Response for Chris Faille
From: Christopher Faille [mailto:XXX@hedgeworld.com]
Sent: Saturday, April 19, 2008 3:06 PM
To: XXX
Subject: an e-mail from Byrne to Herb Greenberg last week?
XXX
Thank you for the kind words.
There is something you might be able to help me with. Something on Herb Greenberg’s blog on MarketWatch has me shaking my head.
As you presumably know, Mr. Greenberg is himself one of the centers of controversy about so-called short-and-distort stock price manipulation. He received a subpoena from the SEC in 2006.
Anyway, back in 2008: on April 15, Greenberg announced that he’ll soon be leaving MarketWatch to start an independent research firm.
The following day, he said that he had received an e-mail from Patrick Byrne, which he posted. I’ll paste it below, in italics.
It raises obvious questions. One might of course suspect a prank — some third party could have sent it pretending to be Byrne for whatever reason. So the first question is: does Byrne acknowledge authorship of the e-mail below?
Second: the wording seems odd. As Byrne knows, it is customary when a reporter is asking a source to comment on allegations to be quite concrete about what allegations, from whom, in what context. For example, I recently asked Byrne to comment on a specific cross-complaint filed in a specific court by a specific defendant in an ongoing lawsuit. That is very different from the vagueness of “There are allegations that…”!
Allegations never just “are”! Somebody alleges something. So: is Byrne himself using this wording to make the allegation himself (in essence, that Greenberg isn’t leaving voluntarily)? or is he saying that he has heard such things? in some context or other? are the allegations in any publication or website or whatever, and were they there prior to the moment when Greenberg quoted Byrne’s e-mail?
I look forward to any light you can shed on all this.
Dear Herb,
There are allegations that you were terminated upon CBSMarketWatch’s observation that positions in your columns overlap with the trading positions of certain hedge funds. What is your comment on these allegations?
Respectfully,
Patrick M. Byrne, Journalist
Christopher Faille
Senior Financial Correspondent
Lipper HedgeWorld
XXXX
Enfield, CT 06082
TEL XXXX
XXXX
==========================================================================================================
Dear Mr. Faille,
I will address your questions in the order you raise them.
1) “Does Byrne acknowledge authorship of the e-mail below?”
Yes, proudly.
2) “Second: the wording seems odd. As Byrne knows, it is customary when a reporter is asking a source to comment on allegations to be quite concrete about what allegations, from whom, in what context. For example, I recently asked Byrne to comment on a specific cross-complaint filed in a specific court by a specific defendant in an ongoing lawsuit. That is very different from the vagueness of ‘There are allegations that…’!”
This is quite definitely false. Financial reporters have often called me asking me to respond to rumors with no source the reporter was willing to identify. For example, in June 2006 Herb called me to ask about a rumor then being circulated. When I told him I would respond when he identified his source, his answer was, “You can answer my question, or not answer my question.” Second and third examples came last Q2, from Roddy Boyd and another reporter I will not identify (because he is a good guy), both of whom called me over an identical (largely false) leak they had been fed. So I think that your theory regarding the SOP for financial reporters is false.
3) “So: is Byrne himself using this wording to make the allegation himself (in essence, that Greenberg isn’t leaving voluntarily)? or is he saying that he has heard such things? in some context or other? are the allegations in any publication or website or whatever, and were they there prior to the moment when Greenberg quoted Byrne’s e-mail?”
Yes, I definitely did hear this rumor prior to writing Herb: I’m sorry, as a journalist I cannot reveal my source.
Best always,
Patrick
Posted in 9) The Deep Capture Campaign |
April 21st, 2008 at 6:00 pm
I really like the ring to that’Patrick Byrne Journalist”. Will this get you a press pass or any of the freebies these these distinguished personalities get?
April 21st, 2008 at 6:02 pm
:”As you presumably know, Mr. Greenberg is himself one of the centers of controversy about so-called short-and-distort stock price manipulation. He received a subpoena from the SEC in 2006.”
I find this paragraph interesting. It appears to state what I believe. That subpoena, as well as Cramer’s, was issued for cause. It doesn’t make one guilty, but there was something most definitely there to get an enforcement attorney to ask for it, and a supervisor to issue it.
We need to get to the bottom of this. Not so much to ‘get Herb’, but to stop these attacks against companies with no means to defend themselves. The idea of Minkow to issue a ‘report’, declare he’s short to ‘pay for the research’, then bash the company smacks of some death squad in Noriega’s Panama.
“Hey, that guy we killed last night??? He was innocent”.
“Yeah, but the guy we killed the night before wasn’t”. HUH?
April 21st, 2008 at 9:37 pm
Could this be really happening or is this another smokescreen?
Senators Call for Examination of SEC’s Enforcement Division
Democratic Senators Christopher Dodd and Jack Reed recently asked the Government Accountability Office to initiate an examination of the SEC’s Enforcement Division. Specifically, Dodd (the Banking Committee Chairman) and Reed (the Securities Subcommittee Chairman) are focused on whether the SEC has fundamentally altered its enforcement policy. “There has been less emphasis on investor protection and more on this issue of the competitiveness of markets,” according to Reed.
This is the second time in 18 months that a member of Congress has called for an investigation into the ways the SEC is doing business. And no wonder. The Senators cite the fact that the SEC reduced by 50% last year the penalties it required firms and individuals to pay in connection with enforcement actions. They also note that the Commission lowered by over one-half the amount of corporate disgorgements that it ordered. No doubt the Senators feel that the SEC has grown lax, considering that in 2007, investors on their own recovered approximately $6 billion in fraud-related losses in private litigation — according to yesterday’s PomTalk post, “The Power of Myth.”
In fact, the SEC seems to be “bending over backward to not discomfit the banks and firms it regulates,” according to a New York Times commentator (in an editorial accessible here). We would point out that there have been a number of distressing changes made at the Commission by former Republican Congressman Christopher Cox — now Chairman of the SEC. For one thing, since taking the helm in 2005, Chairman Cox has given his commissioners increased authority over enforcement penalties — taking that authority away from SEC staff attorneys.
Indeed, SEC lawyers have begun complaining about the commissioners’ exercise of this authority — and the concomitant reduction of fines and penalties levied on wrongdoers. One particular instance, discussed by the Times in an earlier article (accessible here), involved the commissioners’ reduction of a settlement reached with JPMorgan Chase. The bank had already agreed to pay a $25 million settlement when the commissioners voted to reduce that amount by over 90% — to $2 million.
Chairman Cox defended the new policy earlier this month, saying that it ensures that enforcement staff have the “full backing of the commission” when they “seek to obtain the best possible results for America’s investors.” One must wonder, though, how “America’s investors” feel about the whole thing. For it was their SEC that recovered a mere one-twelfth of what they were able to recover in their own private litigation efforts last year.
http://www.pomtalk.com:80/pomtalk/2008/04/senators-call-f.html
April 23rd, 2008 at 11:46 am
Patrick,
I first ran into this blog a couple of months ago while shopping on overstock. I love the company for a myriad of reasons including the raw market efficiency of it as well as the social responsibility. Initially I wasn’t so sure about it. It sounded like it might be another conspiracy theory. After spending some time researching I have come to the tentative conclusion that you are right in your allegations. Thanks for fighting got the truth. I hope that the institutions of this country are still robust enough to see you succeed.