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Citizen Business Reporters, and Disclosure Issue, in New Site

Journalist Chris Carey is partnering with Mark Cuban on a new project that offers great promise and raises some serious questions.

Chris writes, in an e-mail:

I’m leaving the St. Louis Post-Dispatch at the end of this week to launch an investigative business journalism site, The blog-style news site will be devoted to exposing stock fraud and corporate malfeasance.

My partner (and the site’s sole investor) is billionaire entrepreneur Mark Cuban, whose holdings include the Dallas Mavericks of the National Basketball Association, HDNet, HDNet Films, Magnolia Pictures, 2929 Productions and the Landmark Theatres chain.

The site will go live next month and will feature my reporting, aided by stringers and a global network of amateur researchers. We’re going to spotlight questionable companies and activities, and dig deeply into the people and stories behind them. We’re going to take a multimedia approach to the tales, using the Web, Cuban’s television network and his movie-production capabilities.

One of his companies, HDnet Films, was behind the documentary, “Enron: The Smartest Guys in the Room,” which came out last year.

I’ve been a business reporter for more than two decades, at the Post-Dispatch, the Indianapolis Star, the Orlando Sentinel and the Messenger-Inquirer in Owensboro, Ky. I was a finalist for a Gerald Loeb Award in 2005 for a series on global stock fraud ( and spent the 2005-06 academic year studying the criminal subculture in the securities industry as a Knight-Wallace journalism fellow at the University of Michigan.

Cuban alluded to this project in a posting late last month — Why Journalism Matters — on his site. I’d missed this posting. It includes the following item:

Business is an easy place for me to start because the fraud and sithlord wannabes uncovered can not only create great stories of interest for the webite and HDNet World Report, but also allow me to buy and the sell the stocks of the company. A journalistic conflict you say ? Not any more. Not in this world. It will be fully disclosed and explained. This site is for the profit of its owners and we will buy and sell stocks that are discussed, before they are made available on the site. So make any decisions based on this information accordingly.

This makes me a bit uncomfortable, because the journalistic conflict is real. It will inevitably raise questions about motives. In the traditional journalism world, it would be basically unthinkable. (UPDATE: The Houston Chronicle flagged this on the top of its story about Cuban’s venture.)

But in the more diverse journalistic ecosystem that’s emerging from the world of blogging and other conversational media, advocacy (for financial and other reasons) is part of the process. And in that world, transparency is essential both for the people doing the journalism and the audience.

The Wall Street Journal’s great articles on options back-dating are trustworthy in significant part because I know the paper’s ethics policy prevents the journalists from profiting on what they learn. Yet the tipsters who tell journalists can profit, unless they’re corporate insiders.

All of this gets complicated fast, however, in a world where the one role blends into another.

Former Journal reporter Foster Winans went to jail for his role in tipping brokers to stories he was about to write about various companies in the paper. How will be different? One difference, I believe, will be in the direct disclosures, which were missing in the Winans situation — where it was argued that hiding the dealing was the actual fraud (never mind the journalistic violations).

I will read avidly, and will do what I can to help them bring citizen reporters into the mix. But Mark Cuban and Chris Carey should understand that their site will have some credibility issues to deal with. And the audience will need to refract what it reads through the lens of their disclosures.

5 Comments on “Citizen Business Reporters, and Disclosure Issue, in New Site”

  1. #1 Seth Finkelstein
    on Jun 14th, 2006 at 4:06 am


    Let me get this straight – they want people to work for free(?) (“stringers and a global network of amateur researchers”), to develop tradeable information, which they will then use for their own profit.

    But this is disclosed! So, no problem (“Not any more. Not in this world.”).

    Dan, do you understand why I’m sour and cynical about this stuff?

  2. #2 Dan Gillmor
    on Jun 14th, 2006 at 5:20 am

    I haven’t seen the business model, so I don’t know exactly what they plan. But your interpretation — and cynicism — will be fair if it ends up as you describe.

    The disclosure to which I refer is the fact that they’re apparently planning to trade based on what they learn. I do think it’s an issue, and said so.

  3. #3 Chris Carey
    on Jun 14th, 2006 at 8:17 am

    Thanks for your thoughtful post, Dan.

    Just to clarify an issue that Seth raised, is not intended as a trading operation.

    The original concept was simply to publish an electronic newsletter that would be aimed at traders, money managers, etc., and charge a subscription fee for access.

    But rather than solicit subscriptions for a product with no track record, we decided to publish our research as a blog, prove its value and then see where we could generate revenue.

    Of course, we also think our reporting will generate content for Mark Cuban’s television and movie operations.

    We’ll use paid stringers to do field reporting, primarily for stories that I will write.

    The amateur researchers I mentioned are people with whom I’ve been corresponding for years. In essence, they provide tips and some supporting documentation and I take it from there.

  4. #4 Seth Finkelstein
    on Jun 15th, 2006 at 1:46 pm

    Thanks for the reply.

    I understand it’s not primarily focused on being a trading operation, in the way Foster Winans’ Wall Street Journal column was not primarily focused on being a trading operation. But it seems that it’s been outright declared that if trading profits can be made along the way, they will be made. And that’s not considered an ethical conflict, it’s considered a productive sideline.

    Do you at least give the amateur researchers a commission/finders-fee? Shouldn’t they get a piece of the deal? 1/2 🙂

    Dan, I’m not saying the following to be nasty, but remember some of the discussion of FON – someone said approximately “A conflict of interest is not removed by disclosing the conflict”.
    Disclosure is important, yes. but it’s not the last word, by far.

  5. #5 Daniel Berninger
    on Jun 19th, 2006 at 10:42 am

    “Journalism” as currently constituted does very little to expose corporate fraud which fits with the realities of who owns the various outlets.

    There exist almost no business models that support pursuit of information about corporate fraud.

    The regulatory and enforcement apparatus did not catch Enron, Worldcom, Tyco, et al which is not a surprise given the realities of who controls government (hint same folks as above.)

    We have the case of short sellers tipping Fortune/WSJ regarding Enron, but it seems unlikely these “success stories” address the entire story.

    Sharesleuth may not have found a business model to turn this around, but they deserve some credit for trying.