Apparently Sharesleuth’s investigations take a very, very long time. The last article was published in August. And now at the end of September we have a follow-up. This kind of delay is probably a good thing, since the website employs just one reporter and aims at accurate, investigative articles uncovering corporate fraud and misdeeds. But just how is Sharesleuth picking its targets? Gary Weiss points to one possibility–Mark Cuban’s short portfolio.
When Mark Cuban’s Sharesleuth insider-trading vehicle performed a hatchet job on a little company called Xethanol in early August, Cuban disclosed some unfinished business: he had taken a short position in not just Xethanol, but also a company called UTEK, a Xethanol shareholder.
The UTEK short position was “underwater,” Cuban disclosed at the time.
Well, Sharesleuth’s second article has come out, and it is about a company called (surprise surprise) UTEK!
The critics of Sharesleuth keeppiling on. And while we’ve spent a lot of bandwidth discussing the short-the-story aspect of Mark Cuban’s Shareseluth, we thought we’d pause for a moment to remind everyone that Chris Carey’s reporting was very, very good. Deep, thorough, balanced, objective. Almost heroic. It really is first-rate financial journalism. But don’t take our word for it. Check it out for yourself.
What’s more, the company’s board seems to agree, at least in part. Today they announced that CEO Christopher d’Arnaud-Taylor had been ousted.
We should also note something we didn’t pick up on until today. Apparently, the profits from pre-publication stock trading will not be used to fatten Cuban’s already bloated bank account. He plans to pour the profits back into the website and use them to fund additional investigative journalism. At the very least, this helps clear away any charges that Sharesleuth is simply a way to help out Cuban’s short portfolio.
Sorry if this all seems terribly earnest. We hate to get in the way of a good brawl.
A withering critique of Mark Cuban’s Sharesleuth is up over on Buzzmachine. The short version: Mark Cuban’s pre-publication trading creates a conflict-of-interest that undermines the credibility of the Sharesleuth enterprise. But you should read the whole thing to appreciate the full power of Jeff Jarvis’s arguments.
Jarvis also breaks some news, pointing out that Cuban will be the keynote speaker at the Online News Association’s conference. Jeff sounds like he’s looking forward to it.
I sure as hell hope there will be ample opportunity to discuss this and challenge Cuban at the Online News Association. Are they presenting him as some paragon of journalism? Some new kind of media mogul? Some opponent of journalism’s old ways? Or a circus act? I’m bringing popcorn.
As long as its Mark Cuban day at DealBreaker, we might as well run with it.
Back when Cuban first announced Sharesleuth’s controversial business plan, Bruce Carton at Securities Litigation Watch noted, “I’m sure that Plotkin and Pajcin are kicking themselves right now for not including it in the Insider Trading, Inc. business plan.” (Ah, feel the refreshingly synergetic breeze of so many DealBreaker obsessions in one place.)
Today he wonders whether Mark Cuban’s success at Sharesleuth might end up undermining it’s legality.
[If Cuban’s business plan works], the first company that makes its money from legal insider trading will have been created—with a business model that can be duplicated by anyone with similar resources and abilities. If this occurs, Congress and the SEC may need to give serious thought to whether it is time to refine the insider trading laws.
You dont know it yet, but Chris Carey and Sharesleuth broke new ground that will result in a “business journalists employment act”.
Hedge Funds, Private investors, Mutual Funds employ analysts by the boatload. They get paid quite nicely. Those analysts spend their waking and probably a good portion of their dreaming moments trying to figure out ways to get an edge that can improve their returns.
They hire or put on contract, experts, consultants, investigators, anyone who can help them outperform their peers.
If Sharesleuth is successful, you can bet that any of the above with billions of dollars at stake will gladly hire the best and brightest business journalists they can find. Bigger the rolodex, the better. Old is the new young. Crusty is the new Yuppy. They will unleash those journalists to uncover stories that can give them an edge.
The process will be amazingly similar to what is happening with Sharesleuth. The jouralist will have more time and probably resources to go out and dig up the really good stuff than they did when they worked in traditional media. They will get to use all the investigative training and contacts they have acquired and accumulated over the years. Whatever skills they think they have, they will be get the enjoyable task of putting them to work. They will be given as many words, paragraphs or pages as it takes to convey the facts of their investigation.
Rather than turning in the story to an editor, it will go to an analyst, fund manager or investor.
We’re not even sure if it’s really fair to call it round three, since Gary Weiss’s latest response to Mark Cuban’s Sharesleuth comes so fast on the heals of his earlier post. This post needs to be read in its entirety. Weiss actually calls up former Wall Street Journal reporter and convicted insider trader Foster Winans and gets him to comment on Sharesleuth.
My take on Cuban, off the cuff without doing much research, is that in a world of institutional thievery, hidden fees, undisclosed conflicts of interest, “legal” insider trading, engineered and misleading mutual fund returns, false and rigged analyst rankings, and all the other self-dealing behavior that is business-as-usual in the investment racket, Mark Cuban is by comparison a goddamned Mother Teresa. At least you know he’s screwing you.
I read through his rant a few times and still can’t comprehend his point. He seems to be saying that “transparency” is the virtue of his website. I.e., he is upfront about using his site to front-run his reporters — thereby profiteering in the same manner as sleazy penny stock newsletter publishers.
But after saying that he is transparent in his sleaziness, he takes a few shots at me and seems to say that I’m not transparent and that, in fact, nobody is transparent.
He also…. now this is painful… accuses me of “pimping” my book. Good heavens! What an accusation. An author using a blog to promote a book! The scandal. He found me out. What a sharp guy. Definitely right up there with Cuban front-running his reporters.
Seriously, since Cuban sidesteps the ethical issues here, which he apparently feels — or pretends — do not exist, there’s not much more I can say except to congratulate Cuban, yet again, for giving the enemies of financial journalism still more ammunition.
[Haven’t had enough of Cuban and Weiss? A bit of background and analysis after the jump. Bonus: Another ‘One Ocean View’ reference.]
Mark Cuban has come out swinging in defense of the maverick journalism website Sharesleuth. The wealthy entrepreneur came under fire when he announced he was not only sponsoring the site, which takes aim at corrupt business practices and mismanaged companies, but planned to make investment decisions based upon the as-yet-unpublished investigations of its reporter, veteran journalist Christopher Carey. Although this breaks with the traditional rules applicable to many business journalists—who are often prohibited from trading in any stocks they right about and sometimes from trading in any individual equities at all—Cuban argues that his way of doing things is no less damaging to Sharesleuth’s credibility than relying on corporate advertisers or pandering for increased audience share.
He also takes a shot at an unnamed former Business Week writer, who we can only assume is Gary Weiss, author of Wall Street Versus America:
One former BusinessWeek reporter suggests in his blog what I am doing with Sharesleuth is not responsible journalism because I am trying to make a profit by trading on the information that we uncover. All the while, he promotes his site to draw readers, possibly chooses blog posts that will generate the most readership and promotes his TV appearances as a means to pimp his books , which are for sale with HUGE graphics on every page of his blog.
There is absolutely nothing wrong with that. Nothing at all. The news, his news has to get paid for somehow, right? But is he a responsible journalist ? Is he a responsible publisher ? Do we even know ?
Doesnt the foundation of responsible journalism come from transparency ?
Tell us what the goals of your publication are so we can understand your motivation and use it as a filter when we read your blog. your newspaper. Watch your network.
Of course if he did that, he would be alone in the publishing universe.