This is a transcript of the Deep Capture podcast episode published on February 10, 2010.

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   Barry Ritholtz and a tale of two media. [12:35m]: Hide Player | Play in Popup

It’s no secret that the Deep Capture message is not a popular one in certain places. I’m thinking about Wall Street and environs, specifically. In fact last month I was the subject of a fairly lengthy profile in the New York Observer, Manhattan’s alternative weekly, examining the deepcapture phenomenon and the impact it’s had on Wall Street from precisely that perspective.

In my interview with the Observer’s Max Abelson, one theme that emerged was this idea that the market reform movement could only take root in fly-over country because the culture of the coasts — New York in particular — runs in direct opposition to everything we’re trying to accomplish. That’s not to say that there are no moral, law-abiding people in New York or San Francisco, only that the extreme unpopularity of our message would probably keep it from taking root there. It had to be somewhere else.

And even though we’re making headway, as the mere existence of the Observer story demonstrates, the New York press — yes, even the alternative press — generally does not do nearly enough to afflict the comfortable on Wall Street. Sure, they’ll pile on when there’s blood in the water, but dare ask hard questions of the Wall Street celebrity set otherwise? Not going to happen, because the culture doesn’t allow it.

How many business reporters did Harry Markopoulos brief on Bernard Madoff during the decade leading up to his downfall? How many sports writers apparently knew about Tiger Woods’ infidelities in the years leading up to his downfall? But in both cases, nothing happened because the boosterism mentality endemic to both Wall Street and sports journalism means there’s too much to lose by sticking one’s neck out and challenging a celebrity in either field.

Keep that in mind as you consider what follows. I want to preface by saying that this is a very personal situation which I’m certain is of much greater significance to me than most anybody else. I recognize this and I’m not whining. Instead, I’m telling this story because it illustrates a couple of important and broadly-applicable market reform lessons.

Here’s the background…

In early December, I published a video suggesting that — based on links revealed by their publicly-available Facebook friend lists — there is more than a little substance to the long-held suspicion that a group of well-known Wall Street reporters and bloggers have close interpersonal ties with some of the short-selling hedge fund managers they write about. I further posited that these apparent conflicts might explain some of the pro-short seller biases many (myself included) claim to have observed in their writing.

I knew that this social network was only significant to the extent that its own members regarded it as significant. In other words, if it was composed entirely of people who view Facebook as a proxy for a Rolodex, the network would be meaningless. If, on the other hand, this network had dynamics comparable to real world relationships — meaning, some degree of exclusivity based on common interests — then it would be very significant, indeed.

In order to find the answer, I created a fictitious Facebook account and sent friend requests to every member of this group. What I discovered was that I, as a stranger, only managed to replicate about 20% of the network. With that, I knew I was on to something, as the video explains.

And that was it. I didn’t need to be Facebook friends any of these people to see who their friends were.  I did it to determine whether being Facebook friends with them actually means anything.

Well, apparently it does mean something, because my video struck a nerve among these folks. The real journalists kept quiet…likely out of embarrassment, but the bloggers in that network went on the attack like never before. It started with Gary Weiss insisting that I’d gained this publicly-available friend data, by hacking into everybody’s accounts. Then he said that it was actually Overstock.com (NASDAQ:OSTK) CEO and frequent Deep Capture contributor Patrick Byrne himself who did the hacking. Bloggers Felix Salmon, John Carney and Joe Wiesenthal swallowed this easily-refutable line and regurgitated it whole on their own blogs. A few times.

After that silly angle ran its course, Weiss escalated things by announcing that I sent friend requests to many young children he claims are connected to the people in the network, in order to get their personal information so that I could harass and stalk them.

And that was repeated, unexamined, by the same chorus.

Then Weiss revised slightly by saying that it was actually Patrick Byrne who did the kid-stalking.

And that was repeated.

And just when I didn’t think things could get any more ridiculous, Barry Ritholtz showed up.

Ritholtz, a fairly well-known (in fact, the Observer’s Max Abelson called him “revered”) Wall Street blogger, trader and recently book author, has consistently parroted the position of the short selling mega hedge funds who oppose the reform movement for obvious reasons.

Well, out of nowhere, Ritholtz latched on to the demonstrably false notion of my having attempted to become Facebook friends with young children, and created an entirely new reality, going so far as to assert that I am a child molester. That is not an exaggeration. In fact, he said as much multiple times.

Ritholtz then demanded a boycott of Overstock.com, saying the company violates its customers’ personal information and hires deviants to stalk their kids.

Did I mention Ritholtz has a law degree? But you don’t need to go to law school to know what libel is. You barely even need to be human.

Though I’ve been wary of Ritholtz and his motives from the beginning, I contacted him, to set the record straight and respectfully ask that he stop with the poisonous pedophilia rhetoric. He received my messages, but ignored them and continued as before. He also announced on his blog that if I sued him for what he was saying, he would hire a private investigator to uncover all my sexual secrets and very publicly broadcast them.

Anybody else sense something dark going on? What could possibly be motivating this guy?

For authors, large market talk radio interviews are gold, as the host usually gives the author 15 minutes to show off talking about an area in which they’re particularly well-versed and promote the hell out of their book. Talk radio listeners are very loyal and engaged and they will buy books. For the author, it’s money in the bank.

Well, recently Barry was invited to promote his book on the finance-themed talk show “Wall Street Shuffle” airing on a CNN Radio affiliate in Dallas, Texas.

Along the way, Ritholtz told the radio show’s producer that he was hoping to use some of his air time to attack me and repeat his call for a boycott of Overstock. The producer did the responsible thing by giving me an opportunity to respond, if Barry’s attacks warranted a response.

And one more thing: they didn’t tell Barry about this arrangement beforehand.

And so I sat and listened on hold while Barry spent much of the time any normal author would have dedicated to selling books, attacking me and renewing his call for a boycott of Overstock instead.

It was brutal. But better than describe it, you need to hear it. Listen to this.

Finally, the host broke in to say that it was only fair to give me a chance to respond.

Before playing that tape, let’s consider what might happen.

Assume Barry truly believes that I’m the monster he claims and is justifiably outraged. In that case, considering how vocal he’s been in condemning me in my absence, you’d expect him to jump at the chance to give me the same treatment in person…really make an example out of me, and get it on tape, to boot. That would be gold for his boycott campaign and make him look like a hero in front of at least 20,000 engaged, drive-time listeners. Meanwhile you’d expect that I’d want to stay as far away from that setting as possible, right?

On the other hand, what if Barry were repeating a lie and knew it? What if he knew he could never back up what he was saying, and was afraid of looking foolish (at best) and on tape, to boot? In that case, you’d expect him to run while I would leap at a chance to set the record straight, right?

Well, keep those two scenarios in mind as you listen to what actually happened.

Just like that, Barry was gone. While I regret not having an opportunity to truly confront him, I am very pleased that I was able to spend the remainder of what was to be his segment discussing Deep Capture and the market reform movement, and that the host was kind enough to invite me back to continue the discussion.

As you’ll recall, I promised that this story had application to more than just me. So what is the moral of this story?

Remember, this took place on an investing-themed radio show based in Dallas, Texas, not New York. I’m not sure it could have happened in New York. That’s because I’m pretty sure that Wall Street-themed broadcasts originating on or near Wall Street are talking to Wall Street; while the people listening to this show and the hundreds like it across America are mostly retail investors…precisely the crowd most victimized by short-side stock manipulation and most apt to support our reform efforts.

Herein lies both a problem and an opportunity.

The problem, I just described: Wall Street media culture is getting better but has yet to break free of its celebrity-focused ethic and is probably not going to critically examine the words or actions of a Barry Ritholtz. They’re just going to hand him a microphone. Consequently, in that kind of setting, a blogger living in Utah is unlikely to get the opportunity to rebut something Barry says, no matter how extreme.

The opportunity should be implicit in the problem: there are plenty of Wall Street-focused talk shows broadcasting from middle America where people generally place a higher value on fairness than celebrity (as this recent example proves). Chances are, you…yes you, I’m talking to you…know these broadcasts well. If so, I’m hoping you’ll tell me about opportunities in your area. My email is jbagley@deepcapture.com. Send me a note and help us spread the word.

Click here to download the full Ritholtz/Bagley segment from Wall Street Shuffle.