The Brickbats Continue
There's a terrific editorial in the Fort Worth Star-Telegram today, excoriating Mark Cuban's trading/reporting vehicle Sharesleuth.com. It drives home a point I've made a bunch of times, which is that -- hype to the contrary -- what he has created is not "journalism" but a run-of-the-mill stock tip sheet.
"Why is Mark Cuban so ... well, so Mark Cuban? Why is he so focused on Mark Cuban all the time? The latest example of this is really disappointing because it sullies what otherwise is a noble effort on his part," says the Star-Telegram.
Personally I'm not sure about the "noble" part, given his singleminded focus on making a buck and his contempt for business journalism, which he set forth in a condescending blog item. ("Business journalists should be thankful" for his slimy enterprise, says Cuban.)
Apparently Cuban is more than just another self-centered billionaire with an ethical tin ear. Securities Litigation Watch, written by an ex-SEC lawyer named Bruce Carton, yesterday suggested that Cuban may be twisting the insider trading rules more than it can bear. (Hat tip: Dealbreaker.com)
Cuban, he said, "has found the previously unexploited Achilles' Heel of the insider trading laws and fired an arrow deep into it." That is, "for first time, a legal form of what most people would consider 'insider trading' exists and can be replicated by anyone with (a) the resources to hire a skilled investigative journalist, (b) the ability to generate a readership on the Internet."
The piece goes on like that and notes that the aforementioned Achilles' Heel "is that the law does not flatly prohibit insider trading based on material, nonpublic information. Rather. . . it prohibits some such trading, but excuses other trading if there is no legal 'duty' under the circumstances not to trade."
Carton concludes that, if indeed Cuban can make money by this scheme, "the first company that makes its money from legal insider trading will have been created—with a business model that can be duplicated by anyone with similar resources and abilities. If this occurs, Congress and the SEC may need to give serious thought to whether it is time to refine the insider trading laws."
Carton has hit on yet another of the many disturbing aspects of Cuban's scheme, which is as troubling from a legal perspective as it is by making a mockery of real financial journalism.
I'm sure there will be more brickbats like these from journalists and the legal profession.
It's a shame that an ethical rich guy-- one with the public spirit Cuban lacks -- hasn't stepped into the breach and set up a genuine financial investigative reporting outlet to examine crummy stocks. But as a public service, not as a source of pocket money.
Of course, there is yet another alternative, which is that mainstream media outlets crank up their coverage of stock fraud.
© 2006 Gary Weiss. All rights reserved.
Wall Street Versus America was published by Penguin USA on April 6.
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