In wake of the MSFT/YHOO faux rumor that started before the market close by the NY Post and WSJ and ended after the market close, I was going to make a case that the SEC should apply some pressure to the folks over at the NY Post and the Wall Street Journal. When I woke up this morning, I realized I’m not alone in saying that.
As I mentioned yesterday, I’ve owned YHOO for over three years, am long YHOO and stayed in the stock yesterday because I like YHOO’s strength in video and in display ads, and it is, well, the largest/safest online media company. I also used a couple of examples of why rumor-based runups are not good examples of getting into a stock.
But, with 200M shares exchanging hands (10x daily volume), I wonder if there is something illegal - let alone unethical - about a venerable old media newspaper reporting:
- before the market opens that “according to unnamed sources two of the most widely-held media/tech companies are talking about a merger”
- no real news comes out all day, neither company denies this really.
- the same newspapers come back at 4:30pm saying the deal is off, after the market close.
Seems strange, borderline unethical / illegal. Insult to injury? This blog post from WSJ. There’s also an entire argument to be made about the financial theory of efficient markets and what not, but I’ll spare everyone the finance theory right now.
If someone tells a newspaper “Iraq is working on nukes” and we go to war and that costs 3,000 American lives and, oh yeah, 500,000 Iraqi lives and a trillion dollars, if it turns out the newspaper was wrong and / or the source was lying… that’s a crime, I would presume (actually, in America, it’s an unpunishable crime, I suppose).
I’m not trying to be Seymour Hersch here, but tell me one thing: a few years after the corporate scandals of Enron, Arthur Andersen and Worldcom rocked the stock market, maybe the systematic fraud remains in the stock market, and only the crime in question has changed.
I’ve long been a supporter of newspapers, newspaper writers etc., but this one is just appalling. Donna Bogatin over at ZDNet gives a good overview of what is accepted when it comes to journalism and unnamed sources.
My question is, is that good enough, since indeed determing what is accurate information and what is not is nearly impossible when it comes to unnamed sources.
Any thoughts?
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