Update on SEC subpoenas of biz reporters

The New York Times reported today that in addition to Marketwatch columnist Herb Greenberg, the SEC also subpoenaed Dow Jones Newswire reporter Carol Remond as part of its investigation into the practices of short sellers. However, the subpoenas were then withdrawn.

Times reporter Stephen Labaton reported, “But after receiving questions from reporters preparing articles on Friday about the subpoena, the commission appeared to soften its stance. The agency then decided not to enforce the subpoena or seek any documents from the journalists, at least for the time being, government officials and a company spokeswoman said.

“The abrupt about-face was an unaccustomed victory for a news organization, as journalists have found themselves under increasing pressure in recent months from law enforcement authorities for information and testimony. In several notable instances over the last two years, including one involving The New York Times, the journalists have gone to jail rather than cooperate with law enforcement officials.

“In other instances, news organizations that were traditionally resistant to cooperating with subpoenas have complied to avoid severe financial penalties and possible jail sentences.”

Read the Times’ article here.

Former BusinessWeek reporter Gary Weiss said on his blog that the SEC’s actions were reminiscent of the Keystone Cops. He wrote, “Herb Greenberg of Marketwatch, one of the subpoena recipients, is correct in saying that the SEC’s action will have a chilling effect on financial journalism. He and Carol Remond of Dow Jones News Service, the other subpoenaed reporter, are two of the toughest financial reporters around. They and others have paid the price for good work by being regularly smeared by [Overstock.com CEO Patrick] Byrne and his lowlife sidekick, an Internet nutjob who goes by the phony name ‘Bob O’Brien.'”