Business journalism ethics and investing

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Glenn Hunter of D Magazine in Dallas attended the Society of American Business Editors and Writers‘ conference in Indianapolis and was intrigued by the ethics discussion around ShareSleuth.com, an investigation news site funded by billionaire Mark Cuban, who shorts stocks that the site investigates.

Hunter writes, “Sharesleuth stories are fact-checked independently and are absolutely accurate, he added, so ‘I … believe it’s journalism. But I don’t care what you call it.’

“‘What Chris does is definitely journalism,’ said Bob Steele, a professor of journalism ethics and scholar-in-residence at the DePauw University Janet Prindle Institute for Ethics. ‘I am troubled by the underlying financial model of the short-seller, because it pushes very hard on the principle of independence. You cannot be beholden to others who would deter us from getting to the truth.’

“But, ‘people know if Mark Cuban has a position,’ Carey stressed. ‘They know that when we start.’

“‘Disclosure is healthy, but it doesn’t eliminate problems,’ Steele said. ‘No matter how much he holds up his hands and says they’re clean, that doesn’t eliminate problems.’

“Since Cuban reviews all Sharesleuth stories in advance, he has time to buy stock in a targeted company as a ‘short-seller’ before the article appears. If the share price then proceeds to tank, he may profit on the price differential.”

Read more here.