What were they thinking?

In the April 10 issue of BusinessWeek, which just came out, there is an article titled “The Secret Lives of Short-Sellers” that goes into detail about how hedge funds and research firms that specialize in finding companies whose stocks are going to fall are increasingly doing battle with the companies, namely Overstock.com and Biovail.

Most of you in the business journalism world are familiar with this fight because it involves business journalists who use these hedge funds and research firms as sources. Some of these journalists were subpoenaed last month by the Securities and Exchange Commission, while subpoenas sent to the firms request details of their communication with business journalists.

What I find shocking is that the BusinessWeek article gives no mention of the role that the business journalism community has been playing in this issue of using hedge funds and research firms as sources of information. It’s especially shocking considering this all blew up earlier this year when BusinessWeek writer Timothy Mullaney sent a list of questions to Overstock.com President Patrick Byrne, who responded by answering the questions and posting the interview on the Internet so that everyone could read it.

The BusinessWeek article makes a brief mention to the media, noting a private investiagtor has been hired to “help prove that a group of short-selling hedge funds are fraudulently collaborating with analysts and journalists to push down stocks.” Later, there is this mention: “Public relations campaigns related to the suits have drawn intense media interest, with CBS’s 60 Minutes featuring a sympathetic segment on Biovail. The Securities & Exchange Commission, meanwhile, is investigating allegations about abusive short-selling concerning the two companies, as well as potential underlying problems at both.”

Yet, there is no mention of the bigger issue here that involves business journalism.

If business journalists don’t protect their own turf, then no one will. I realize the article may have wanted to focus on the battle of the shorts vs. the companies, but I don’t see how that can be done without mentioning that the shorts are sources for journalists and that the SEC is trying to interfere with that relationship.

Go here to find the article. The article is for subscribers only.