Marketwatch and Madoff investment by columnist: An ethical issue?

TALKING BIZ NEWS EXCLUSIVE

Marketwatch has had some of the best reporting about disgraced hedge fund manager Bernard Madoff in the past 10 days.

In particular, a column by Robert Powell posted Monday about how his wife lost her 401(k) and her job due to the failure of Madoff’s company was poignant.

But MarketWatch hasn’t disclosed that one of its columnists, chief economist Irwin Kellner, is one of Madoff’s clients who has lost money even though it’s been reported elsewhere. Kellner has filed suit against Madoff and his company.

I asked David Callaway, Marketwatch’s editor in chief, why that’s the case.

Callaway replied via e-mail, “No real discussion or decision about it, to be honest. If we do a story about the list of victims, we’d certainly include him, perhaps somewhere between Spielberg and Zuckerman.”

Callaway later stated, “If Irwin felt compelled to write about it, we’d be happy to take a look. But his brief is really economics, where Powell’s topic is personal finance and individual asset management, which ties in much closer with the scandal.”

I’ll accept Callaway’s rationale, but I’m still uneasy that Marketwatch hasn’t disclosed that one of its “name” columnists has a vested interest in how the Madoff case plays out. In business journalism, it’s always safe to err on the side of caution and disclose as much as possible.

To Callaway’s credit, he notes how aggressive Marketwatch has been in covering the case. He stated, “Powell’s piece was so unique and personal, and early on in the breaking scandal, that it really covered the victims angle for us in a way that competitors didn’t have, so we just linked to WSJ’s story list of victims and moved on to other stuff, such as this excellent piece last night by Alistair Barr on how Madoff’s arrangements with hedge funds worked and how it might have exploded ten years ago.”

You can read Barr’s piece here, and Powell’s column here.