The Information War: The Deal Editor Versus New York Times Wonder Boy

Posted by John Carney, Jul 08, 2008, 5:03pm

Andrew Ross Sorkin's call for a regulatory crack down on those spreading rumors was probably a big hit in the corner offices of Wall Street firms. But it's getting a much frostier reception from some of his fellow scribes. Earlier we pointed out that Portfolio's Felix Salmon gave him a bit of a thrashing in his Market Mover's column. Now we also find that he's getting knocked around by the Deal's editor in chief, Bob Teitelman.


Teitelman points out that Sorkin's argument raises a philosophical question that's been around at least since the time of Christ: "What is truth?" How exactly would a prosecutor go about determining the truth of the financial condition of Bear Stearns when even its top executives seem to be largely in the dark? Ditto for Lehman Brothers, which was denying anything was wrong, cursing the rumor-mongers, until it finally had to confirm the rumors and hand around the hat once more.

We'll go a step further. The notion of pursuing rumor mongers is potentially far more dangerous than spreading false rumors. If subpoenas started flying around "at least as fast as the rumor mill." as Sorkin suggests, it would have a chilling effect on the way information gets passed around Wall Street. It would make the discovery of information, the pursuit of hunches, the comparing of notes far more dangerous. This is a frightening curtailment of freedom of speech, to be sure. Your right to express your doubts about the financial health of a company would suddenly turn on ex post-facto decisions of prosecutors, judges and juries.

It would also make markets less efficient by making obtaining information more costly. No doubt some of those who advocate a crack down on rumors would enjoy exactly that. It's far easier to get away with balderdash if no one dares call you on it. It is tempting to say that some journalists might even find this curtailment enticing because they would quickly become the only legitimate means of passing along such opinions. Of course, we must exempt Sorkin from any such suspicions. He's already got plenty of people willing to pass information through him.

Rumors, subpoenas and the pursuit of truth on Wall Street [DealScape]

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Tags: Andrew Ross Sorkin, Info War, Rumors

Comments

Posted by guest, Jul 08, 2008 6:32PM

Odd: The fact that your argument is incredibly self-serving doesn't make it wrong in any way.

Posted by guest, Jul 08, 2008 11:02PM

Andrew Sorkin's back hurts from carrying so much water. His job as brainless shill is to offset the brainless critique from Gret-Gret.

As to the topic at hand, the fundamental assumption about the "short sellers is evil" thesis is that it easier to get someone to sell their own stock for less than it is worth, than it is to get someone to buy a stock for more than it is worth. I'd argue its equally easy to get a chump to buy on M&A rumors as it is to sell on calamity fears.

Posted by guest, Jul 15, 2008 12:28AM

Andrew Ross Sorkin is the poster boy for exactly the type of person who is allowed lots of airtime and column inches, in this country. He straddles all sides of every issue, is careful to never make an assertion that someone else has not already made, and of course, he's cheery.

But that's all going to change. And it's one of the reasons we're having this crisis. The deadwood needs clearing out. In academia, on Wall Street, in government and especially journalism.

Gregor

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