Saturday, July 26, 2008

'History and Mystery' on Sharesleuth

As I've said in the past, I'm no fan of Sharesleuth because its owner, Mark Cuban, finances it (or tries to) by shorting in advance of articles on the website. That's a no-no for anything purporting to be journalism.

Sharesleuth's business model has been a flop for the same reason it has been editorial failure: over the past two years it has written about a grand total of four companies. Compare this with ProPublica, which churns out a constant stream of investigative articles and is funded by a nonprofit group. When it was commenced two years ago, Cuban hyped it as the savior of financial journalism. It has been anything but.

In fact, you get more timely share-sleuthing from Zac Bissonnette on AOL in one month, than you have from Sharesleuth in its two years of existence.

All that aside, I think that the latest Sharesleuth offering is worth reading -- a detailed depiction of the matrix of stock fraud and overseas boiler room schemes. Some of these were targeted by Internet sleuth Floyd Schneider, making him a target of the stock fraud aficionado Judd Bagley, the nauseating cyberstalker who makes his living harassing critics of's nutty CEO Patrick Byrne.

Sharesleuth would have proven its value, despite its business model, if it had produced articles frequently, dealing with overpriced or fraudulent shares that are currently in the public eye, whether or not its owner was able to make a few bucks. Instead, its readership has dropped, embarrassing, to pretty much nothing.

That's a shame, because there really is a need for a "share sleuth." ProPublica is an outstanding news outlet (despite an annoying technical glitch that cuts off the left side of the page). But its business section lacks hard-hitting financial journalism.

What's needed is a truth squad guarding against ongoing hype in the markets, not historical overviews or massively documented hits against companies on a once-per-blue-moon basis. So when Byrne tells outlandish lies about Force Protection Inc., describing that financially quaky company as a "victim of naked short selling" (as he did on Fox Business News yesterday), the truth squad could roll into action.

Perhaps ProPublica could fill that role. There are lots of journos being cast out of newspapers around the country, and it would be great to put them to work doing some real share-sleuthing -- in the public interest, not to make a billionaire richer.

© 2008 Gary Weiss. All rights reserved.

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