Is the business press fair game for the SEC?

CNBC commentator Charles Gasparino, who is a former Wall Street Journal reporter, wrote a commentary for Newsweek magazine on the recent actions of the SEC to subpoena business reporters as part of its investigation into an investment firm. Publicly, the SEC has backed off enforcing the subpoenas.

Gasparino, however, concludes that is not the case from talking to sources within the SEC about the public back-tracking from Chairman Christopher Cox on Monday.

Gasparino writes: “Cox didn’t rule out ever calling reporters in as witnesses, and putting them through the paces that other SEC subjects are put through, meaning they must not only answer questions, but also hand over documents, e-mails and possibly most damning for any journalist—their sources. In fact, my own sources at the SEC tell me that [Marketwatch columnist Herb] Greenberg and the other journalists involved in the Overstock.com story may still be called in to testify about the case. Cox, they say, wants the testimony of journalists to be taken only rarely, and only as a last resort.”

“To be honest, I am not all that comforted by Cox’s go-slow approach. In public, Cox appeared to rebuke Thomsen’s decision to subpoena journalists, but my sources at the commission say he acted much differently privately. One said he called both Thomsen, and the SEC officials leading the Overstock investigation in the commission’s San Francisco bureau and gave them his ‘unflinching’ support. Cox, these people say, wasn’t so much concerned about sending subpoenas to journalists, rather, he didn’t like the public perception that the SEC was somehow trying to curtail the free flow of information about stocks, something it has vigorously defended in the past. In other words, under certain circumstances, Cox might not have a problem hauling a bunch of journalists down to SEC headquarters and having them answer questions and possibly hand over their sources.”

Later, he concludes: “SEC may be on firmer ground than we journalists may think. Remember last summer when The New York Times’ Judith Miller was thrown in jail for not revealing her sources in the Valerie Plame CIA leak case? Public opinion wasn’t on the side of Miller as she languished in jail before finally announcing that her source had given her permission to reveal his name before walking free. And I bet, if Linda Thomsen and the SEC chose to pursue journalists in the Overstock case, public opinion would come out the same way.”

Read Gasparino’s column here.

Former BusinessWeek writer Gary Weiss comments about Gasparino on his blog. He writes: “But with whom are the subpoeanaed journalists (Herb Greenberg, Carol Remond and Jim Cramer) ‘consorting’? ‘Malefactors’? Or stock analysts dedicated to rooting out overvalued and manipulated companies? What’s out of kilter here is that the SEC is investigating people who are indeed on the same side as the agency– that is, on the occasions when it deigns to pursue stock fraud.

“Meanwhile, the bad guys — the stock touters promoting the fictitious ‘stock counterfeiting conspiracy’ — are the ones cheering on the feds.

“This is not the first time that the anti-shorting crowd has screamed ‘stock manipulation’ and tried to push the feds into engaging in a wild goose chase. A good example came in the mid-1990s, and involved a company called Solv-Ex that also blamed shorts for its crummy stock performance. The company’s top officials pressed hard for SEC action.”