Friday, June 29, 2007

Should Newspapers Police Content From Corporate America?

That issue has arisen because of a full-page ad in the New York Times, filled with distortions, fantasies and at least one outright lie, from Universal Express. This basket case of a company, a subject of multiple SEC court actions, was responding to an article by chief financial correspondent Floyd Norris.

In a comment in his blog this afternoon, Floyd reports as follows:

Stephan Jespersen, the Times’ director of advertising acceptability, offers the following reaction to the complaints over the ad:

“It is the policy of the New York Times to accept advertising that disagrees with our reporting, whether it be on international affairs, business news, or our own editorials. Universal Express has done exactly that, as well as comment on their own court case. We do this because we believe that this ad and many like it are part and parcel of a free press. To limit a company’s right to free expression to voice their opinions would, in our opinion, cut off an important vehicle of free speech.

“The policy of the New York Times when it comes to accepting ads that promote specific stocks, however, is a little different. We require that all stock offerings in advertisements be registered with the Securities and Exchange Commission or the Attorney General of New York State. If a stock is registered with the SEC for example, the SEC then becomes the organization to police the stock, and its promoters, not The New York Times.”

I'm afraid I must take issue with Mr. Jesperson. The New York Times owes it to its readers to not allow its pages to be forums for corporate lies and blame-shifting. Note the furor that erupted over Pinnacle Development Partners over its ad campaign, as reported by the Wall Street Journal blog last October:
Today, financial-fraud watchers are asking why Newsweek, the WSJ, and others accepted ads from Pinnacle, which raised money through “an extensive national advertising campaign” promoting its investment returns in some 40 publications, according to the SEC.
No, the Times does not have a legal obligation to remove ads from companies seeking to tout their share price or spin fairy tales. But it has a moral obligation that needs to be taken seriously.

Also there is an irony in Mr. Jesperson's comment about stocks needing to be registered with the SEC, because Universal Express has been selling unregistered stock on a massive scale, according to the SEC. Altomare has been barred by court order from serving as an officer of any public company, including Universal Express.

I don't mean to single out the Times. The same principle applies to the major financial magazines who ran ads from a Chinese penny stock company, as Kiplinger.com reported some weeks ago. Newspapers and magazines shouldn't bury their heads in the sand, and take a "not my job" attitude when sleazy corporations buy their way into their pages.

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

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