Dumb money

The Online News Association just announced that Mark Cuban will be their keynoter this year. Yow. Now on the one hand, Cuban could be perfect, for he has been pushing back at reporters and making his interviews with them open, even over their wailing and whining. But on the other hand, Cuban is most decidedly imperfect, for his latest venture, Sharesleuth.com, raises no end of troubling ethical and journalistic, if not legal, questions about his media activities.

Mark Cuban has made his career and his fortune on dumb money. He sold his first company to CompuServe, a failure acquired by AOL, another failure. He sold his next company, Broadcast.com, to Yahoo, which promptly did nothing but kill it even as broadcasting came onto the internet, yet Cuban walked away with something in the billions, allowing him to have fun, buying a sports team and starring in a TV show, which was also a failure. He invested in another well-known company sold to AOL; return to Square One. Yet people still invite him to share his wisdom. That’s because he loves to be provocative and he’s good at that.

But now Cuban is making smaller killings from the dumb money of smaller players who’ve invested in bad companies. Now one could say that’s just the way the stock market works: smart wins, dumb loses. But Cuban has given himself an advantage: He started an apparently journalistic enterprise in Sharesleuth to find the bad companies . . . so he could short them first.

What’s wrong with that? That’s what a prospective student at CUNY asked and so I went to read the controversy at Sharesleuth and the defensiveness at Cuban’s blog and here’s what I come away with:

* Cuban says he is being transparent: He says he warned us that he would trade on the information Chris Carey, his editor at Sharesleuth, digs up. Except that he’s not transparent at all — not until after a story about a stock is released. He has a period of utter opaqueness when he knows a company is crap and you don’t — nya, nya, nya — and so he gets to trade on his information and take money not from the offending company but from the poor shlub on the other end of Cuban’s trade.

* Cuban tries to say that he is underwriting this journalism to do what journalism is supposed to do: help the poor shlub. Except he already took the shlub to the cleaners. Doesn’t wash.

* Cuban also has to be aware that his celebrity will have an impact here. He argues that he’s just sharing what he knows about a company after he took advantage of the information he paid to gather about it. Generous, eh? Except he has to know that a site he, Mark Cuban, underwrites and promotes — he was, after all, a TV star… for a few minutes — will have an influence on the market for that stock. Is that company insider information? No, it’s Cuban information. But he can move a stock and he acts on that knowledge before the rest of the market can.

* It becomes a bit of self-fulfilling prophecy, doesn’t it? Cuban and company find a company they think is suspect. Cuban and company investigate and find smelly fish. Cuban shorts the stock. Then his guy reports what’s what to the world. The market gets a whiff. Then the stock falls. Then Cuban profits. You have to trust Cuban and company not to use their power to manipulate. After what he does to little investors, do you trust him?

You see, it’s not just about transparency — and I like to toot the transparency horn at every opportunity. It’s about conflict of interest. Whom are you serving, Cuban? If you say you are committing acts of journalism, exposing bad companies and outdoing the business journalists you despise, then you are saying you’re serving the public and the public should be able to trust you to do that. But no, the public in this case is the aforementioned poor — now poorer — shlub. So you’re not doing journalism, you’re serving yourself. Well, that could be OK: You hire your private analyst to find turkeys to short and you short them. But then you use your public prominence to reveal what you now know and that all but assures that the stock will fall, making your short a good investment. I’d call that a virtuous circle except . . .

Is everything unfair in love, war, and Wall Street? Yes, but some things are less fair than others. And it’s hard to sit up on a journalistic high horse — to ridicule the rest of journalism — even as you take behind-the-scenes advantage of your knowledge and the impact of your prominence. This, of course, is exactly why news organizations have policies requiring either not owning a stock or revealing ownership in companies you cover or not trading on them when you write about them: so you can judge whether to trust them and so they cannot take advantage of moving the market for a stock. If a professional reporter did what Cuban did, he would be fired … and Cuban would probably write a blog post attacking him.

There has been much discussion of this online. See this excellent editorial in the Star-Telegram:

It’s too bad that Cuban couldn’t let his investment in Sharesleuth stand on its own. He had to use it as a tool in a side deal to make himself a few more bucks to add to the gigazillion that he already has.

In the process, he cast doubt on Sharesleuth’s efforts.

See Gary Weiss writing on his blog:

It’s a shame that an ethical rich guy– one with the public spirit Cuban lacks — hasn’t stepped into the breach and set up a genuine financial investigative reporting outlet to examine crummy stocks. But as a public service, not as a source of pocket money.

Of course, there is yet another alternative, which is that mainstream media outlets crank up their coverage of stock fraud.

Securities Litigation Watch, a blog, says — and others quoted here agree — that Cuban’s actions are not illegal but that Cuban…

…has found the previously unexploited Achilles’ Heel of the insider trading laws and fired an arrow deep into it. The result is that for the first time, a legal form of what most people would consider “insider trading” exists and can be replicated by anyone with (a) the resources to hire a skilled investigative journalist, (b) the ability to generate a readership on the Internet.

And see the comments on Sharesleuth itself: This poster tries to give analogies that explain why Cuban’s activity doesn’t seem right:

I see a huge contradiction in providing information on what you personally believe to be a scam (in escence, posting a “do not enter” sign) but then on the other hand potentially making a financial gain (shorting the company stock). Essentially, it seems, indirectly partaking in the named fraudulent operation and knowingly so. This is even magnified by the fact of Mr. Cuban shorting the shares PRIOR to the report that it appears he has direct input.

In the report D’Arnaud-Taylor and his wife are demonized for selling the company shares into the open market, and maybe rightly so. But how are the buyers of Mr. Cuban’s short sell any less a victim than the buyers of D’Arnaud-Taylor sells? If both are aware that the underlining business that the shares represent to be a perversion of truth are they not each participants? (though Mr. Cuban on lower level understandably so). Is not the instrument of the fraud the stock itself?

Another commenter identifying himself as a shareholder in the company that Sharesleuth pilloried — an aforementioned poor shlub — says:

On the outset, it appears that you have good intentions Mr. Mark Cuban. Your plan is to uncover the “dirt” on companies to save investors from losing out, correct?…So this might make you a “hero” to some people…and I might agree with that EXCEPT for the fact that you appear to be making a decent profit on all of this negative hype you are building up. In a sense, you are profiting off of the unsuspecting shareholders (like me), who have put their trust in the companies you are digging up “dirt” on.

The honorable thing to do would be to NOT trade on the companies that you write about, thus giving your readers a chance to exit…or if you do trade wait for 30 days after the article has been released.

If you happen to uncover true “dirt” about a company, and that company is truly an “evil” company, than the shareholders are victims, correct? So, in essence, what you are doing now is profiting off of victims before they have an opportunity to escape.

Another shareholder:

So this is suppose to “help” people avoid investing in poorly managed companies or just plain bad companies…unfortunately the average investor got the info too late. I was down over $1200 by the time I was “informed”. Mr. Cuban I appreciate your work, but a little heads up for the little guy would have been nice. I know $1200 may only be lunch for you, but it is a lot more than that for most people. I love the Mavs, I love you, but this hurts. That’s just $1200 less I have to spend on Mavs tickets this year.

You see, journalism is, in the end, about trust and credibility and this is what Cuban is doing to his. Mind you, Cuban is right to ridicule the trust and credibility of stock analysts and much financial journalism that just sucks up what those analysts and company flacks feed them. They, too, don’t protect the public. But just because they’re bad, does that mean you need to be? Two wrongs, etc.

Cuban is, of course, unrepentant. He goes off on a rant that, as near as I can tell, reasons that news organizations make profits so why shouldn’t he? He says:

Every media outlet has an agenda. Given that almost all are public entities, the primary agenda is Earnings Per Share. When was the last time you read the New York Times say they were going to proactively choose to lower their earnings this quarter and for the next several quarters so they can invest in doing a better job of reporting ? Or that they planned on expanding the number of pages dedicated to their journalistic endeavors at the expense of shareholder return ? Anyone ?

Well, actually, I’ve sat in public meetings with Times editors as they talk about the cost of maintaining a Baghdad bureau and that is not a financially motivated decision. I’ve watched papers add pages to cover big news — as an editor, I’ve done it myself — when those pages came with no advertising and thus only brought loss. I’ve sent reporters on trips to cover stories that would bring no revenue. Why do journalists do these things? To serve the public. Haughty but true.

And what this brings out is the equally haughty question: What is the nature and mission of journalism? Is it an effort to serve the public over oneself ; is that a key element in the definiton? That’s where the Cuban case would lead us, I think. Is journalism now about getting any information from any source with any agenda? Well, I’ve argued that we all do have agendas and the worst thing is for them to be hidden. Is journalism about trust and credibility? And can we trust and believe Cuban when he’s making money on the information he can afford to gather and disseminate?

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.

If Cuban had just started a new journalistic endeavor to show the way and shame the business press into reporting and investigating — not to mention to create jobs for reporters — he might have been welcomed with open arms. I’ll bet that there are plenty of ripped-off shareholders out there who’d have gladly contributed to make this a success. And advertisers would want to talk to an audience of smart investors. But by turning this into a personal and shady profit center, by trying to play the bad boy in this arena as he does in the basketball arena, he harmed his endeavor, his reputation, and even the nascent movement in independent journalism. Just so he could make a few bucks. Now that’s what I call dumb money.

: LATER: Mark Cuban responds on his blog. He digs up every snarky thing I’ve said about him and that’s fine. My view of Cuban is encapsulated in what I said at the start of this post. He doesn’t really respond to the ethical question about reporting on the company from a position that can move the market for it while having an interest in that market. I would very much like to see him explore that more. He lists the stocks he has shorted and their status so we can judge whether he has had an influence. I do think that Sharesleuth is bigger — and, in so many ways, better — than a blog comment and so its influence will surely be different. Cuban says that trust is built with getting the facts right. Amen, brother, amen. It is also built, in this age of transparency, with both revealing and avoiding, when possible and when necessary, conflicts of interest. You see, I’m a big fan of Sharesleuth and Cuban starting it in every aspect except that conflict, which does undermine trust.

See the comments on his post and this one; lots of good discussion. And I’ll repeat that I hope there is this sort of discussion at ONA. There are a few vital debates here. One is about reporting on companies and protecting the public and how we find better ways to do that than relying on newspaper business writers who are good at nothing so much as retyping press releases and quoting analysts who are good at nothing so much as spitting up company lines. The other is about journalism and what expectations and standards the trusted will operate under, whether that journalism is performed by a big, old, professional institution or by a renegade upstart company or by individuals or networks of all of the above. I’m not sure what the answers are in either case but I think we need to explore them through these debates.

: LATER STILL: Mark Glaser writes a very good summary of the good, the bad, and the ugly of Cuban and Sharesleuth. See also Gary Weiss’ next post.

  • Alan

    Well, which is it? Are all citizens (Cuban, tho rich, is a “citizen”) supposed to be welcomed into the brave new online journalism world. Or are we supposed to adhere to what you (gatekeeper?) say are the standards for that world? I thought us old, fuddy duddy, “trained” journalists weren’t supposed to foist our outdated and outmoded standards upon the new citizens who wish to join us. It is these new citizens who are here to teach us the (new) way.

  • http://texasgigs.com Mike Orren

    Mark only pays lip service to transparency:

    http://www.texasgigs.com/news/2006/aug/07/cuban-hdnet-true-music/

  • steve

    “I think it will be fun to run a newspaper!”

    — Charles Foster Kane

  • http://www.copyblogger.com Brian Clark

    Let’s think this through…

    Cuban knew that this reaction would come.

    People are buzzing. It reaches a fever pitch. People recognize the value of ShareSleuth, but don’t like Cuban’s self-dealing.

    He reluctantly changes his stance and promises not to trade.

    ShareSleuth is a huge success.

  • http://www.buzzmachine.com Jeff Jarvis

    Alan,
    No gatekeeper here. Except every single reader is his or her own gatekeeper. And many of those readers are unlikely to trust Cuban and his enterprise because of what he is doing. Are there standards? You bet there are. And those standards are set first and foremost by the public being served. If they think they are being ill-served, then their standards are not met. I’m all for new ways — new and better ways. Conflict of interest and corruption and distrust don’t qualify, I’d say.

  • Michael Kelly

    For those of us in the financial industry, this issue is as old as the hills. An efficent market demands that investors seek out information; however, if investors are not allowed to act on that information, they have no incentive to seek it out. I hope that we can all agree that investors have the right to do research to find bad companies and short them. (And find good companies and buy them as well.) If you don’t agree, then you disagree with almost investment management, professional and non-professional.

    Therefore, it’s not the acquisition of information that one acts upon that is raising everyone’s hackles. It’s the subsequent revelation of that information that bothers people. If Mark Cuban did his research, shorted his stocks, and shut his mouth, that would be OK. But he TELLS people about it. That’s not.

    But I turn on CNBC everyday and see fund managers being interviewed about their portfolios. I read annual and semi-annual reports from fund managers describing their positions. I read articles where analysts talk up some stocks and talk down others. I listen to Bloomberg’s “On the Money” where the hosts quiz portfolio managers on every stock that they own. Everyone reveals their actual positions (typically at the END of the segment). No one complains.

    Ah, but Mark Cuban claims to be a journalist. He’s not being interviewed by a REAL journalist. He’s just talking to the world on his own. How dare he! He should be giving his stories to a REAL journalist, who can then quote him verbatim.

    I feel much better now.

  • http://www.buzzmachine.com Jeff Jarvis

    Michael,
    Well said. The issue here is how Cuban presents himself: he’s standing up for the little-guy victims of bad companies, he says, even as he is profiting off those same little-guy victims. So who’s he serving? If it’s only himself, fine, but then I’d strip the veneer of helping aforesaid little guys. If your aim to help them, then don’t profit on their misfortuune not to have the fortune to gather the information you can. This is a case of having your cake and selling it, too, eh?

  • Michael Kelly

    OK. Let’s agree that Mark Cuban’s a jerk. (I’m not saying that he is….) That doesn’t make him unethical or lead to a need for us to change our insider trading laws. That’s the talk that scares me most, especially when it comes out of the mouth of a plaintiff’s lawyer.

    However, I don’t think that Mark’s a jerk. The problem with a stock scam is that the money’s already gone. The stock has been sold to the public. The insiders have gotten their loot. (This is especially true in pump-and-dump schemes AFTER the stock has been allowed to fall.) I tell my students all the time that if you get a cold call from a scam artist and are dumb enough to send the money to them, it’s gone. All the brokerage statements in the world won’t make it come back.

    So Mark is exposing securities fraud. He may prevent some people from buying a fraudulent company, but the fraud has already been perpetrated. The money is lost. Perhaps if someone read Mark’s column and sold the shares to someone who didn’t, they’d get out. But the total amount of money lost remains the same. (Aside question: What’s the ethical call on that?)

    If Mark had just said that he’s exposing securities fraud and making money off his research, would you have had a problem with that?

  • http://bennett.com/blog Richard Bennett

    Isn’t Sharesleuth in competition with Craig Newmark’s new venture?

    A little disclosure seems to be in order here.

  • DJ

    I’ve been reading Cuban’s blog for a while and, quite frankly, I’m disappointed in your representation of his intentions. He explicitly stated on his May 31st blog entry:

    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 is the sort of work that I would actually expect a Fund Manager to dig up for me. A stock broker working for me is supposed to tell me these things. The problem is that there is so much, well, let’s call it corruption, in the business world that you have no idea who to trust. Mark isn’t saying he’s doing this for the little guy, he says he is doing this for himself, but he’s going to tell the little guy.

    Are you upset because he is calling this Journalism? It’s an investigative report into the business dealings of a publicly traded company. If Business Week did it you would call it journalism. Because Mark is doing it, and making money at it (funny, but I thought Business Week made money as well), you throw him to the lions. It’s funny how journalists feel they need to be poor to be “right”.

  • http://www.buzzmachine.com Jeff Jarvis

    Richard:
    None whatsoever.

    Michael:
    All fine except for the conflict of interest. You can short a stock and then decide to attack it only to get the publicity that benefits your position. What if your reporting is flawed? Damage done already, once again. And you can argue that it was just an honest mistake (after you’ve cleared your short position). Or you can argue until you are blue in the face and no one needs to believe you. That’s the issue: the conflict, using not just the reporting and disclosure but also the celebrity to strengthen the position and do so at the expense of the poor shlubs you’re supposedly trying to save.

    DJ:
    “Upset” is such a loaded word. No, I actually think what’s interesting here is that it pushes us to define journalism. Journalists would not be permitted to do what he is doing because of the conflicts outlined above — and because of the need for credibility and trust. Those rules are not there out of haughtiness but out of the need to protect credibility, which is a journalist’s only — repeat, only — asset. So what does that mean for Cuban and what he is doing? Does that conflict of interest mean he is not doing journalism? You tell me.

  • http://robertdfeinman.com/society Robert Feinman

    One of the more famous cases of insider trading involving a business reporter occurred in the early 1980s when R. Foster Winans, a former Wall Street Journal columnist, provided stock tips to a broker before publication of his “Heard on the Street” columns. Winans was fired and later convicted of mail and wire fraud.

    From MySA

    I never understood the legal basis for the conviction since Winans was not an “insider” he was a reporter, but it might be a precedent here if the SEC wants to get involved.

  • Michael Kelly

    Hmm. Conflict of interest. So we’re back to the original point. Is it a conflict of interest or an ethical problem for someone to act upon their own research by shorting a stock and then reveal their research to the rest of the world? Let’s ignore the “save the little guy stuff” and assume that the revelation was not meant to save the little guy. (I talked about that in my previous comment.)

    First, I believe that Mark has the “perception” or “potential” of a conflict, not an actual conflict of interest. The difference between a perception of a conflict and an actual conflict is the use of the phrase “What if…” which you should note in your comment. If something else is true, then there would be a conflict. From your blog, “You have to trust Cuban and company not to use their power to manipulate.” Once again, the perception of a conflict, not an actual conflict. (Isn’t that statement true of everything that comes out of the media?)

    There are all kinds of ways to deal with a perception of a conflict. Doctors who submit studies to journals must reveal any potential conflicts. They’re still allowed to submit the study.

    Many journalists have gone the route of no stock positions to avoid the perception of a conflict of interest. But that’s only one solution. I knew several journalists at Barrons who had a minimum holding period of 6 months for their stocks. (This was a while back.) I thought that they handled the perception of conflict well. However, several scandals led to a BUSINESS decision to try to remove any perception of a conflict of interest, so no trading. Mark handles it his way, which is fine by me.

    One final point. I want to see Mark Cuban’s research and am willing to accept his terms that I understand that he will short the stock before he publishes his results. I accept that. I’d even do a click-through on something that says I won’t sue him if he’s wrong. (And he did hire third-party fact-checkers out of his own pocket based upon comments he received.) Why should the perception of a conflict get in the way of me seeing information that I want to see? (Assuming that he won’t reveal the information if he can’t short the stock beforehand.) My point is that a perception of a conflict of interest is not a reason to restrict free speech.

  • http://bennett.com/blog Richard Bennett

    Is ShareSleuth in competition with Newmark’s venture, yes or no? I understood that Newmark was paying people to do invesigative journalism on the web, as is Cuban.

  • penny

    I have a real problem with Mark Cuban. How much innovativeness, seriousness and integrity can you accord a guy that hires Dan “fake, but accurate” Rather?

    http://www.boingboing.net/2006/07/11/dan_rather_moves_to_.html

    No one else with any great business sense would recycle that untrustworthy and disgraced hack with a ten foot pole. Innovative? Serious? I think not. Mark Cuban is a gadfly.

  • I. F. Stoner

    What’s the difference between Cuban and CNBC Chief Cheerleader Jim Cramer? One has animated bulls and bears and the other doesn’t…

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  • http://www.buzzmachine.com Jeff Jarvis

    Richard:
    What don’t you understand about ‘no’?
    Craig is an investsor in Daylife, which I’m involved in and which I’ve described as a service that gathers, analyzes, organizes, and creates a platform for the world’s news — no investigation there. Craig also contributed to NewAssignment.net, which is going to investigate; maybe youu’re thinking of that. He has also been supportive, in various ways, of other endeavors, such as NewsTrust and Dan Gillmor’s good work.

  • http://www.buzzmachine.com Jeff Jarvis

    Michael:
    So what if Cuban shorts a stock his guy is looking into and after further vetting and reporting he finds out that the reporter was wrong and the stock wasn’t a turkey? Does he fire the reporter? Does he stop the story?

    Robert:
    As for Winans, his publication could move stocks and he took advantage of that before the public coiuld. Same issue here, eh?

    Bottom line is, should I trust Cuban? Should you?

  • Michael Kelly

    Ah, “what if?”

    I took a closer look at Mark’s addendum to his first report and got the following, “My intention is not to cover based on any short-term swing in the price of either stock. I will stay short until there is a material change in the operations of either company. My goal is to never have to cover.” So, if he follows his strategy, there are no short swing profits. If the stock goes to zero, he never needs to cover. Your case is the most interesting one with ambiguity. (The other is that he loses his stock borrow and gets “bought in”. In this case, it’s involuntary on his part and can be reported after it happens.)

    I figure he has a four choices. First, he can cover and not mention that to anyone. That’s a dirty, unethical move, more so if the story stays up. Second, he can publish a mea culpa and cover afterwards. I consider this to be a “legal fees minimizing strategy” and I also see it as ethical. Third, he can sit on the position and choke. Not highly likely. Fourth, and most interesting, is that he can cover first and let everyone know later.

    Is the fourth choice necessarily a conflict of interest? It’s still the “perception” but boy is it a strong perception! In this case, given the damage that he’d have done to the principles and shareholders of the firm, I’d think he’d be obligated to do his mea culpa first. By the way, the stock would probably be going through the roof before he writes as investors start to see evidence that he’s blown it.

    His decision about the reporter must be based upon all the facts. It’s easy to be wrong in this business. He shouldn’t stop the story. He should print a retraction.

  • http://bennett.com/blog Richard Bennett

    NewAssignment.net was what I had in mind, indeed. It seems to be a direct competitor to Cuban’s deal. Newmark and you are partners on one project, and on another he competes with Cuban. You may not see the connection between your criticism of Cuban and your association a competitor of his, but it’s only one degree of separation. Better to over-disclose than under-disclose.

    Cuban also opposes network neutrality regulations, which you and Newmark support. In fact, Newmark as been a poster boy for net discrimination through the false story about Cox Cable shutting their customers out from accessing his ads, which was finally cured by the correction of Craig’s List’s server configuration.

    Your story about Cuban raises an interesting question, so it would be a shame if the Newmark issue became too much of a distraction. I’d rather have people discussing the expansion of insider-trading laws than these other issues, frankly.

    At the end of the day, Cuban will wrap himself in the First Amendment just as the pornographers do. So that’s the issue that deserves our attention.

  • hey

    Jeff:

    You’ve been consuming your own koolaid for too long. Papers don’t add non-revenue papers to serve the public good, they serve their long term profit or personal interest. It could be a brand building exercise (especially for a paper geared to be profitable), or it could just be to reinforce a position (for a vanity press like the political mags), but either way it serves a private interest just the same way that paying for some tarty story is in the private interest of a UK Red Top.

    Journalism exists for 3 reasons: make money, advance politics, and advance socially (or at least not fall socially). They’re all private interests though are helped by claiming public spirited motives, and the second motive usually leads proprietors to be so self deluded as to conflate their private interests with the public interest.

    As to Sharesleuth… it’s an interesting dilemma, compounded by the fact that Cuban is frequently an ass. He does highlight some of the problems in the market that people need to be more aware of.

  • CH

    Jeff – All good points. Bottom line for me – do what you want Mark Cuban. Just don’t call if journalism. Otherwise you have a conflict of interest. Being ‘transparently conflicted’ is still ‘conflicted’.

  • http://www.buzzmachine.com Jeff Jarvis

    Richard:
    “Oh, nevermind” would suffice.

  • http://bennett.com/blog Richard Bennett

    Not really, but thanks for playing.

    Cuban’s a weirdo, that’s a matter of public record. The Mavs won the first two games of the NBA finals, and then went on to lose it all to the Heat. Something strange must have been going on behind the scenes, because they were clearly the better team.

    But sometimes it takes a weirdo to bring things to the surface that otherwise escape the public’s attention. We can’t count on altruism to provide the funding for citizen journalism, there needs to be somebody involved with a commerical motive. Cuban’s is self-serving, plain to see, and pretty greasy.

    But who’s got a realistic alternative?

  • http://civilities.net/people/JonGarfunkel Jon Garfunkel

    Richard, it’s a neat little conspiracy you’ve concocted, beyond my imagination, and I like the network neuterism touch, but I don’t think it adds up. When Dan Rather goofed last year, the Washington Post was on the story in a day, and ABC News pressed it as well (despite the conventional wisdom that the takedown was exclusively by bloggers). Sure it was a little competitive jousting, but I do believe they were interested in clean media. To me, that’s much better to me than a conspiracy of silence (e.g., doping in sports).

    Dan Gillmor flagged the sharesleuth launch two months ago, but, in Dan’s nice-guy tone, it “raises serious questions” and only made him “uncomfortable.”

    I mean, reading through Cuban’s original post, he’s doing this because he wants to restore “journalism with a payoff.” Like in the old days, the payoff is the Mike Wallace doing “gotcha” on the malfeasant. In today’s media, the payoff is a monetary one– to Cuban! Good thing billionaires can’t be bought. But lesser soles may try this tack.

    I’ve been critical of Jeff in the past for his scoffing at journalistic standards in the name of noble amateurism. Lately he’s been warming towards standards, so I’ve applauded him, as I do here. I’ve passed this along to the ONA mailing list (it costs only $50/year to join) and I’m curious what people say. I feel ashamed enough that I didn’t raise this beforehand (and suggest instead invite Jill Carroll to speak).

    One thing that from Jeff’s post that made me laugh out loud:
    “Well, actually, I’ve sat in public meetings with Times editors as they talk about the cost of maintaining a Baghdad bureau and that is not a financially motivated decision.”

    Yeah, I sat in on that meeting too, though I don’t remember a multiplicity of Times editors, it was just Jill Abramson defending herself against Dave Winer. It could have been a different meeting. Were their no meetings from the Advance days where news budgets were discussed?

    That’d be a payoff.

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  • http://bennett.com/blog Richard Bennett

    Please, Jon, don’t misunderstand me. I’m not suggesting that Jarvis is bashing Cuban in order to build up Newmark, I’m just calling for disclosure of all the relationships so nobody jumps to that false conclusion. Jarvis is a man of great integrity, and when he’s wrong he comes by his mistakes honestly. He’s wrong about network neutrality because he doesn’t understand the likely unintended consequences of the regulatory scheme, not because he does and has some proprietary interest in a backward Internet. He’s going to suffer as much as the next guy if that mess goes forward (not that I think it will.) But I digress.

    One of the problems with blogging is that so many people with big audiences in this Internet-driven media think they must understand all about the Internet itself, but that makes no more sense than believing that the New York Times staff knows how to grow trees, make paper, and design a high-speed web press. If they can grasp the fundamentals of soy-based inks they’ve come a long way.

    Cuban’s enterprise has dubious legality, and the idea that it’s some sort of “journalism” freaks me out because it’s obviously true, just as it’s true that Jon Stewart, Bill Maher, and that Cobert guy are practicing journalism of a sort.

    So what does that say about regular journalism that no line can be drawn between it and naked profiteering?

  • http://civilities.net/people/JonGarfunkel Jon Garfunkel

    Richard, no worries. Yes, I agree with you that Network Neutrality is done in by people who don’t know the issues, and who want to pretend they understand in order to draw populist props. But to your second point, I have argue that there are aspects about RSS and the web which ought to be understood by blog evangelists– these are not at the bits or pulp layer, but at the structural layer (e.g., RSS is woefully underspecified). But we digress.

    I really do think that Jeff is pushing for clean journalism here. My reasoning here is this: the other stock-fraud investigators and business writers (whom Jeff cited) are engaging in competitive jousting as well. It’s in their interest to dump on Cuban’s project, too. And we can chalk up a lot of BuzzMachine’s blogging to a bit of competitive jousting. But it’s a judgment call.

    I wish though that someone would take bite of the bigger picture: are their alternative means of preventing securities fraud?

    [My last comment was blocked, so rather than wait for Jeff to unblock, I’ll repost sans links here: ]

    Ok. I read the ShareSleuth article, all the comments to it, 6/22 article in the New York Post, and the Motley Fool article (both of these were days after XNL joind the AMEX board), and all of the comments here again. I checked out the Google and Yahoo stock pages for XNL. I am also absolutely floored that the wikipedia entry has remained virtually unchanged (asides from a link to the SharedSleuth article).

    I can’t argue the ethics further. I’m curious about the journalism angle.

    1. Is the current state of business journalism absolutely incapable of doing this research and calling it like it is? NYPost and Motley Fool were on the sniff of the trail. And in the sleuth comments I read about “citizen” efforts like StockLemon which have been doing this for years.

    2. Should there have been due diligence on the part of AMEX prior to listing the company? (from what I understand, AMEX is easist to list on) Why not encourage a friendster-style mapping services– call it FRAUDSTER (sorry, the domains are taken)– which lists information gleaned from public records: business dealings, court filings. The whole point of filing this information with the government in the first place is to make it easier to connect the dots. Sounds to me like what you’ve been calling “networked journalism.”

    Of course, Cuban and Jarvis are libertarians– they wouldn’t be keen on such an encroachment of communitarianism!

    (I assume, if the US intelligence community has done anything at all over the last 5 years, they’ve starting setting this up privately. So might as well do it better– and out in the open– on a public site).

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  • http://miloriano.com Milo Riano

    “Mark Cuban has made his career and his fortune on dumb money. He sold his first company to CompuServe, a failure acquired by AOL, another failure.”

    One thing is certain, Mark is so Smart enough to make his fortune from dumb money. He’s smart enough to make AOL see gold out of trash.

    Mark is the best, ShareSleuth is crafted by a Genius. You may call him Lex Luthor if you want, but he is one hell of a mind. He doesn’t need the word “buzz” in a machine, he is buzzing more than you’re machine man.

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  • http://www.buzzmachine.com Jeff Jarvis

    Richard:
    On net neutrality, I’m siding these days with Tom Evslin, who doesn’t want regulation but thinks it may be necessary temporarily until technology helps an open marketplace replace the duopoly we have now. But in any case, what I want to see first is reporting finding a smoking gun. That’s why I’ve been trying to help Evslin (not able to do much, just make introductions) to get an ap built that will allow thousands to test the neutrality of their nets. For example, I can’t use Skype worth a damn at home on Cablevision and it works wonderfully on other, slower net connections elsewhere. Conspiracy? I don’t know. I’d like reporting to find out. And that reporting itself — by a network of people, ironically — would perhaps fix the problem, if there is one. I have written, transparently as ever, that I’d like to see this happen. I’ve also introduced Evslin to Jay Rosen to see whether this might be a project for NewAssignment.net (not that that’s not a stock investigation). I want to see reporting informing a debate. I also know that the debate has to be informed by technical expertise like yours to educate not only me but also Sen. Stevens!

    Jon and Richard on alternatives: Great and needed discussion. That’s the essence of it. I think there are alternatives:

    * Force business reporters to be more than flack regurgitators. Use the new Thomson roboreporter to write the damned earnings results stories. Link to Business Wire for the damned press releases. Forego the damned cuddly features. Fire the present business staffs. And bring in some investigators. The only problem there, of course, is that newspapers are shrinking and don’t have much in the way of business staffs anyway, since business sections have sucked for a long time. But there have to be some egotistical editors who would see this as a path to prizes.

    * As I mentioned above, I think Sharesleuth and services like it could be supported by advertising. The audience there is smart and involved and rich and there are no end of financial advertisers; every newspaper — every newspaper — wants more business inventory.

    * As I also mentioned above, I think Sharesleuth could be supported by public contributions.

    * I would bet there are foundations that would support Sharesleuth.

    * I would bet there are rich guys who would support Sharesleuth…. without turning profiteer behind its curtain.

    * I like your suggestion, Jon, that this be turned into another opportunity for networked journalism: as the Sunlight Foundation has people scouring Congressional earmarks, so could the public scour public business documents for smelly fish. In a sense, of course, that does happen now on Motley et al. What’s interesting here is that this would not be for stock touters (save short-selling touter in reverse, I suppose); it’s all negative all the time. I imagine this could be formatted better (e.g., telling the public what to look for exactly, fill-in-the-blank-style) and use data smarts (find all companies with this or that characteristic).

    What the exchanges and the SEC can do, I don’t know. I’m concentrating on this from a journalistic perspective.

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  • http://equityinvestmentideas.blogspot.com Yaser Anwar

    It doesn’t matter whether Mr. Cuban’s companies were failures or not, what matters is that he SOLD them. Selling them well beyond their intrinsic value in most cases, wow, instead of congratulating him on “The Art of Deal Making” Mr. Jarvis, you’re here ranting once again about “dumb money.”

    Who the hell are you to decide whether it’s dumb money or smart money? Like George Soros said, “it doesn’t matter how many times you win or loose, what matters is how much you make when you win”.

    You can criticize Mr. Cuban all you want, the fact is that he sold Broadcast.com for 4 f**king billion dollars! & has a profitable team, Mavs, so those two successes outpace his failures.

    Find someone new to pick on, enough with the good cop bad cop charade.

  • http://www.mythusmageopines.com/wp Alan Kellogg

    Yaser,

    Can you say, “Conflict of interest”?

    Cuban buys stock in a company. Share Sleuth dumps on the company. Cuban publishes Share Sleuth. What could be wrong with this picture?

  • Grant Fisher

    Cuban is not original in what he is doing here, Asensio has been doing almost exactly the same thing for years. why no controversy there? http://www.asensio.com Has been written up and quoted by many reputable journalists.

  • http://bennett.com/blog Richard Bennett

    Jeff, Evslin is straddling the fence in a most uncomfortable way, trying hard not to offend the neuts even though he knows as well as I do that the regulations they’re seeking are nuts. Doc Searls said down there at Berkman when Evslin gave his talk on my issues with neut regs you can’t regulate based on practice because good practice and bad practice looks the same, you have to regulate based on intent. Which means market distortion, I believe.

    That’s the problem with Evslin’s application: it can only detect the bandwidth available on any pair of end-points, not the delay or jitter, and even if it did measure jitter it wouldn’t know how to interpret the results. You don’t know why Skype doesn’t work from your home because the effects of cableco intentional degradation are indistinguishable from the effects of your neighbors downloading lots of porn. That’s why the issue for Skype isn’t bandwidth, it’s QoS.

    So don’t ban QoS, you need it.

    Anyhow, who has a commercial motive for producing good-quality investigative business journalism? My guess is the subscription model works best, because it has the most direct connection between customer and product. Like the Wall St. Journal, only more detailed. So we need a user-supported service that only sells if it produces solid information and analysis.

    The tech press failed us miserably during the bubble, and we don’t want that happening again with Bubble 2.0.

  • Tim

    Did Mark Cuban sleep with your wife? why do you hate him so much?

  • FH

    Jeff –

    I typically like what you write. Sometimes I think you overstep your boundaries, because all though your tone would suggest otherwise, you are not an expert on all subjects. Whether it’s smart or dumb money, Cuban’s got more money than you’ll ever have and for you to slam him like this seems entirely out of bounds.

    It’s funny as someone who is very active in the blogsphere it would seem that you’d be aware that Cuban’s biggest frustration with most of the basketball stories written about him and his team are incorrect because the writer never actually called or emailed Cuban for his take on the given subject. I can’t imagine that you’ve read his blog with any sort of consistency without having noticed this once or twice. That being said even if you were going to make the claims that you did above, why the heck didn’t you at least get in contact with Mark and get his pov?

    You have a great blog and it’s clear that you’ve got a good thing going, so keep up the good work. If you want to keep the blogsphere aware of what other bloggers, more informed in the ways of shorts, longs, and the like about Cuban that’s one thing, but your commentary on the subject is essentially worthless given the fact that you won’t be making the Fortune 400 this year and he will. That being said, I think you should stick to media commentary and let the people who know how to make the money give the advice on what’s right and wrong about what Cuban’s doing.

  • http://bennett.com/blog Richard Bennett

    Cuban edited his Wikipedia entry yesterday, removing all references to his letting Steve Nash go to the Suns despite Nash’s valiant efforts to remain with the Mavs, material on his antics related to Michael Finley, and his comments on the people of San Antonio.

    http://en.wikipedia.org/w/index.php?title=Mark_Cuban&action=history

    Cuban is a deeply troubled man.

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