Commentator Calandra Resigns Amid SEC Trading Probe

Thom Calandra, chief commentator and co-founder of CBS MarketWatch, resigned Jan. 22 amid an informal inquiry by the Securities and Exchange Commission into his stock trading activities. Following that resignation, the online financial news site issued strict new trading rules for all employees, taking effect Jan. 26.

But this is just one of a number of highly publicized instances in which stock trading by journalists who cover business has drawn attention.

The SEC had requested that San Francisco-based MarketWatch furnish information about its policies on editorial staff stock trading, as well as any internal communications specifically about Calandra's trading. The company has been cooperating with the SEC. That inquiry was reportedly prompted by a Forbes magazine article in November citing Calandra's frequent mention of Canadian companies Ivanhoe Mines Ltd. and Ivanhoe Energy Inc. in his MarketWatch-sponsored newsletter, Calandra Report.

Calandra disclosed in the newsletter that he owns shares in Ivanhoe Energy and traveled to Beijing and Mongolia on trips paid for by Ivanhoe Mines. This raised questions about whether he purchased stock of companies before he wrote about them. Trading restrictions on MarketWatch newsletter writers at the time were less stringent than those for reporters.

The SEC is conducting its inquiry into Calandra's trading activities dating back to October 2002. MarketWatch stock took a temporary hit on news of the probe and resignation, but has since resumed trading around its 52-week high. The Calandra Report newsletter was terminated and subscriptions, refunded.

Some other examples of stock trading by business journalists drawing fire:

• Maria Bartiromo, stock-market reporter and anchor for CNBC, disclosed at the beginning of a television interview last July with Sanford I. Weill, then chief executive of Citigroup, that she owned 1,000 shares of Citigroup stock, then worth about $45,000. Though she neither violated company policy nor broke the law, her comment caused quite a stir. In January, CNBC issued a stricter stock ownership policy for employees, prohibiting managers and news staff from owning individual securities, but said it had been considering changing its policy for many months.

• Chris Nolan, former tech gossip columnist for The San Jose Mercury News, was suspended in 1999 for what the newspaper considered to be a violation of its conflict-of-interest code. It was reported that Nolan participated in a "friends and family" stock deal that was offered to her by a friend who ran a Santa Clara firm called AutoWeb.com. She bought stock at insider prices in the Internet company and sold them a day after the company went public for more than $9,000. The San Jose Mercury News contended that Nolan was prohibited from investing in local firms. Nolan reportedly said she never wrote about AutoWeb.com in her column and said she fully disclosed her investment to her editors. All along, she contended, she planned to write an article about her experience participating in an IPO for Fortune magazine, and that ran in August 1999.

• In the most infamous example, R. Foster Winans, former Wall Street Journal reporter and author of the paper's influential "Heard on the Street" column, was convicted in 1985 of fraud and conspiracy for tipping off two New York stockbrokers about stocks mentioned in his articles before publication. The brokers traded on the information and earned nearly $700,000 in illegal profits. Winans received $30,000 of that money. He was sentenced to 18 months in jail and served about nine months in a federal prison. After his release, he wrote a memoir "Trading Secrets: Seduction and Scandal at The Wall Street Journal." He has since become a ghostwriter and has lately found himself in demand for speaking engagements with journalism groups and law and business schools, thanks to recent corporate and media scandals, for his views about his case, insider trading and white-collar crime.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism