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Editorial: Media won’t be bullied by NYSE rules

Dec 2, 2002  •  Post A Comment

The New York Stock Exchange is proposing rules that would penalize a Wall Street analyst if he or she talks to a reporter and the reporter does not disclose in the resulting article whether a stock the analyst mentions is of a company with which the analyst’s firm does business.
The rules would have to be approved by the Securities and Exchange Commission.
It’s a commendable attempt to make disclosures clear in view of recent scandalous behavior by analysts whose connections to the companies they cover has not been so clear. But these proposed rules are wrongheaded and likely a violation of the First Amendment.
To begin, the responsibility of what to say in an article is the responsibility of the publication, not the government.
Under the proposed rules, if, say, Electronic Media quotes an analyst about a certain stock and fails to disclose that the analyst’s company does business with that company, it is the analyst who could be subject to a fine or a suspension.
That is, of course, patently absurd. An analyst should not be penalized for what a publication chooses to disclose.
Furthermore, the proposed rules say that if the publication fails to make the disclosure, the analyst would be expected to cut off any further communications with the publication.
If an analyst doesn’t want to talk to a publication, that is the prerogative of the analyst. We don’t have a problem with that. We do have a problem with an analyst not talking to a publication because he or she fears some sort of government reprisal.
Again, this is none of the government’s business.
A publication’s only responsibility is to its readers. That responsibility is to report as accurately and fairly as possible. Sometimes that may mean the publication needs to disclose the relationship an analyst’s company has to a stock the analyst mentions, and sometimes not. Among other things, it depends on the context of the analyst’s remarks and the context of the article.
Floyd Abrams, a noted lawyer with expertise in First Amendment matters, spoke eloquently on this subject when queried about it recently by The New York Times: “For the SEC to ban contact with the press unless the press itself has published all the material that the commission wants publicly disclosed would raise a significant First Amendment issue. It’s one thing to say that the press doesn’t have a constitutional right to interview everybody it wants to. It’s quite another when a federal agency bans communication [between] the press [and] private entities because the press chooses not to print certain materials.”
We agree wholeheartedly with Mr. Abrams.
Most publications, including Electronic Media, have long had rules about when such disclosures need to be mentioned. What is not needed is the government telling the press what to report.