Jesse Eisinger, who was a big player in the “Who’s Bob O’Brien?” investigation last year that resulted in him being ejected from the grounds of a guard-gated retirement community after being cited for trespassing, and who plays poker with hedge funds, and who refused to answer direct questions from me as to how he had confidential banking and cell phone records from NCANS, and who further is part of the SEC’s probe into a group of journalists who are alarmingly tightly-connected to hedge funds involved in civil suits alleging stock-manipulation-like business interference and front-running of doctored research reports, writes another piece where he is just verklempt over the SEC coming after those it obviously has really good reason to want to chitty-chat with.
Here are some of his more choice snippets, along with some Bunny-comments:
”A few weeks ago, SEC Chairman Christopher Cox slapped the hand of his staff for taking the "extraordinary" step of subpoenaing journalists in a market-manipulation probe without notifying commissioners. Now, as part of that probe, the agency is demanding that a small stock-research firm, Gradient Analytics, turn over all its communications with nine reporters, including me, as well as CNBC.”
Jesse? Did you miss the interview where Cox said he fully supported his staff’s decision? Yes? No? Decided to ignore it? Why? He said that he felt that the book should be thrown at journalists who are crooks, and further indicated that the Commission acted within its rights by issuing the subpoenas, and further indicated that there was NO WAY he would have been notified, nor any policy where he should have been notified. So let’s start off by telling the truth, huh?
”Securities lawyers say it's perfectly reasonable to ask market sources for their communications with journalists if they suspect people are using reporters to spread misinformation.
While subpoenaing journalists directly was a "big mistake," says Stanford law professor Joseph Grundfest, "it shouldn't be surprising and it shouldn't disappoint anybody" that the agency is going after market participants' communications with journalists. "It would be a very strange world if people could be held liable for every lie they told except for the biggest lies they told to reporters," he adds.”
Exactly. Thank God someone with a brain weighs in. Oh, but wait, they aren’t a member of the NY press or married to a hedge fund choagie. Apparently the view from NY is different than those fools’ naïve take over at Stanford’s law school. Not surprising, really, given that the Stanford law professor isn’t the target of an investigation. Think that might color things a bit?
More from Jesse:
”But that's a view from the airy realm of the abstract (Read common sense view from the rest of the country - Bobo). Context is what matters here. What's really happening is that the SEC is displaying alarming credulity (alarming? To whom? I’m not alarmed. Jesse sounds like he sure is – Bobo) about allegations leveled by a chief executive who has been the target of critical Wall Street analysis and articles. In doing so, the agency has provided a clear roadmap for CEOs of that ilk: Whine loudly enough that there is a conspiracy afoot to harm your company and the agency can be made to do your bidding.”
Translation: I’m a victim, and the SEC is being used by the all-powerful CEOs that have been insulting the SEC for over a year. Huh. Couldn’t be that the Commission has analyzed a mountain of data and come to the conclusion that there is much merit to doing a full investigation, and are sitting on the largest stock-scamming ring since Milken and Boesky last went to jail?
Nah.
They are nothing but dim puppets of those all-powerful CEOs, not the billionaire hedge fund managers living in NY and the surrounding area who making their livings by trading off of short positions that increase in value only if the public thinks there are big problems with the companies. See, the guy in Utah that has been spitting in their face is the problem, not the hedge funds that have been front-running the research reports it turns out they paid for, and then coordinated with the reporters to get the word out. And certainly not the reporters – brought to you by one of the reporters they are looking at in a harsh light, incidentally. Did I already mention that?
”The nine reporters have one thing in common: They all have written critically about Overstock.com or been named by CEO Patrick Byrne, the Dan Brown of the business world, as card-carrying followers of a "Sith Lord" or "Master Mind" out to get him and his company. Mr. Byrne has repeatedly charged that certain financial reporters are "crooked." He has said some reporters are "condoms" to be used and discarded by nefarious hedge-fund market manipulators. (So the other thing that they could all have in common is that they are all crooks. Got it. Maybe that is why the SEC wants to have a talky talk?)
Mr. Byrne laid out the whole scheme on a flow chart -- a maze of crisscrossing lines and boxes that makes Mr. Brown's "Da Vinci Code" look like "Where's Waldo?" Distributed in conjunction with an Aug. 12, 2005, conference call the CEO held, the chart includes six of the nine journalists named in the subpoena. The other three wrote about his company subsequently.”
Correct. Byrne did the legwork and uncovered a large, well-funded, organized ring of stock manipulators exactly like those involved in the Elgindy case, but larger and more networked.
So far so good.
Because they are Wall Street-based and super rich, predictably they hold way more sway over the Street than some guy in San Diego did. Check. Understood. And Byrne says that some are super-felons from the 80’s, who will be put under the jail once their role is understood, leading many to speculate that Milken or some of the other Predator’s Ball miscreants are in the mix. Check. Who knows? We shall find out in due time, I’m sure. Nobody could possibly know that at this point but the miscreants.
And Byrne even laid it out in a schematic, so that the layman could understand what he was describing – a layer of hedge funds acting as the capos and foot soldiers, directed by some uber-bosses, and leveraging some crooked reporters and bent research firms to financially benefit from victim companies’ stock prices declining. Check. So far no confusion. Seems basic put that way.
Apparently as Jesse features in that matrix as one of the crooked reporters, he understandably is using a full page of the Wall Street Journal to argue that he is innocent and that the whole thing is an outrage, a waste of the SEC’s time, an invasion, and a threat to God, Country, the American way..
Sure it is, Jesse. Say, did you ever explain where the NCANS bank records came from? The cell records? Who gave you the hot idea to try to track the Easter Bunny down? How that bounced from you to Carol to Roddy? Is there any way any of that could have been legally obtained? No? Is your boss wondering about how large a liability they have from that episode? Maybe?
But I digress.
”The SEC's roster is puzzling. A person familiar with the SEC's probe says the journalists' names were compiled from multiple sources, but it looks more like a download of Mr. Byrne's enemies list. For one, it includes Seth Jayson, a writer for Motley Fool, a Web site that has carried numerous positive articles about Overstock. Mr. Jayson has been an exception there, writing a handful of critical pieces that incited the wrath of Mr. Byrne.”
Huh. So Seth is in the mix? Super. The little whiner has been hitting a host of Rocker and such shorts with astounding regularity – maybe the arrogance of the NY financial press is such that they think nobody will notice when a guy like Herb writes 32 negative articles on NFI in one year, most of them front-run, or has whole columns that are nothing but a favored hedge fund’s attack list? Dunno. But it looks like the Seth’s of the world will have their opportunity to prove their innocence once and for all. How refreshing. One would imagine that brothers and sisters alike would be dancing in the streets. Apparently not.
”Another reporter on the SEC list, Cheryl Strauss Einhorn, hasn't even written an article for Barron's (like The Wall Street Journal, a Dow Jones & Co. publication) since late 2002. Her only apparent connection to this affair is that she was mentioned by Mr. Byrne in that infamous conference call last summer and included on his Sith Lord flow chart.
The only rationale he alluded to in the call was that she had the audacity to marry a hedge-fund manager. True, she once wrote a piece on Biovail for Barron's. But that was back in 1996 and it was positive, concluding that the company's stock might be "a bitter pill for short-sellers to swallow." (The SEC list also includes two other Dow Jones journalists, MarketWatch's Herb Greenberg and Dow Jones Newswires' Carol Remond.)”
Well, then, Cheryl should have nothing to hide, right? I mean, what are the odds that she was in communication with Gradient and Rocker and SAC acting as a conduit for toads like Bill Alpert? I find it laughable, and say let the discovery begin. There will be no there there, and then we can all have a Mojito.
We all know that the idea of a hedge fund manager using his wife or child as a foil for convenient access or sympathy is beyond belief, right? So what is the big objection?
”Journalists aren't above securities laws. If the agency has serious evidence of wrongdoing by reporters, it can and should investigate them.”
We agree on that. Maybe that is why you are getting the knock at the door, Jesse.
"It's appropriate for market manipulators to think twice before trying to use journalists to mislead investors," said John Nester, an SEC spokesman, speaking generally. "We don't believe the policy chills law abiders from communicating with the press."
That's naive. Even though the SEC is on solid legal ground now, it's stubbornly compounding its initial mistake by persisting in this line of inquiry. That should trouble any investor who expects the SEC to be spending taxpayer money wisely and not hindering the free flow of information.”
Yeah. I’ll just bet, Jesse.
Their “initial mistake” – huh? So you have predetermined that none of the reporters in this little clique, who have been noted as being hedge fund toadies for years, and who have been on deck to lick their masters’ hands whenever required, is a “mistake.”
How do you know? Weren’t you also saying just recently that the affiants were lying, and were framing Gradient? Or was that one of the other SEC-probed NY press guys? I can’t keep them all straight.
Jesse. Do you have access to all the info the SEC does? Do you know what tapes, or emails, they already have? What ATM records? What offshore trading accounts have been uncovered by persistent PIs and then passed to the Commission? What testimony from disgruntled or former employees or co-workers has made its way to them? No?
Maybe they want to understand where you got the only-obtainable-illegally bank records, sweetie. That ever enter your noggin? No? Why not?
How about they see a plethora of 17(b) violations from the researcher end, and a story that is changing more often than the night shift at McDonalds, and a bunch of “journalists” that are spending more time hyperventilating on TV with guilty dog looks than doing their jobs?
”The key issue, says University of Illinois law professor Larry Ribstein, is whether the SEC has enough solid information to think that the communications with journalists are relevant or is "acting on rumors and going on fishing expedition." The latter "deters future communication of the sort that is very important [for] market efficiency."
What the SEC is doing is less akin to a fishing expedition than a snipe hunt. As it stumbles through this investigation, what is the likely effect?”
Uh, again, you prejudge the data the SEC already has and try to paint it as a bumbling incompetence.
Why is that? What evidence is there that is the case? None? Or maybe that is a happy, high hope from someone being targeted, and who wants to paint themselves as a victim, or express faux concern over how “our” valuable tax dollars are spent? Puhleese. The public already voted on CNBC, and 89% said they approved of the SEC’s actions. So save us the one-sided spin that conflicts with reality. The public wants this gang of miscreants, if miscreants they are, taken down. Period. And they don’t care if the miscreants are journalists, or billionaires, or priests. They want them brought to justice. So far the only ones whining are the journalists and the billionaires. Isn’t that a surprise?
”Let's hope it will be modest. Perhaps sources who want to communicate with journalists will just use their phones, rather than email.”
Because the SEC is far too stupid to get the phone records, huh? You know, those stumbling simpletons?
And then Jesse delivers the final, self-serving, hand-wringing appeal to the 1st Amendment we have come to expect in these infomercials-for-the-subpoenaed-or-being investigated; almost like clockwork from these jokers:
“But that's unlikely. The message is that the SEC will give credence to any company that is a target of skeptical research if it complains. What will honest analysts and investors think as they witness this? They'll be less inclined to talk to journalists and to each other -- just the sort of thing the SEC's Mr. Cox publicly fretted about after learning his agency had subpoenaed reporters directly. Analysts also will be less likely to take on tough targets. Why analyze a prickly company if the end result is an SEC subpoena, legal costs and bad publicity?”
Jesse? Babe? The SEC isn’t subpoenaing all analysts, or even most analysts, or even a bunch of analysts. It isn’t happening. They are subpoenaing a small circle of reporters who may have become a bit too enamored of the glow from being buddies with the billionaires, and a research firm which now admits that they were acting on the behalf of hedge funds when they wrote their reports, precisely as the affiants said – and which was vehemently denied up until yesterday. Ooops. That would be the 17(b) shoe dropping. One violation per report, I believe. That’s a lot of reports. Lot of Federal Securities Violations.
So the chill you speculate about isn’t happening. It is a fiction, a conceit, an invention that seems like a desperate attempt to try to create some downside to getting to the bottom of this.
Every guilty perp I’ve ever seen on COPS, insists that they were innocent, and that it is all a big mistake, a waste of time. So that isn’t exactly new, or believable. Everyone is innocent, it is always persecution or a miscarriage of justice, and if caught red-handed, it was an “error in judgment.” Wanna bet we hear that before too much longer?
If it is all a big mistake, let’s clear it all up, now. No stonewalling, no whining on CNBC every 10 minutes – give the SEC the info, and let them do their job. The only ones with anything to lose are the guilty, and if you are one of them, I say, bury you under the jail. If you are innocent, you should welcome putting this behind you. So stop sniffling like you fell off your tricycle and buck up – what are you so afraid of?
Or do you know what they will find when the data hits the Commission?
That’s really the question with all these self-serving articles and protestations of innocence, isn’t it? How much is COPS “Ah din’t do nothin’” perp swagger, and how much is legitimate complaint?
You probably already know my sentiment.
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