TALKING BIZ NEWS EXCLUSIVE
Some business reporters have used rumors and talk to make a name for themselves on Wall Street and in the media.
Dan Dorfman, who died Friday at the age of 80, was perhaps the biggest proponent of such reporting about Wall Street in the 1980s and 1990s. A former Wall Street Journal reporter, Dorfman had written the “Heard on the Street” column, as had Alan Abelson. He left the paper after buying stock in an initial offering that he had not written about.
By the late 1980s, he was writing two columns a week for USA Today and providing commentary about the markets on Cable News Network. “My goal is to be an equalizer, to let the little guy know what the big guy knows,” said Dorfman.
But he had his critics. After reporting on CNBC in 1995 that Coca-Cola would make a bid for Quaker Oats, the Atlanta-based soft drink company put out a statement that simply read, “Dan Dorfman does not have a clue.”
He was right on other occasions. He reported on CNN Moneyline that Time Inc. and Warner Communications were merging before it was announced. In 1989, he broke the story of Paramount Communications’ hostile offer for Time. And his reporting moved stock prices, showing that people paid attention to what he wrote or said.
The Chicago Board of Options went as far as to instituting a “Dorfman Rule,” where trading would be halted in a stock that Dorfman referred to on television.
“The reason Dorfman rose so rapidly in recent years to become the highest- paid and most influential business reporter in the United States isn’t because he’s a market genius,” wrote Newsweek business columnist Allan Sloan in 1995. “…It’s the hunger for the simple way to make money, the quick hit, seven stocks to buy now, 10 mutual funds for the ’90s, the 12-step computer program that guarantees you won’t have to live on cat food when you retire.”
Another business publication, BusinessWeek, called to question Dorfman’s reporting tactics and noted his relationship with a public relations executive used as a source for several stories. The magazine broke the story in 1995 that the U.S. attorney was investigating Dorfman and the PR person, Donald Kessler, for possible illegal insider trading.
Dorfman was placed on a leave of absence by Money magazine, which had lured him from USA Today. The magazine then fired Dorfman after he refused to reveal his sources. Though Dorfman was never found to have profited by mentioning stocks in his writing, he was deemed guilty by his association with Kessler, who later pled guilty to two counts of securities fraud.
Dorfman later made a comeback on the Internet.
Dorfman’s style of business journalism always made me uneasy. But I can not deny that he had a huge influence on how the stock market is reported about today. The type of reporting that he pioneered in the 1980s and ’90s is now practiced regularly.