Opinion

Felix Salmon

Trish Regan, Einhorn apologist

By Felix Salmon
March 24, 2014

Ever since the story first broke, more than five weeks ago, that David Einhorn was suing Seeking Alpha, the Israeli financial website has been very, very quiet on the topic. Sometimes they have simply failed to respond at all to requests for comment (including mine); other times, as with Andrew Ross Sorkin, a spokesman will formally decline to comment.

So it was a big deal when Seeking Alpha president David Siegel appeared on Bloomberg TV today, and answered Trish Regan’s questions about the Einhorn lawsuit. Or, at least, it would have been a big deal, if Regan had actually bothered to ask him any of the obvious questions. Like, for instance, whether he’s going to fight it, or what he thinks of the merits of the case.

Instead, however, Regan decided that the best use of her time would be to deliver to Siegel a lecture on (and, presumably, an example of) Proper Journalism:

Trish Regan: David Einhorn has expressed his concern. He would like to know the name of the Seeking Alpha blogger who revealed one of his investments. Who was it?

David Siegel: (laughs, in a WTF kind of way) Well, we’re not going to tell you right now. But, um…

TR (interrupting, just as Siegel might be about to say something newsworthy): Why — Why hide behind anonymity? Why not put your name on something?

DS: We vehemently believe that it’s critical to have an open platform, where everyone can discuss, and debate, without necessarily having any repercussions to that. With that said, we have 24/7 monitoring on everything… it’s incredibly important to us to create the right forum, and we believe that that forum is —

TR: But why, why…

DS: — is a, anonymous…

TR (pushing over anything Siegal might want to say, because she has something more important of her own to declaim): I know but why — why not reveal — I mean, to me, and call me old-fashioned, but part of journalism is when you write an article, you put your name on it. You don’t hide behind anonymity. Why allow your bloggers to do that?

DS: It’s part of our philosophy. We need to have an open environment, and a flexible environment, for people to feel comfortable posting what they need to. We have a very, very rigorous background check process.

TR (giving Siegel four seconds to answer the big question, and burying it under another one): You can understand why David Einhorn would be upset, why he’d want us to actually know who this person is. I mean ultimately will you guys be held responsible?

DS: David Einhorn is a legend, and we have tremendous respect for him, absolutely.

The whole interview is just bizarre. I have no problem with aggressive, adversarial journalism, but the proper place for that is when your interlocutor is refusing to give a straight answer to a straight question. Seeking Alpha has always been very open about offering anonymity (or, more precisely, pseudonymity) to bloggers who request it, for very simple and obvious reasons: many of them are financial professionals whose jobs might be at risk if their identity were made public. Journalists like Regan give anonymity to their own sources on a regular basis, for exactly the same reason.

What’s more, anonymity is hardly unheard-of even among very mainstream publications: the Economist, for instance, has no bylines at all, while even the NYT will occasionally withhold a byline from a reporter in a dangerous country, if revealing that person’s identity would put them at risk.

Let’s say that the blogger in question had phoned up Regan and told her (off the record, but with Regan knowing her source’s identity) that Einhorn was buying up shares of Micron Technology. That might have turned into a nice little scoop for Regan, if she had confirmed it with other sources — all of whom would themselves surely have insisted on anonymity as well.

If Regan had published that story, Einhorn would surely have been annoyed, since he was taking great care to accumulate his stake in Micron as quietly as possible. But here’s the thing: Einhorn would never have dared take Regan and Bloomberg to court, trying to force them to reveal her sources. If a journalistic organization finds out a true fact and publishes it, that might inconvenience a hedge-fund manager, but it’s not going to result in a court case.

In the Micron case, however, Einhorn saw an outlet which was small enough to bully. If he wins, as Sorkin says, “the case could have a chilling effect on the free flow of information to traditional news outlets” — it would damage not only Seeking Alpha and its pseudonymous blogger, but also Trish Regan and all other journalists with confidential sources. Einhorn wants to be able to keep his own information confidential; he just doesn’t want Seeking Alpha to have a similar right.

If anybody deserves a lecture on journalism in this case, then, it’s not Siegel, it’s Einhorn. Meanwhile, Siegel is faced with a very hard decision. Einhorn is not the kind of person to back down from a fight: he has essentially bottomless resources, and will happily spend millions of dollars on lawyers just to make Seeking Alpha’s life miserable and expensive for the foreseeable future. Big media organizations are set up to fight such threats; smaller startups aren’t.

So the big question here is not whether Einhorn is right or wrong: of course Einhorn is wrong, Regan’s misplaced self-righteousness notwithstanding. Rather, the question is whether Seeking Alpha can and will be able to afford to fight him. That’s the big question which every non-enormous media company wants to know the answer to — and that’s exactly the question which Regan didn’t ask.

Ensconced as she is within the massive Bloomberg borg, Regan doesn’t need to worry about the cost of defending her journalistic operation against litigious hedge fund managers. But even Bloomberg benefits from a diverse media ecosystem. And so it’s rather worrying that Bloomberg TV should spend its energies defending Einhorn in this case, rather than finding out whether we’re facing a very real threat to media freedom.

Update: David Einhorn has dropped the suit, after finding out through other means who the blogger in question is. Trish Regan covered that development, too:

We’re in an interesting time in journalism, because bloggers are in the blogosphere, and there’s a lot of information out there that’s not always necessarily with someone’s name on it… Is that a danger, nowadays, that we’re in an environment where people can have a very big effect on securities, on the markets, and do so anonymously?

Yes, Trish, bloggers are in the blogosphere. And sometimes market moves happen in reaction to pseudonymous information sources. Or even to fully anonymous sources, in things like Bloomberg articles. I don’t see the problem with this. Unless you’re just upset that Valuable Insights has his own outlet, now, instead of having to bring his story to you.

Comments
8 comments so far | RSS Comments RSS

Excellent piece, thank you.

Posted by shoshido | Report as abusive
 

In the interests of full disclosure (for those reuters readers who don’t get around the web much) Felix Salmon is a contributing writer for Seeking Alpha.

Posted by Strych09 | Report as abusive
 

Is this to say that a NDA clause in contracts is meaningless now? Because that sounds like what Mr Salmon is arguing… I haven’t heard any argument that this contributor at Seeking Alpha was a whistle-blower or that buying a stake in a public company is illegal. So by what right does a secrecy-bound employee have the right to violate his contract and potentially inflict millions of dollars of damages to his employer? I think Mr Einhorn has the right to learn the identity of the blogger so he can sue for damages. How is this unreasonable or how does it threaten news media in any way? This is a lot more like the kid who blabbed on Facebook about her dad winning a sealed lawsuit only to have the award rescinded for breaking confidentiality.

Posted by CDN_Rebel | Report as abusive
 

The problem is, most of Seeking Alpha’s content is complete morons making stuff up and talking their book, and the rest is overaggregated stuff ripped off from other websites. Anonymity can also be a shield to protect utter garbage, as Judy Miller proved.

Posted by druce | Report as abusive
 

I think the Seeking Alpha platform is pretty fantastic. You have to read everything on the site with a grain of salt but hey… you can say the same thing for the Journal or the Times these days.

A top shelf top dollar legal team comes in pretty handy if your on trial for 1st degree murder… but for a 1st amendment case… Seeking Alpha could win this one with the mock trial team from a 2nd tier law school.

Posted by y2kurtus | Report as abusive
 

Much as I think Seeking Alpha isn’t worth defending, it’s worth noting that this isn’t the only case where Bloomberg has come out in favor of killing stories that are uncomfortable for the powerful folks who pay for its terminals.

http://jimromenesko.com/2014/03/24/ben-r ichardson-quits-bloomberg-news-over-hand ling-of-investigative-piece/

Posted by druce | Report as abusive
 

@druce: It’s really reaching – to the point of being misleading – to say that decision by Bloomberg to squash a story about the government of China had anything to do with the “powerful folks who pay for its terminals”. It’s fair to disagree with the decision, but it’s the same decision that’s been faced by many media, information, and technology companies. Namely, is a company willing to make deals with the Chinese government’s lack of a free society as part of the price of doing business in China.

Posted by realist50 | Report as abusive
 

SeekingAlpha published this statement about Greenlight dropping its suit:
http://seekingalpha.com/article/2106353- seeking-alpha-and-david-einhorn-the-real -story

Posted by Trollmes | Report as abusive
 

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