Saturday, April 29, 2006

What's Wrong With Business Journalism

Bill Holstein, former longtime Business Week editor, sets forth some reasons in a column in Chief Executive magazine. (Hat tip: Talking Biz News blog.)

It's quite an indictment and worth reading.

I'd add to Bill's list an almost complete abandonment of investigative journalism, except at a couple of leading publications. I deal with financial journalism's inadequacy in some detail in Wall Street Versus America.

Bill observed that
. . . news organizations, with the exception of a handful such as The Wall Street Journal and the Associated Press, Bloomberg and Reuters news agencies, are walking away from quality business and economic information. Here are the dirty details:

The networks get cut back. Fortune magazine now has one full-time staffer on the ground in Asia and one in Europe. That’s it. Business Week has folded its international editions and downgraded its Tokyo bureau to local hires. Forbes has scrapped Forbes Global. And forget television. The major networks have largely demolished their bureau networks. Fox has never built one. CNN has demonstrated that it can’t make a go of it in business news, aside from Lou Dobbs’ latest tirades. And CNBC has long ago forgotten any global aspirations.
I don't agree with all of Bill's comments. For example, I don't see all the anti-CEO coverage that troubles him. On the contrary, most coverage of securities industry CEOs, even from the major media, is far too puffy.

Still, I think Bill has written a thoughtful commentary on a pressing issue.


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


Friday, April 28, 2006

The SEC Fouls Up (Again) on Naked Shorting

Lots of misinformation out there on naked short-selling, much of it spread by the misinformationmeisters, the Baloney Brigade anti-shorting crackpots.

Well, it seems that the SEC is getting into the misinformation act.

A reader points out that the Securities and Exchange Commission has issued a "definition" of naked short-selling. Apparently it's been there a year, and nobody -- except this reader, apparently -- seems to have noticed this goof.

This definition is nice. It is spiffy. It is also wrong.

It is as follows:

In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due; this is known as a "failure to deliver" or "fail."

This definition gives the distinct impression that "fails to deliver" are equivalent to "naked short sales."

However, that is not true, as is stated elsewhere on the SEC site, in a link in the definition I quoted above.

As you can see by going there, all naked shorts are fails, but fails are not necessarily naked shorts. In fact, the Depository Trust and Clearing Corp., which -- despite all the blather but out by the baloneys -- has zero reason to lie on the subject, maintains that "There are literally dozens of reasons for a 'fail to deliver,' and most of them are legal."

Might have been nice for the SEC to say that, and also to point out that the entire issue has been blown out of all proportions and used as a scapegoat and/or diversion by money-losing companies. (Speaking of which, Patrick Byrne of was in full-diversion mode at a conference call today, as he laid out horror-show quarterly results. Hat tip: Dealbreaker.)

With all the confusion being deliberately spread about short-selling by the con men of the Baloney Brigade, you'd think that the SEC wouldn't contribute to it. But it's really not surprising. As I point out in Wall Street Versus America, the SEC's record on this subject is really pretty disgraceful.


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

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Thursday, April 27, 2006

An Offer He Can Refuse

A former Merrill Lynch customer named Rand Groves plays a prominent role in my book, as an example of the kind of agony investors face if they have a serious dispute with a brokerage firm. As explained in the Introduction, available on my website, Rand feels he was.... well, suffice to say that he is no fan of Merrill.

Today Rand sent me a copy of an invitation that he just received for a retirement seminar -- from Merrill, naturally. It is being held at a restaurant in Trenton called "Rat's." Really.

It's a tempting invitation, as you can imagine, but Rand isn't going.


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

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Tuesday, April 25, 2006

Turning the Tables on Scam Artists

Great article today in the New York Post on how Steve Kirsch, founder of Infoseek, turned the tables on some stock scamsters who were using junk faxes to push penny stocks. This is one of the few uplifting stories to come out of that slimy world.

The article recognizes the role of Floyd Schneider, a New Jersey mortgage broker who worked with Kirsch in exposing the scam, which recently resulted in indictments.

Schneider is an Internet activist who spends considerable time exposing stock scams, and is profiled in Wall Street Versus America. His reward? A string of ridiculous lawsuits, one of which is still pending.

One of the many genuine issues being neglected by regulators, and the media as well, is how outspoken investors are punished for speaking out on Internet message boards. "SLAPP suit" statutes have proven inadequate in dealing with this problem, which is a systemic issue in our legal system.


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

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Monday, April 24, 2006

It's 10 p.m. Do You Know Where Your CEO Is?

If he's CEO of, he's arguing with people on an Israel message board. A reader was kind enough to alert me to Patrick Byrne's latest venture into geopolitics, religion, and the semantics of New York Times columnist Thomas Friedman.

This dialogue with some increasingly irritated pro-Israel types has been going on for eight days.

Byrne seems to have a lot of time on his hands. Either that or he can't.... well, see this link.


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

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The Smear du jour (redux)

I've tried, without much success, to avoid chronicling the ongoing con game that calls itself the "anti-naked-shorting campaign." But alas, the odor has become too overwhelming to ignore.

A reader brought to my attention a particularly noteworthy post that appeared last night on Yahoo's Overstock message board. The author of the item was the bravely pseudonymous proprietor of the "sanitycheck" conspiracy-cult website, "Bob O'Brien." (He's actually a former used medical equipment salesman named Phil Saunders, according to the NewYork Post.)

If you wonder why this creep Saunders uses a phony name, here's why.

As I have noted in the past -- see this and this -- this paranoid crackpot, a favorite information conduit of Overstock's loopy CEO Patrick Byrne, has a special way of dealing with people who disagree with him.

"O'Brien's" technique is disarmingly simple: He accuses them of being corrupt. Hey, he's got to say something, right? He can't very well present facts in support of a nonexistent "stock counterfeiting" scandal. There are no facts, just a lot of meaningless statistics. There is no scandal. So instead he and other cultists use good old-fashioned, anonymous smears.

The latest target of an "O'Brien" smear was Forbes editor William Baldwin. Seems that Baldwin had written a column on naked short-selling a couple of years ago that said the practice had some merit. Someone posted it on the Yahoo board.

Uh oh. You know what that means. Baldwin obviously did not reach an honest conclusion after evaluating all the evidence. He must be corrupt.

"O'Brien" made his point thusly:
Seriously - what did that [the Baldwin article] cost?

$5K? $20K?

The guy at the Cato group was getting $2K per, so Forbes must be way more, wouldn't you think?
I know. It's crazy. It's paranoid. It's also fairly typical of the naked-shorting kooks. Yet people who ought to know better take this person, and his crackpot cause, seriously.

Among them are regulators at the state and federal level, and even some members of the media. "O'Brien" himself claimed, shortly after posting the smear, that he was invited to give a presentation to the Forbes editorial staff last year. In Wall Street Versus America I describe how esteemed members of the press have been gulled by the naked-shorting Baloney Brigade.

Time for the media and regulators to treat these hucksters with the contempt -- and the thorough scrutiny -- that they richly deserve.

UPDATE: This afternoon "O'Brien" made an appearance on the Yahoo board, in reaction to posts citing this item, to say as follows:

"The favor bank is the way a lot of Wall Street works. Either billy boy [Baldwin] is a dolt, or did a favor. Simple. I don't think he is a dolt."


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

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Friday, April 21, 2006

Two Ways to Fight the Shorts

In the press this morning we have on display two ways to fight short-sellers: the right way, and the dreary, dumb, and dishonest way.

I'll start with the right way, described in the latest Business Week. Seems that a company called Hansen Natural Corp. has been under attack from shorts, who believe that its Monster energy drink is a fad. Even if it isn't, the shorts say, Monster will be crushed by the competition if their own energy drinks catch on.

So how has Hansen fought back? BW's Roben Farzad recounts the anti-short campaign:

Hansen's shares have surged from $2 to $130 since 2003, and earnings have increased from 28 cents a share to an expected $3.92 this year. Hansen's market value sits at a lofty $2.9 billion. The company reaches its core demographic, males aged 18 to 30, by flooding retailers with giant cans of its energy concoctions
In other words, Hansen has fought the shorts by performing. By actually making money for shareholders. "Hansen. . . is beating the pros by doing what it does best: selling drinks," says Farzad.

Meanwhile, on the Wall Street Journal Editorial Page, we get the dreary, dumb and dishonest way. The blow-smoke-against-nonexistent-conspiracies way. The Patrick Byrne way.

Today, the CEO of this chronically money-losing retailer bloviated in a letter to the editor. As usual, his bloviation responded to a columnist who had committed the ultimate offense in the eyes of Patrick Byrne: criticizing Byrne's "jihad" against a nonexistent "conspiracy" of short-sellers, analysts, hedge funds and journalists.

No need to quote from it. It's typical Byrne: sneering and rambling, vaguely lashing out against unnamed "blackguards."

Since Byrne's jihad has been getting a lot of criticism, Byrne has been fighting it on a bunch of fronts, and he appears to spend a goodly amount of time and energy doing so. He has responded to criticism in a Motley Fool message board and, most recently, the New York Times's DealBook blog.

Byrne, of course, has also filed a lawsuit. He has not been shy about talking about it and taunting one of the defendants, David Rocker. Jeff Matthews pointed to that as evidence (not that there wasn't plenty already) that Patrick Byrne is a "little, little man."

So there you have it. You can fight the shorts by making money or making noise. Got to say this much: if you're a CEO who craves attention, adores the adulation of crackpots and views himself as the Savior of the Financial System, the "making noise method" makes a hell of a lot more sense! Particularly when your company is in the red.


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

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Tuesday, April 18, 2006

Nut Season Has Begun

It's that time of year, I guess

The Full Moon was on April 13, so that can't be it. Sunspots, perhaps? Anyway, for whatever reason I've been getting a larger than usual number of nutty/threatening emails/attempts to comment on this blog, with every single one from the anti-shorting crackpots.

This is, apparently, nut season!

The most egregious of these nutty/threatening etc. emails etc. I have cheerfully forwarded to law enforcement agencies.

That brings me to something the public doesn't understand about journalists. There seems to be a feeling out there that if you communicate with a reporter you are instantly afforded some kind of "First Amendment" protection. Hell no! Everything is on the record unless stated otherwise, and if threatened (in the criminal sense of the word) most journalists will prosecute.

I made that point back in February, when the "sanitycheck" website's bravely pseudonymous proprietor, "Bob O'Brien," who the NewYork Post has identified as a former used medical equipment peddler named Phil Saunders. Saunders reported a cock-and-bull story about a "journalist friend" being "threatened" by supposed thugs in a bar. (He posted the story to explain why he cowers behind a phony name.) See Feb. 15 entry here. As I said at the time, a real journalist would not hesitate to report a threat.

I should point out that threats have never (well, almost never) been an issue in the past. Years of writing about the Mob produced not a single threat of any kind.

That's because Mob people are (with some exceptions) fairly rational. Naked-shorting nuts are not. Maybe that's because their entire movement is based on a screwy conspiracy theory that makes the Mossad-dynamited-World Trade Center kooks seem sane by comparison.

Take, for example, the communication that I received last night, which attempted "blackmail" over "dirt" that exists only in this slimeball's imagination. This person concluded his missive as follows:

"Tell your friends to stay away from our computers, or we will release the information to NCANS [National Coalition Against Naked Shorting]. They've been waiting for months for something this juicy."

I presume the "our" is this creep and his pet hamster. The "friends" refer to the massive conspiracy in which I am involved (no doubt along with hedge funds that I excoriate in five chapters of my book) and I suppose the "computers" are ... Lord knows.

Lunatic or not, a threat is a threat -- and I repeat: I report all threats to law enforcement, even from obvious nuts. In fact, especially from obvious nuts who are dumb enough to use the Internet to communicate threats.

This particular jerk didn't sign his name. Another one did. We're talking dumb.

It is becoming increasingly clear that the Baloney Brigade anti-shorting movement is an army of wackos -- small, vocal, and dismayingly effective in its campaign to divert regulatory attention from real problems.

Time for regulators to wake up and smell the nuts.

UPDATE: A response to this item came quickly on an Internet message board from "Bob O'Brien," the bravely pseudonymous phony name used by Phil Saunders, the creep who is the Propaganda Minister of the anti-shorting crazies. ApparentlySaunders was dissatisfied with my reaction to the threat from one of his followers, and he wondered aloud as follows:

Wonder what the bad guys have on 'lilGW, or whether it is a straightforward financial matter?

First of all I appreciate the compliment. I am trying to get little, with no success.

I think the rest of this typical O'Brienism -- the same line pushed by Overstock CEO Patrick Byrne -- merits some analysis and should not be instantly dismissed as "trash talk" or somesuch.

Byrne and his anonymous friend both take the position that it is impossible for any journalist to believe that is a stinker, or that the naked shorting campaign is a lot of hooey. We must be corrupt!

This attitude can be easily explained. The anti-shorting movement is not a legitimate movement, but a cult. Only cults demonize their critics in this fashion. This rhetoric, which can be found throughout the anti-shorting movement, is not evidence that the anti-shorters are a cult. It is proof.

FURTHER UPDATE: The errant individual has come forward. (See comments.) He pleads the "baloney defense" -- he consumed too much baloney, and that apparently resulted in a chemical imbalance in the brain.

Apparently this person didn't realize that IP addresses are captured by the Haloscan system. Even if they weren't, they're easy enough to track down.

Hey, baloney cultists are not known for their mental acumen. If they had half a brain, after all, they wouldn't be pushing a nonexistent cause, would they?


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

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Ernie Pyle: August 3, 1900 – April 18, 1945

Ernie Pyle died sixty-one years ago on Ie Shima in the Pacific.

Some of his best wartime columns can be found here, including his most famous one, "The Death of Captain Waskow."

My favorite, apart from the Captain Waskow column, are the three columns he wrote from the Normandy beachhead. One was the "The Horrible Waste of War":

"It was a lovely day for strolling along the seashore. Men were sleeping on the sand, some of them sleeping forever. Men were floating in the water, but they didn't know they were in the water, for they were dead.

"The water was full of squishy little jellyfish about the size of your hand. Millions of them. In the center each of them had a green design exactly like a four-leaf clover. The good-luck emblem. Sure. Hell yes."

In "A Long Thin Line of Personal Anguish" he wrote about the personal possessions of the dead, left on the Normandy beaches:

"Here in a jumbled row for mile on mile are soldiers' packs. Here are socks and shoe polish, sewing kits, diaries, Bibles and hand grenades. Here are the latest letters from home, with the address on each one neatly razored out - one of the security precautions enforced before the boys embarked.

"Here are toothbrushes and razors, and snapshots of families back home staring up at you from the sand. Here are pocketbooks, metal mirrors, extra trousers, and bloody, abandoned shoes. Here are broken-handled shovels, and portable radios smashed almost beyond recognition, and mine detectors twisted and ruined.

"Here are torn pistol belts and canvas water buckets, first-aid kits and jumbled heaps of lifebelts. I picked up a pocket Bible with a soldier's name in it, and put it in my jacket. I carried it half a mile or so and then put it back down on the beach. I don't know why I picked it up, or why I put it back down."

If you're ever in Albuquerque, be sure to visit the Ernie Pyle home, now a municipal branch library. It's beautifully preserved, has a memorial to Ernie on the grounds, and contains a large amount of memorabilia. More on that can be found here.


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

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Friday, April 14, 2006

The SEC's Unfinished Business

In all the coverage of the SEC's new journalist-subpoena guidelines, including my item in this blog, nobody mentioned a lingering issue: Just how does the SEC define "journalists" and "news-gathering"? Nothing in the SEC policy statement defines those terms, and that troubles me.

This a subject I've discussed before (thanks to New Market Machines for reminding me). When the subpoena morass first arose, SEC chairman Christopher Cox told Reuters that people "masquerading as journalists" are a problem, and that the guidelines would cover just the media and nobody else.

The problem is that stock swindlers have long posed as "journalists," such as by publishing "stock market newsletters" that are little more than stock-promotion vehicles. More recently, we have the anonymous crackpots of the anti-naked-shorting cult, some of whom are from the world of penny stocks and are well acquainted with stock-scam tactics.

As I noted in my item last month, the "sanitycheck" website, a favorite of's loopy CEO Patrick Byrne, bills itself as an "independent" website that likes to say that it engages in "journalism." In fact, "sanitycheck" has as much in common with journalism as the anti-shorting "market reform" movement has in common with genuine market reform. In other words, nothing. In fact, its tactics and secrecy make it more a kind of stock market version of the Ku Klux Klan than anything else.

"Sanitycheck" is run anonymously by an individual who hides behind a phony name (used medical equipment salesman Phil Saunders, a/k/a "Bob O'Brien") while he serves as a shill for Overstock and publishes drivel on "stock counterfeiting." One of the site's primary functions is to slander and intimidate journalists who fall afoul of Patrick Byrne and the naked-shorting cultists. One of "O'Brien's" "reporting techniques" is to publish a lie or rumor about someone or other, and then give that person or institution X amount of time to respond or he will consider it as "fact." (See Feb. 15 entry here.)

The SEC needs to investigate the funding, tactics and secret ownership of "Sanitycheck" and similar sites, without being deterred by the misimpression that such phony, crackpot websites are part of the "news media." Some kind of formal guidelines defining the media (perhaps simply excluding anonymously-run sites run to push a particular "cause") are clearly needed.

Now one might think that the SEC would know the difference between a crackpot website and a genuine online journal like, say, Slate. However, judging from its recent witch hunt against journalists, I am not so sure.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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Wednesday, April 12, 2006

Cox Reaffirms SEC-Journalist Amity

Securities and Exchange Commission chairman Christopher Cox today set forth guidelines for issuing subpoenas to reporters. In a press briefing, generously webcast, Cox practically swept down on the reporters in attendance and covered them in wet kisses.

The SEC, he said, just loves investigative reporting. Goody goody.

Cox pointed out -- you got to love this -- that SEC officials who violate these guidelines will be punished. (Hopefully such swine will be punished more severely than Wall Street firms that break the law, but that is a separate issue.)

Anyway, I'm glad Cox has issued these guidelines. By the way, as long as Cox is issuing stuff, why doesn't he tell the San Francisco office of the SEC to take those journalist subpoenas it issued a few weeks ago and put 'em in the shredder? Ditto for their investigation.

After he does that, maybe Cox can start investigating real miscreants and not Overstock CEO Patrick Byrne's fantasies.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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Monday, April 10, 2006

Beware the Short-Bashers

Great commentary today on MSN Money by hedge fund manager Bill Fleckenstein: "Beware of Companies that Attack Short Sellers." Fleckenstein observes:
Let me repeat something I've said before: Short-sellers do not mismanage companies. They don't cause them to stuff the channel, build receivables or cook the books generically. Company managements do that. Short-sellers catch them.

The very fact that someone actually has to say that shows how short the public's memories are. And it's not just the public. A few weeks ago -- I blogged on it at the time -- I chatted with a journalist about short-selling. At one point he remarked that short-sellers had damaged companies by driving down their share prices.

I asked him to cite an example. His response: Enron.

Like I said -- memories are short.

(Hat tip: SABEW's Talking Biz News blog.)


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.


Saturday, April 08, 2006

Kudo Roundup Time

I hate to admit it -- it pains me to have to say this -- but Wall Street Versus America has received all kinds of great notices, and it has been just two days after pub date!

Apart from the New York Times, Houston Chronicle, Publishers Weekly and New York Post kudos that came in between January and early this week, I've gotten awfully nice reviews from Knight Ridder Newspapers (see this pickup in the Newark Star-Ledger), Corporate Crime Reporter, Joe Mysak in Bloomberg and, last but not least, veteran financial journalist Don Bauder, writing in the

Knight Ridder's Cecil Johnson calls WSVA a "provocative and insightful assault on Wall Street," and points out that my solution is not more (usually ineffective) regulation. Said Johnson: "This book is essential reading for anyone who has money to invest but doesn't have any to throw around foolishly. It is the kind of book that might make you angry while you're reading it, if it were not spiced with acerbic wit and skillfully applied satirical understatement."

Corporate Crime Reporter, a leading authority on white-collar crime, said as follows:

It’s not the same old recitation of corporate and Wall Street crimes that have bored generations of business school students taking their required ethics courses.

While it purports to be about Wall Street, it is in fact a biting critique of the elites that populate the Wall Street firms, regulatory agencies, law firms, and newsrooms across America.

Weiss spent 18 years as a reporter at Business Week. But he never wrote with this point of view and intensity.

The praise from Don Bauder was particularly gratifying. Don recently retired after many years with the San Diego Union-Tribune, and is one of the most respected financial journalists in the country.

Don focused on my excoriation of ex-SEC chairman Arthur Levitt (who apparently has gotten a nice gig in San Diego), and concluded: "Weiss's book is relevant to your pocketbook and to San Diego. Read it."

Corporate Crime Reporter's review, written from a different perspective, had the same conclusion: "Read this book."


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.


Friday, April 07, 2006

News from the World of Time-Wasting

Today the wires are burning up with news that a federal appeals court -- oh no! -- overturned Securities and Exchange Commission mutual fund governance rules. Why, I'm horrified! Outraged! Or I would be, if these rules meant a damn thing.

"Good governance" is one of those self-evident good things, sort of the regulatory equivalent of a high-fiber diet. The rules would have required that all funds have independent chairmen. That is nice idea, I guess. Hey, I suppose it would be even great if everyone on a mutual fund board were independent. Or maybe even that everyone in the world be independent because, hey, independence is a good thing.

But as I describe in Wall Street Versus America, there is no connection at all between a fund's "governance" and whether the fund has been screwing investors.

So, in other words, here we have yet another example of the SEC wasting time.

Meanwhile, for other tidings from the world of time-wasting, we have Eliot Spitzer's ongoing get-Grasso campaign, also in the news today. Apparently some New York Stock Exchange official altered Grasso pay figures submitted to the NYSE board. I am shocked! Shocked! But it still doesn't make his suit against Grasso and the NYSE any less silly.

The judge overseeing the case suggested today that Spitzer and Grasso settle the case. Good idea. Then Spitzer can, hopefully, pursue his political ambitions in a manner that would actually benefit the public.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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Monday, April 03, 2006

A Times Review? Moi?

I'm still reeling from the experience of the generous review in the New York Times this morning. At left is a depiction of how I appeared this morning, as captured by cellphone camera. "Highly illuminating"? Aw, shucks.

As you can see from the review, Wall Street Versus America doesn't pull any punches! Another important point, which I'm glad was emphasized in the review, is that this book is for a general reader, even though I deal with complicated subjects.

In fact, one person who interviewed me recently for another publication noted something to the effect that "this sure isn't what you wrote for Business Week," which I think he meant in a positive way. Actually in the Acknowledgments I point out that the guiding spirits behind the book, whether they like it or not, were the two BW editors who ran the magazine's Wall Street coverage through 2001.

As SABEW's Talking Biz News blog points out today, the good and, mainly, bad traits of the financial press are dealt with throughout the book.

The Times review concludes by opining that this book may "provoke change" -- and hopefully it will be real change and change for the better, in contrast to so much of what has emerged from Wall Street regulators in recent years.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.


Saturday, April 01, 2006

'60 Minutes' Revisited

Two good articles today -- in the New York Times (subscription only) and -- debunk last Sunday's awful 60 Minutes episode on Biovail's tussle with short-sellers.

Great stuff. Joe Nocera's column was the most eloquent defense of shorting outside of you-know-what. TheDeal's article made the following interesting point concerning the 60M piece and CEO Patrick Byrne:
. . . Byrne hasn't gotten the friendly treatment from "60 Minutes," or any other big media outlet, for that matter, probably because, in a conference call last year, he charged that several high-profile journalists were players in a vast conspiracy theory dominated by a mysterious Wall Street puppet master he called the "Sith Lord" and inexplicably blurted out that he's not a cokehead. Contrast this behavior to Melnyk's, who, according to The Wall Street Journal, hired public relations firm Sitrick and Co. to help push his case against Gradient in the media. If "60 Minutes" is any indication, PR pays.
What a shame. Is there no room for character assassination, paranoia and weirdness in our national discourse?

Does this mean that when a CEO promotes a conspiracy cult website that specializes in smearing and threatening reporters -- that, well, maybe such tactics don't win friends in the media?

I'm referring, of course, to Byrne's close association with the anonymously run "sanitycheck" website and -- you know, that's gotten me thinking:

Let's say, purely hypothetically now, that I run a company, and certain reporters have been mean to me or are asking tough questions.

I give the emails to my exchanges with those reporters to a "good friend who is anonymous" and he publishes those emails and attacks those reporters and performs other nice IR tasks on my behalf. Totally out of the goodness of his heart, of course! Or maybe not.

Is that kosher? Or is it whatcha call a "loophole" in the securities laws?

It's an interesting question, I think, and one that the SEC might want to examine when it's finished subpoenaing reporters and otherwise chasing down Byrne's conspiracy theories.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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