07 April 2021

Time for a Blogger Ethics Panel

(As Atrios would say)

It turns out that a reporter at Bloomberg news was feeding insider information to a speculator. Hoocoodanode?

Basically, there was a pattern of suspicious trades in the hours before a story from Bloomberg hit the web, and one reporter had a byline on all of the stories:

For more than six months, federal prosecutors say, a New York man used inside information to make illegal profits in the stock market—and a core element of his alleged scheme was his interaction with Bloomberg News, which published several stories shortly after the trader arranged to make significant purchases of the companies’ shares.

Last month, a federal grand jury indicted Jason Peltz on multiple counts of securities fraud, money laundering, tax evasion and lying to the FBI. Peltz, 38, is accused of working with over a half-dozen unnamed and unindicted co-conspirators to learn about impending takeovers and other market-moving news, and to move money between accounts as a way to hide his role and profits.

The indictment notes that Peltz’s moves were timed closely to stories that ran at “a financial news organization.” While the newsroom isn’t named, federal officials cite five stories and their timestamps— all of which match precisely to pieces that ran on Bloomberg News’ website. Each of those stories had shared bylines, but only one reporter is identified as an author for all of the articles: Ed Hammond, who worked at the Financial Times before coming to Bloomberg more than six years ago to cover mergers and acquisitions. In 2017, Hammond was named Bloomberg’s senior deals reporter in New York — a highly prestigious post in that newsroom.

Hmm, I wonder just who could be the source of the insider information?

The feds allege that Peltz used disposable “burner” phones and encrypted apps to communicate with a journalist, and that the reporter provided “material nonpublic information about forthcoming articles” which Peltz used to trade in the market “just prior to publication of an article about each company written by the reporter.” The indictment describes “numerous contacts” between Peltz and a reporter, including at least one in-person meeting.

I might be inclined to dismiss this as an a unfortunate social interaction, except for the fact that Mr. Peltz was using a burner phone.

Assuming that the Bloomberg source was not actively profiting from the transactions, it means that either Peltz was using him to manipulate the timing of the public release M&A information, or using the Bloomberg source to get information regarding future M&A information, or both.

In either case, the reporter still got something of value, a scoop, and while this should not be actionable from a criminal perspective, one would hope that his editor is crawling so far up his ass about this that he can see his tonsils.


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