, the subpoena is for records of calls, emails, etc. that concern an event, which had nothing at all to do with the reporter, except as a reporter. In this case, however, it is the reporter him(her)self who is under scrutiny, NOT WHAT THEY ARE REPORTING ON! This is not what did THEY know, and when did THEY know it, this - why did YOU write this, when all freely available information did not back up your writings. Why did YOU write this, when it seems so conveniently to tie in with this or this negative report. Cox is ok on this delay, as long as, when it comes out again, he backs up his brave SF attorneys, et al, as doing the right thing. Backing off on a subpoena is not the same as cancelling it.

RVAC
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 11:21 AM
nah - here it is. I don't want my fingerprints around either:


THE OTHER SIDE OF THE COIN:

Between 1600-1830 A.D. thousands of people were born in the nation of Japan, who later became Ninjas by profession. These skilled proto-assassins trained under the tutiledge of Ninja Masters for years before ever inflicting their pain in the hearts of the enemies of their benefactors.

Japan's population grew during the Meiji Period, but mushroomed in the 20th century as improved agriculture, health improvements, dietary change, and economic expansion allowed for higher population densities in Japan's major centers of commerce. Therefore the population of Ninjas and proto-Ninjas must have increased accordingly. Japan's population now totals over 128MM. You do the math.

In the United States, Americans who experience terribly bloody accidents ususlly do so within 2 miles of their homes. Ninjas use sharpened flying death stars and polished metal hair needles to attack their foes mercilessly. Very bloody accidents near the home are generally the result of such encounters with Ninjas.

These deadly assassins often try to blend into the surroundings to avoid detection by their intended targets. They generally hide behind trees, bushes and walls en route to the kill. I'm a sushi-loving American, living in New England, and my home has many large trees in the back yard. There have been days that I have witnessed movements in my yard that would be entirely consistent with human movement from one tree to another. But most of the time, I detect little in the way of people presence out there - except for the wife when she takes our dachshunds out for a little romp. Ninjas are clever, and they know many ways to avoid detection.

When I go out in the yard, while the dogs pull me from sniffing the rabbit poop and dead voles, I focus on the trees because that's where the Ninjas are likely to hide. My wife tells me that the shadows are nothing to worry about, but I've done the math.

.............

Reporters are open to the bribe. No doubt. The Healthsouth reporter was pissed that she didn't get more than the $14k or so...she thought she was due another $100k at least for that crap she wrote. But once you get to a certain level of success/stature in the business I'd say the payoff for this decreases relative to other compensation. These folks have a lot on the line, and Cramer doesn't need another $500k to pump crap. He's got a gig. Herb would love another $100k in his Wells Fargo account, but again, the risks are too high. He's a brand. Bigger payoffs have darker fingerprints. Someone like the Healthsouth lackey is completely corruptable. Please - no racial accusations here. Not the point.

And yes, this despite the Rocker-TSCM relationship. I won't state for the record that that relationship is completely conflict-free.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By teacheric on 2/27/2006 11:25 AM
I'm not too versed in what a subpoena can do, but if it requires you to hand over emails and such, wouldn't backing off of the subpoena give HG, and anyone else for that matter, destroy any incriminating evidence? Seems to me it's like saying, I'm going to take the subpoena away for a bit, just so you know. But I'll be back to see if there's any incriminating evidence that you might have saved for me.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Tammy on 2/27/2006 11:42 AM
I can't believe some of the things Im reading here. Isn't it pretty obvious what is going on? The hedge funds are pulling out all the stops to squash teh investigation, now, before any more info falls into the SEC's hands. Nobody thinks this is about freedom of speech. My only question is whether Cox is honest, or not. If not, the investigation will get sidetracked and the SF office censured for doing their job.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By mhelburn on 2/27/2006 11:43 AM
Why are the predictions you made coming true. NYP Byron thinks this is a freedom of speech issue. Has Roddy given up on this? These hot potatoes are getting passed from one writer to another.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Julie Christianson on 2/27/2006 11:52 AM
I'm new to this issue. Am I reading this correctly? Other reporters have done similar things in the past, but nobody will admit that they can do them again?

Why not?
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By dave on 2/27/2006 11:55 AM
"In February 2003, a Florida Court of Appeals unanimously agreed with an assertion by FOX News that there is no rule against distorting or falsifying the news in the United States."

http://www.projectcensored.org/publications/2005/11.html
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By x. trapnell on 2/27/2006 12:03 PM
May the SF SEC office was sick of the Washington headquarters' inaction and took a risk by issuing the subpoenas on its own authority? Morale at the SEC can't be very high over the free pass that certain hedge funds seem to enjoy.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Olive_Jar on 2/27/2006 12:24 PM
Love it, Mr. Bunny! Bending Gary over again. I know you said you wouldn't blog about him again, but I do enjoy the dog hair book references. Funny.

Re: More Humiliation for Patrick
by: easter_bunny_d3 (100/Candyland) 02/27/06 03:17 pm
Msg: 69580 of 69580

Right. He name calls, and ignores when he is caught flatfooted in lies.

He can call me all the names he wants. He is completely irrelevant and meaningless.

Ahem:

8-year old "Knitting With Dog Hair" - Amazon.com Sales Rank: #94,885 in Books
Yesterday: #32,538 in Books

Pre-release "Wall Street Vs. America" -
Amazon.com Sales Rank: #102,216 in Books
Yesterday: #60,572 in Books

2-year old "Born To Steal" -
Amazon.com Sales Rank: #317,760 in Books
Yesterday: #310,693 in Books

-----------

The 8 year old dog hair knitting book continues to outsell either of Gary's works - the new one is no doubt selling as nobody has had a chance to evaluate his work therein, the 2-year old one selling a third or worse what the dog hair knitting book does - no doubt because everybody has had a chance to evaluate that important work's relative quality and merits.

He is irrelevant in the book world. Now let's turn to the reach in the cyber-sphere:

His blog. Per Alexa. This week 771,811. 3 mo average 1,579,802.

TheSanityCheck. Per Alexa. Today: 44,185. 3 mo average 149,672.

They don't even rate him per day as he isn't in the mix. As in relevant.

Lower is better. Gary, irrelevant. The numbers speak for themselves.

Have a nice day.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By n-tres-ted on 2/27/2006 12:29 PM
Bob,

On your update question, I'm not directly familiar with inhouse SEC protocol rules, but I seriously doubt there is a written rule saying don't subpoena a reporter without an order by the SEC commission. I think it is in the category of "sensitive" political matters that cause ripples for Commission members, so check with HQ before stepping into hot water. I'm surprised Cox's statement indicates a vote of the commission will be necessary, and would have thought he would just decide the matter himself.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By Patchie on 2/27/2006 12:55 PM
Forgive me for simplifying this but...

According to nearly every report written on this subject a common line is interjected:

The SEC, an independent regulatory agency with only civil powers, rarely subpoenas journalists or news organizations.

Rarely is not NEVER. I guess the question is, who have been served in the past, why, and how was that media response?

The fact that the media players in this case are alleged to be in cahoots with some very wealthy individuals should not be overlooked. Well funded campaigns bring out a higher level of braizen behavior.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By rashomon on 2/27/2006 12:56 PM
Why the SF office subpeonaed two members of the mainstream press without DC sign-off is incredibly perplexing. One thing about the SEC -- toothless as they are in criminal prosecution and enforcement (thats the DOJ's job) they have unparalleled powers of discovery. While the Patriot Act has changed this up a bit, they are as far as I know the only govt institution that can issue subpeonas without a judicial check. An SEC office run amok is a very frightening thing.

I'm not saying thats what has happened ... more likely the guys in SF believe they have extremely solid evidence of wrongdoing. Put it this way, a subpeona is a very aggressive way to start a conversation. The SEC could just have arranged a confidential sit-down where Herb and Remond are asked point blank if they knowingly conspired with funds to drive down stock prices. Maybe they already tried this route and didnt trust the responses or got frustrated getting access and had to go official? Or maybe it is more innocuous and the journalists arent the target but they dont trust other subpeona respondents are being forthcoming or they want to find out who else beyond the already named funds comprises this nexus?

Lots of questions, lots of unknowns. No good to have one-side shouting about 1st amendment rights and portraying the other side as looney tunes amateur night while the other side rants about conspiracies and cover ups. What gets lost in this circus is that market transparency is near zero and stock manipulation and fraud schemes are being perpetrated by issuers and hedge funds and BDs alike.

The SEC has to get consistent both in rule interpretations and enforcements. Instead it looks like some at the SEC are doing stuff to stoke conspiracies and others are claiming nothing is wrong with the system. Sucks for everybody.

Re: Free Speech, or Conduct? On Subpoenas to Journalists… By mwillwilly2003 on 2/27/2006 1:07 PM
I think Cox wants to wash his hands of this business, and will hide behind a vote of the commision to do it, as Annette Nazareth et al can be counted to to vote to hobble the "investigation." That way Cox doesn't have to carry the brunt of investor blame once it has been concluded without meaningful result. And that has been my fear all along: that in response to mounting investor pressure re FTDs and stock manipulation, the SEC would open a dummy "investigation,"only to announce later that they have officially looked into the allegations of abuse and find nothing very wrong. That seems to be the game plan now.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By n-tres-ted on 2/27/2006 1:10 PM
What gets lost in this circus is that market transparency is near zero and stock manipulation and fraud schemes are being perpetrated by issuers and hedge funds and BDs alike.

rash,

The emphasized part of your comment is precisely the problem that Bob and others have been trying to get resolved for quite a long time, with nothing but personal attacks, threats, stonewalling and denial - all coming from a wide array of characters, some including press, big financial players and law enforcement. In that circumstance, I'm surprised Bob, Patrick Byrne and others have maintained as much good humor and optimism as they have.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By bobo on 2/27/2006 1:15 PM
Rash: My question to a few of my friends was, does Washington have any reason to believe that the SF office was acting in an unauthorized capacity? In other words, is there any policy requiring the SF office to notify the commission of their intent to subpoena? So fat nobody can think of a rule requiring them to, so this may be more of a situation where an ultra-rich group is pulling strings. Don't forget that Stephen Cohen is now in the mix with the same bunch, so this works against him too if there is discovery granted.

I'm not describing a conspiracy. I am describing a stock manipulation scheme exactly like many in the past. Stop thinking conspiracy. It's no more a conspiracy than the S&L's looting by several networks of well connected crooks was a conspiracy. Think of it as every 20 years or so, another generation has its crooks, who, predictably, do the same things as prior generations of crooks.
Re: Free Speech, or Conduct? On Subpoenas to Journalists… By AWS on 2/27/2006 1:30 PM
///It's no more a conspiracy than the S&L's looting by several networks of well connected crooks was a conspiracy. Think of it as every 20 years or so, another generation has its crooks, who, predictably, do the same things as prior generations of crooks.///

OK. I'm coming along. I'm OK with this characterization. Big securities manipulatiions are cyclical and we could be due. Stevie Cohen didn't make his coin by being Mister Nice Guy. He pays a lot of vig and expects special treatment.

However to cover one's trail on the clearing side, there must be quite a lot of smokescreens up which could only work with loads of complicit cogs in the system. A conspiracy. And if that's your description of things, are you implying that the press are not knowing parts of the scheme, just an innocent vehicle that could provide a few times and dates?

At this point in time, wouldn't you expect that those whose hands were in the cookie jar would have cleaned up their books so as to be presentable enough to withstand SEC investigation?...particularly w/r/t OSTK and NFI? [congrats to longs today] And yet, the FTDs pile up and the stocks remain soggy.

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