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.
“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.”
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This is absurd. Its the press and the shorts that detect and report crime , NOT the SEC. They know it, i know it and you all know it. Don't believe me ? File a freedom of information request with the SEC and get a tally of the investigations were started by press reports. Greenberg has been doing this stuff for years . The SEC knows exactly what he is all about......The subpeonas are a outrage .
The reporing of this whole incident is misleading. The problem as I see it is this. Stocks go up and down based on information flow, or lack of information (speculation). If you buy a stock you want it to go up. If you sell a stock you want it to go down. The catalyist is information flow. If you can create information to support your position after you take the position then that is wrong according to who? If the information is accurate then was it created or just highlighted? It will very interesting to see where the investigation goes. I have never seen anybody complain about positive reports being created (from facts) when holders of a stock prosper from the information. The real culprit is greed and not being able to control human nature. The hedge funds created over the last couple of years are pressured to produce income and the amount of money makes illegal activity a given. The SEC needs to understand that illegal activity is going to occur. The internet will evetually equal the playing field for all and this is just an example of how the flow of information is going to be distributed. What a great time to be an American. How would you like to live in China.