Sharesleuth.com . Such a big controversy. The question is why ?
A while back we told everyone exactly what we were
going to do with Sharesleuth.com . We told everyone that i was going to trade on the information before we published
the story. There was much commentary.
Was it good journalism ?Was it responsible journalism ?
<just for fun, this is a link to the definition of
journalism>Then everyone wanted to know if what we were going to do was legal.
Was it against SEC
regulations.Was it
ethical ?
Everyone wants to question what we are doing. Great. Question away.
What the people who are doing the most questioning, the traditional members, and the traditional bloggers, are
missing, is the hypocrisy in their criticism.
One former BusinessWeek reporter suggests in his blog what I am doing with Sharesleuth is not responsible
journalism because I am trying to make a profit by trading on the information that we uncover. All the while, he
promotes his site to draw readers, possibly chooses blog posts that will generate the most readership
andpromotes his TV appearances as a means to pimp his books, which are for sale with HUGE
graphicson every page of his blog.
There is absolutely nothing wrong with that.Nothing at all. The news, his news has to get paid for somehow ,
right ? But is he a responsible journalist ? Is he a responsible publisher ? Do we even know ?
Doesnt the foundation of responsible journalism come from transparency ?
Tell us what the goals of your publication are so we can understand your motivation and use it as a filter when we
read your blog. your newspaper. Watch your network.
Of course if he did that, he would be alone in the publishing universe. 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 onexpanding the
number of pages dedicated to their journalistic endeavors at the expense of shareholder return ? Anyone ?
Of course theNY Times is not alone. Every major media company, newspaper or otherwise seems todoing
every bit of financial engineering they possibly canto increase earnings per share and stock price. Use cash to
buy back stock. Save cash by firing reporters and closing bureaus.
I havent heard a lot about increased investment in journalistic efforts at the expense of EPS. Has anyone ?
When CBS hired Katie Couric, the story wasnt whether she would improve the network news. It was how much she was
getting paid and could she increase ratings. Les Moonves wasnt excited to talk about the new levels
ofnewsgathering CBS could reach with Ms Couric.Heseemed tobe incredibly proud that they
covered her salary with advertising sales in the upfront. EPS baby.
If the NYTimes was truly a responsible publication, wouldnt it change its motto on the front page from “All the
News Thats Fit to Print ” to something else ? Doesnt that motto suggest they would invest in the newsprint and
newsgathering resources required to get any and all news they deemed fit to print ? Maybe it could “All the
News That we can Afford to Print “
Shouldnt a truly responsible and transparent publication offera series of footnotes or a syllabus online
defining why they chose to cover a given story ?
How much better would we all feel if we read:
“this democratic candidate was falling behind. Our publisher felt his side of the story needed some
visibility”
“we like this guy, we wanted to trash the other guy”
“we think this story will be very popular with Hispanics 18 to 24, which is a demographic we are trying to reach
because we think we can grow our advertising to that market by 20pct or more this quarter”
“Bottomline, we just want to try to get as many readers as we can. So we pick and choose articles that we think we
increase our circulation numbers. Sometimes we do have to choose between what we think are the more important news
stories and numbers. I wish i could tell you which story was which, but if i did, they would fire my ass”
“that story had a great headline that we could put on the front of the business section, so we went with it”
Now thats transparency and responsible journalism.
Its all about the money. The difference at the responsibility level between those major media companies and
sharesleuth.com ? We are transparent. You know exactly how we are paying forthe storiesand we make no
apologies for it.
In our story on Xethanol, you didnt see any of the typical “at X times sales it has a market cap of Y, while this
other company we want to compare it to trades at some lower multiple of sales and at lower market cap,”
suggesting that the stock is expensive. Thats suggestive and leading and we are going to do our very best to
avoid all valuation comparisons, which IMHOis always laughable filler. Nor did you see any “this expert
saysthis stock is expensive too ! “. Thats what you typically find in your every day business article
about a company,particularly negative articles. Again laughable stuff, the type of fodder you find on
CNBC…”I like this stock because ” “I dont like this stock because ” Its all filler.
Look at cable news.There are no longer any arguments about who delivers the most depth of coverage on
any given topic. The only discussions are about who gets bigger ratings and why. There is more value in a
dead blonde and a hurricane than finding originalnews or a story with impact.
It is what it is, and Im fine with that. They may not be transparent in writing, but they are so obvious in their
pandering for ratings, you cant question it.
Sharesleuth.com is what it is. Its paid for by my trading based on the information we uncover. I might make
money. I might lose money. Thats the risk i take.
If there is a real question that could be asked about sharesleuth, its “why would someone read it ?” And the
answer is, if you happened to be interested in the company(s) we write about, hopefully you will learn facts about
that company that you didnt know before.
And for those of who think i might have had this stock in my portfolio first, and went after it with sharesleuth
after the fact. This email from chris (its not the entire email, but it makes the point) was received on May
8th 2006 at 11:03am
“Hi Mark,
I thought I’d call your attention to a company
that might be featured in the debut installment of Sharesleuth.com – if the situation doesn’t blow up before
then.
The company is called Xethanol Corp.
(OTCBB:XTHN), which went public in early 2005 through a reverse merger with the shell of a failed pottery-equipment
company.
Xethanol operates two tiny ethanol plants in
Iowa, accounting for less than 1 percent of U.S. capacity. The company has only modest revenue ($4.34 million in
2005) and is deeply in the red (a loss of $11.7 million last year).
Even so, Xethanol’s shares have more than
tripled over the past four months, partly because of interest in alternative fuels and partly because of a relentless
public-relations campaign. The stock closed Friday at $11.76 and up $1.40 this morning, giving the company a market
cap of more than $210 million.
Volume has been averaging topping 1 million
shares a day recently so you might be able to find some shares if you want to bet against this outfit.”
Unfortunately, it was playoffs time , things were hectic and I didnt see it till May 10th
On May 10th at 3:15pm, i sent
this email to my broker
Char
See if we can borrow and
short
Hello,
You might want to try some of the European newspapers for a bit more journalism and a lot less fluff. The Financial Times, Le Monde, etc do some in-depth reporting that approaches the due diligence level you seem to aspire to with your new venture.
I, personally, gave up on the domestic news sources long ago.
David
Comment by David Wilbur -
The Emperor has no clothes, or at best has a thong on.
People’s and business’s words say one thing designed to make you think they are doing a good thing, when they are really covering what and why they are doing something else.
I think many people have not been taught to think critically about who is providing their world, wealth, or health view. Those who can are kind of stuck without and alternative when they see self serving journalism, or self serving businesses.
We need to find ways to take action like you are doing before we the people become swamped in the B.S. that media, and public companies and the stock market sellers are throwing around.
I have read “the number” and other books you have recommended. I am currently reading “Fooled by Randomness” by Nassim Taleb, he hits on exactly these principles in how foolish people are in understanding risk. (he takes a good run at “quality journalist” like George Will and how he helps to misinform the public)
Love the Blog….thanks for the insights
Ross
Comment by Ross -
Mark, Since you’re high on the food chain and you trash a company, and then announce that you short it…there is a pretty good chance that it will drop.
If a company is “featured” on sharesleuth, do you think that in most likelihood, it’s going to drop?
I’m not sure if it makes a difference, but have you considered not disclosing until approximately 1 week after the story is “featured” in sharesleuth?
Comment by Billy T -
Responsible Journalism = Transparency? There may be a link – it’s an improvement over not knowing the underlying goals (sponsors) of the organization. Responsible journalism comes from responsible people/reporters who consistently demonstrate impartiality over a long period time, regardless of income/ratings/website traffic (name-recognition). [“I find that the harder I work, the more luck I seem to have.” – Thomas Jefferson (1743-1826)]
“Time is an excellent teacher; but eventually it kills all the students.”
Comment by Ben Adams -
This is innovative. We’re all sick of hearing filler news. And there seems to be no such thing as just ‘journalism’ anymore. It’s all called ‘journalism’ but it’s ‘opinionated journalism’. It seems journalism is maybe a notch or two above prostitution anymore!
Comment by Aaron -
I want to learn economics.
http://www.fiftythousandcharacters.info/
Comment by bobi -
In our years of informational technologies everyone have forgotten what real journalism means. It’s sad, but true
Comment by Patrick -
Mark,
You are completely right about the motive behind Sharesleuth.com. All the information is completely public. Everyone else can go and see if the facilities at Xethanol have water and power turned on, but because its not reported in a summary on Yahoo Finance, no one does the work. It’s all public knowledge.
Not only is this a great business idea, but you’re uncovering fraud, something newspapers can’t do today. I’ve uncovered a series of stock frauds, and finally got through to the Washington Post which was interested. The next day, 20% of newsroom staff was reduced and my contact was gone…no story. Traditional journalism is not getting the job done.
I’m behind you 100% on this venture. I’m in touch with Chris about seeing if you can’t make a little bit of money off the information I’ve got.
Bryan
Comment by Bryan Sims -
Brilliant website. Brilliant. It is a service to society. I’m not kidding. It makes the markets more efficient.
The feather in the cap will be if you can expose a S&P500 company as a sham. I have heard from so many people that the financials at Citigroup are so complicated that no one completely understands them — this has been claimed by Jim Rogers for a number of years. He also has claimed that Fannie Mae is completely corrupt accounting-wise.
Great job with Xenthanol, though. Reminds me of so many of those hype plays — like XYBR.
Keep up the good work. I will be reading sharesleuth regularly.
Comment by tim g -
Mark,
You have every right to uncover the truths and disclose information about public companies. Sharesleuth is a great service to us! In fact, other people should be grateful that you provide such information. And just like every other publication it is up to the individual to make an educated guess to the validity of the information and at that point choose to act on it or not. Mark, despite all your blog cynics that say senseless things I want to say that I really admire and appreciate the knowledge and information you unselfishly share with us.
Thanks,
Erik_Big D
Go Mavs!
Comment by Erik_G -
Want to loan me some IMKI.PK to short then?
Comment by HDM -
Critica say: It’s ethical if you don’t have a position prior to the news release.
Here are the choices:
A)Don’t share your research and continue making your fortunes without educating the public for free the proper way to do due diligence.
B)Spend your time and dollars to do the research, then publish it for free and don’t ever take a position. (A total waste of time and return on your money,why bother?)
a Question for the Critic(s):
Investment Managers do their research and take their Long positions and then show up on CNBC (or in an article in Major Print Media)and give their Bullish Stance and then disclose at the end of the clip that they are long. WHAT IS THE DIFFERENCE between what these Investment Managers do and what Cuban is doing?
Comment by whatisthebigdeal -
You disclosed what you were planning to do w/sharesleuth so I dont see a problem
Comment by asset -
Here….a not-for-profit independent news organization.
Readers/Members are encouraged to do their own objective reporting and submit it. Or they can just browse what others are covering.
Based in the NYC metro area. Status Killer is a not-for-profit reader/member supported organization committed to combating the ills of social, political, environmental, and cultural degradation in the United States.
Our goals are to incite thought, provoke change, encourage debate, and weaken the symbols of power, control, and status one day at a time. We encourage our members, friends, and guests to share their thoughts and ideas in a free and constructive environment. Power has been abused across the board in the United States for far too long. The days of status obsession, greed, corporatism, and environmental destruction are numbered.
Comment by Ian -
You cannot have forgotten that the great investor warren buffett told us that companies Berkshire purchases must be operated by honest and competent people.In this case,can we trust the managers of Xethanol Corporation?If you can,place your bets now at $5.If not,stay out of it.
Comment by alan -
Xethanol is just a wonderful dream for crazy speculators.If it can really create fossil fuel through waste materials,then i beg to sell my SHIT for money !! Certainly some sort of accounting fraud is present.I would not be surprised if it turns out to be another ENRON.
Comment by jane -
I’ll bet he won’t because he knows that it is sleazy as hell to trade in stocks before publication. He knows that would be a career-ender, if that hasn’t happened already.
Comment by Hair -
Sharesleuth is doing investors a great service by disclosing potential frauds in companies like xethanol.I’m thoroughly convinced by its research.Forget about discrediting their noble deeds just because Mark is shorting the stock!!
And as for toby smith,please stop your accusations and many poor investors had lose their hard earned money through your recommendations already!
Comment by jeff -
Hey Cuban, its pretty interesting that you shorted the dtock in May when in May the stock was on the bulletin board and not the AMEX and therefore NON-marginable??? So how could you have shorted the stock if you werent able to?? Sounds to me like some serious trading fraud! Don’t worry, Im sure theyll show the Mav’s games in general population.
Comment by Jason -
good
Comment by imdbcn -
Investigative journalism on Wall Street could be a very dangerous thing. After reading Sharesleuth.com report on Xethanol Corp. I had mixed feelings about it. I felt bad for all the individual investors who owned this stock and at the same time I was happy that finally we have an independent entity that will try to uncover corporate fraud before we read about it in mainstream media.
Mark Cuban and Sharesleuth.com personifies pure American capitalism. From the beginning they told everybody that they will trade on the information before they publish the story. Yes, capitalism they want to make money. They don’t care about anything else but making money.
Furthermore, what about all the legal and ethical questions that will arise as a result of these investigations. What about transparency? According to Sharesleuth.com they claim that they are going to pay an independent fact checker to review their stories and ensure that the details are correct and the conclusions are neither false nor misleading.
Aug. 10, 2006–Xethanol Corporation (AMEX:XNL – News) responded today to comments about the Company and its Chief Executive Officer that were published on the ShareSleuth.com website on August 7. Christopher d’Arnaud-Taylor, Chairman and Chief Executive Officer of Xethanol stated that “while it is generally our policy not to comment on articles or publications about our Company, the misinformation and disinformation contained in the ShareSleuth.com posting were so egregious that we felt we had no alternative but to respond.”
Moreover, you have to read “Responsible Journalism” post that was written by Marc Cuban about this subject. It will give you more information and inside on this issue. I am not a betting man but if I had to bet I would put my money on Cuban.
Comment by andrey -
Mr. Cuban needs to decide which is more important to him: making a giant profit or changing journalism history. Right now, his greed — legal or not — is overshadowing any journalistic merit the site may have. Unless he’s making a small fortune shorting the stocks (and I suspect what he’s making amounts to far less than he loses every time he opens his mouth during an NBA game), it can’t be worth it to risk his and Carey’s reputations, can it?
If he really wants to help create a new home for Investigative Reporting on the internet, if he really wants to be taken seriously as a force to be reckoned with in the world of journalism, he needs to either back off trading on the content of Sharesleuth stories entirely, or at the VERY least wait until the stories go public and show his good faith by trading along with the rest of the world.
If that’s not profitable enough for him, then he misunderstands the journalism game and should probably leave it to those who value truth far more than profit. I like Carey’s work. I thought his first report was pretty concise. I hope he can emerge from this unscathed because there are a lot more scandals out there to be uncovered, I’m sure.
Comment by TraderGal -
While the technological advances which allow more interaction between the journalist and the reader, the essential elements of honest reporting cannot be forgotten. A lazy journalist cannot wait for the readers to call his bluff, he must operate with the highest degree of honesty as possible. If even one of the ‘yardsticks’ were answered negatively, the intent of the story will be dishonest. In the opening it was illustrated who a small difference in a fact can alter the overall truth presented, and by failing to measure up to the ‘yardstick’ the truth risks becoming distorted beyond repair, as illustrated by Russell when he refereed to the Janet Cooke story
Comment by Keny -
Wishful thinking, Brownfield. Cuban just got slammed by the Fort Worth Star Telegram and I bet the hazing party is just beginning. He’s going to get the full Patrick Byrne treatment and deserve it.
Why do you think Carey won’t short stocks himself? He can do it legally.
I’ll bet he won’t because he knows that it is sleazy as hell to trade in stocks before publication. He knows that would be a career-ender, if that hasn’t happened already.
Comment by Warren G. Miller -
Don’t sweat Weiss too much. He does some really good work, but at the same time he can be an insufferable putz when a situation doesn’t mesh with his somewhat distorted view of the business world.
Like any other enterprise, sharesleuth.com will succeed or fail depending solely upon the value it brings to the market. Let the dweebs wring their hands over what sharesleuth.com means to “responsible” journalism. Just concentrate on delivering a quality product.
Comment by James Brownfield -
“robert…Your comment still assumes the information came from INSIDE the company being traded. It doesn’t have to.”
Well, you are the one who used Martha Stewart as an example, even though she fell under the definition I provided. Maybe you should choose your examples more carefully.
“Like I stated, there are many different types of insider trading charges…”
Yet you seem unable to provide an example. You gave me Martha Stewart, and that example fails. Next you gave my BMY, even though no charges have been filed. If you are going to make claims, I would appreciate it if you would back them up with actual evidence.
“Hate to say it but…you are out of your league here pal.”
Well, one of us certainly seems to be. I will give you a clue as to which one it is. If Mark Cuban doesn’t get charged with insider trading (and he won’t), then we will know it was you who was out of your league because you don’t understand what insider trading actually is.
Better luck next time. Pal.
Robert Rapier
Comment by Robert Rapier -
Good job.. I hope you and your associates lift up a few more rugs, and reveal some other cockroaches.
Comment by Mike -
robert…Your comment still assumes the information came from INSIDE the company being traded. It doesn’t have to.
Like I stated, there are many different types of insider trading charges and not all are based on company insider information. Try the Bristol Myers investigation where the shorts increased from 27 to 47 million in the month leading into a fed. probe. The NYSE is investigating the insider information shorting but not due to the insiders putting out the news. The company did not know of the fed. probe. http://squawkblog.spaces.live.com/
Hate to say it but…you are out of your league here pal.
In this case the inside information was a hatchet job forthcoming on the comapny and thus the expectation it would alter the stock price. Worse, the article was financed by the short seller.
Comment by Dave -
“You better bone up on teh definition of insider trading. “insider” does not mean that you work for teh company…”
You might help yourself out a bit by reading for comprehension next time. Note that I also said “or tipped off friends or family to news that hadn’t been released to the public.” Given that this is what happened with Martha Stewart – a company insider tipping her off – your criticism is invalid.
Incidentally, I updated my essay to address XNL’s press release. Interesting that they didn’t actually address the allegations:
http://i-r-squared.blogspot.com/2006/08/xethanol-story.html
Cheers,
Robert Rapier
Comment by Robert Rapier -
Robert,
You better bone up on teh definition of insider trading. “insider” does not mean that you work for teh company (ask Martha stewart) it is that you have “inside Information” that would influence the price of teh stock and trade off that information.
In this case Cuban funded Sharesleuth, paid Carey to write articles, and traded off the knowledge of what a paid employee was writing before that article was made public. By Cuban’s own accord he did not do any research but short sold the stock as soon as he opened Carey’s message. That shows intent. It could also make Carey a paid analyst if you wanted to stretch that definition since Cuban traded off Carey’s recommendations/analysis.
The Businessweek gang that traded off businessweek articles, they did not work for the Companies they traded on either.
Too much of the Kool-Aid pal – too much.
Comment by Dave -
Mr. Cuban,
You have more money than God. Why use it to blur the lines of serious journalism? Just to make a little more? Because you can?
Can’t you come up with something better to do with all that power than yell at referees and get in p-ing matches with pundits?
Why not use it to bolster journalism instead? Why not hire about 10-20 top-knotch reporters and let them loose on Washington or New York, or wherever the story takes them. Good reporters need an environment where the bottom line is second to ethical journalism. It’s called integrity.
Why not do that? Sure, it might not make you richer. But that’s the point.
Comment by A. Paras -
“Theoretically the definition of insider trading is the trading of a position prior to an event being made public.”
That’s a complete load of crap. Mark isn’t an Xethanol insider, so no insider trading. Insider trading would be if an Xethanol insider (officers, directors, or employees) traded on either good or bad news, or tipped off friends or family to news that hadn’t been released to the public.
Cheers,
Robert Rapier
Comment by Robert Rapier -
Hey Mark,
I have been asking some of the same questions. I have been working on the concept for some years. You see my intention has been (I am already doing it) is to create the intelligence for distribution. Knowing what will be distributed and how it will effect the markets I can initiate large transfers of wealth to the “Like Minded”. As far as I know there are no legal precedents. What is cool is I already have the material for distibution and one is a whopper. 😉 It required a lot of hours of research and multi disciplined study. I will send through your other contact interface.
Richard
Comment by Richard Gerber -
Hi All,
I was quoted in the Xethanol story, but when I was asked to comment I had no idea that the story was for Sharesleuth, or that this was affiliated in any way with Mark Cuban. Had I known, I would have hit him up for Mavs tickets! I grew up not far from Dallas, and my family still lives in the area. We all love the Mavs, and they all got a big kick out of the fact that I was quoted in a story for Mark’s site.
I just published a short essay directing readers to the Sharesleuth article:
http://i-r-squared.blogspot.com/2006/08/xethanol-story.html
No doubt in my mind that they are scamming investors. By the way, Xethanol put out a response, but did not respond to the substantive issues (and threw out a couple of Red Herrings):
http://home.businesswire.com/portal/site/cnnmoney/index.jsp?ndmViewId=news_view&newsId=20060810005648&newsLang=en&ndmConfigId=1000618&vnsId=33
Cheers,
Robert Rapier
Comment by Robert Rapier -
Marc,
I like the idea of having a global network of amateur researchers spotlighting questionable companies and activities. Such conception is very interesting. I really appreciate your work.
Comment by J Acura -
What mark is doing is not insider trading! You’re a fool if you accuse him of that. Newsletter writers and stock promoters do this every single time. They load up before they proclaim this to be their best pick yet. Then they often dump into the buying public at significant profits.
However, I don’t think publishing comments for shorting is the best choice. Especially if you decide to profile small cap companies.
Most small stocks have somebody behind them that may have a duty to prop the price up. As soon as they know mark’s position they might try to buy all your short positions and more with an intent to create a massive short squeeze on mark and his readers.
If this is going where I think it might go, sharesleuth will become madmoney2. The sheep will buy on the recommendation the first day but then will get squeezed out over the next week and month….
Comment by Mike -
Mark,
It appears that Xethanol has put out a PR that kind of shreds your evidence piece by piece. If the sharesleuth article is proven to be inaccurate, what steps will be taken to address the losses investors incurred due to the possible negligence in the sites reporting?
http://biz.yahoo.com/bw/060810/20060810005648.html?.v=1
Comment by Dave -
How about e-mail alerts when you’re taking action? It would seem that in this case with Xethanol, you took action well before publication of this information. It would be nice to have the info at the same time so we can take action as well.
Comment by Curt Whitaker -
This idea is yet another example of your ingenuity Mark. It is no wonder that all these oter hacks are upset. In one swoop you created a new concept and they’ve been reinvesting in the same old sh-t for a decade. They never thought they needed ingenuity on the media. It is what it is and they expect that they can sit back keep getting richer and we, the duped, should keep digesting the same old crap. How dare you Cuban come in with new ideas. How dare you indeed!!!
Comment by Rob Thrasher -
R. Foster Winans did the same thing. He did the research, bought the stock. After he took the position he wrote about it in Heard on the Street. The only difference between Winans and Mark is that Mark is disclosing his position, which makes the whole thing merely stink to high heaven but not illegal.
I agree with what the New York Times Dealbook said today about this item. After point out that you mischaracterized Weiss’s criticism and calling your analogy to promoting a book “a labored attempt to equate his methods with the simple acts of advertising and promotion.” Dealbook said:
“Having a direct financial stake in the articles published — especially investigative articles that tend to be negative — is about as basic an ethical violation as there can be, whether that stake is disclosed or not.”
http://dealbook.blogs.nytimes.com/?p=6261
Comment by Warren Miller -
Trading on information gathered before you publish it would get you fired at any legit news operation.
It really is that simple.
Are yoiu really as stupid as you take the rest of us to be?
Comment by Don Martin -
Wall Street does essentially the same thing.
1. Investment firms do research.
2. After their research is done, they take a position in the stock.
3. AFTER they’ve taken a position in the stock, they issue a research report to the public and then have their entire sales force pump the stock.
Comment by John Domenic -
Am I understanding this right? Are you saying there is no conflict of interest in shorting a stock and then going out and publishing an article trashing it?
Comment by Jose -
Are you kidding? You can’t trade in advance of publishing articles that you know will move the market! That’s what did in Tokyo Joe, or whatever his name is. . . Could a billionaire truly be that dumb? Yes. . .
Comment by walter -
I think sharesleuth is a great idea, and a great service. Imagine if it had uncovered Enron. It wouldn’t have saved all the shareholders’ money, but they would have been made aware of the situation much earlier, and the bottom would have fallen out before Ken Lay had time to dump his stock.
I do think Cuban is walking a very fine line. I’m no expert on insider trading, but it seems like he is coming very close to it. He’s not stupid, and I’m sure he has very expensive lawyers advising him, so I’d be shocked if he actually breaks any law.
The real problem I see is what if he’s wrong? What if one story is wrong, and Cuban’s already shorted the stock, the stock plummets, and it turns out the story was wrong? Wouldn’t Cuban have just caused a major stock drop by reporting inaccurate information, and profiting on it? That would be the end of sharesleuth.
Careful journalism might prevent this, but you better be sure…
Comment by Tim -
Stick to your guns Mark. Chris did a great job with the first report. Looking forward to the next one.
http://www.associatedcontent.com/article/45032/mark_cuban_launches_corporate_scandal.html
Comment by John Domenic -
Part of the plot is to transfer the worlds incumbant wealth into the hands of enlightened minds. Which I have developed a web based online screening process for. You can’t tell it is happening, but based on the links you choose, the insight contained in your mind, and your intention, you get can filter your self out or get connected to “The Source”.
: )
Comment by Richard Gerber -
What you all don’t understand, is that I can communicate with all the investment / fund / advisors with 60 key strokes. Like I said I have been working on this for ten years. You know whats cool none of them know I am talking to all of them. Nobody can see the communication.
So I can desseminate information and I know what effect it may have on their behavior.
The other thing is if you are a keyholder you have a subscription and “know in advance”.
Totally legal, very sophisticated.
It is all a part of http://infiniteplaythemovie.com
Comment by Richard Gerber -
I guess the one thing that may be confusing people is how Chris would have known to submit the tip back on May the 8th, given that the Sharesleuth project had not yet been announced at that time.
I mean, there’s perfectly legitimate explanations for this, the most obvious being that the submission was the result of an earlier, non-public request on your part. It’s just that a few words to explain the apparent disconnect would have been nice.
Comment by KJP -
Okay, let’s put side for a moment your idea that journalists are whores. And here, just for fun, is the definition of insider trading: http://dictionary.reference.com/browse/insider%20trading
I’m not sure that I would have a problem with what you are doing if you made your investments upon publication where everyone would have a fair shot at the information you have gathered. But you acknowledge you bought short in May. Now through Sharesleuth, you appear to be trying to ensure you gain financially from the advance knowledge you obtained with an disparaging article.
Journalism cannot work that way. We do not all have vested interests in what we write or choose to publish. I’m a rank innocent on the ethics of investing, and I don’t have the necessary legal background to say whether or not what you are doing passes SEC security. But as a reporter I find what you have done is plain damn wrong.
(For the record, I am recently retired, do not have a Web site, and have nothing left to pimp).
Comment by Lance Gay -
If I am not mistaken some traders were recently charged with insider trading by bribing a printer to provide the Bloomberg articles prior to Bloomberg releasing the copies. The network traded off the reports they knew were coming out knowing that the reports would also impact the markets in those securities.
Mark, how is this any different as you traded this stock AFTER you were informed of the pending article.
Comment by Dave -
Mark,
Theoretically the definition of insider trading is the trading of a position prior to an event being made public. In this case, you traded on Xethanol with full knowledge that a negative news story was pending. In fact, the news would have been closer to your story had you not run into problems with the first report.
Now whether you planned on this as a quick hit and run or a long term trade is irrelevant, you traded just prior to a publication you knew was coming out negative on the stock and would most likely impact the stocks values. Trading on inside information.
Now had you announced ahead of time that you planned to present an article on the stock and then executed your trade the news would have been public first and thus the trade more legal.
Clearly you are walking the fine line of legal and ethical standards. Tread carefully.
BTW…Nice to see that you and Gary are no longer friends after all teh love and support the two of you had for each other not that long ago.
Comment by Dave -
Hey Mark,
I have been asking some of the same questions. I have been working on the concept for some years. You see my intention has been (I am already doing it) is to create the intelligence for distribution. Knowing what will be distributed and how it will effect the markets I can initiate large transfers of wealth to the “Like Minded”. As far as I know there are no legal precedents. What is cool is I already have the material for distibution and one is a whopper. 😉 It required a lot of hours of research and multi disciplined study. I will send through your other contact interface.
Richard
Comment by Richard Gerber -
Mark, first of all I would like to point out that I am Xethanol shareholder, so that certainly makes me biased. And I’m certainly taking a bath right now, and since I’m not rich, it hurts a little. Luckily I didn’t put too much money in to it, but nevertheless…
I do see a bit of transparency in your operation here. Everything is on the level, and all associations are put in the spotlight. The article was well written, and avoided making judgment calls. However, I do feel it is a little irresponsible that you shorted it. True, you are free to do what is legal, and while I don’t know the legality of this, it appears to be legal, but I really don’t know.
Look at it this way. I assume that Sharesleauth is doing lots of research on a few different companies, and that is a noble goal. But, who is to say that, since you both have a beneficial relationship with one another, that there isn’t a little bit of selectivity going on with the reports that are released. Did you say, hmm, I can make some money by shorting Xethanol, wouldn’t it be nice if a negative report came out at the same time that I wanted to short? And since Sharesleauth is related to Mark Cuban, that automatically makes Sharesleauth a market maker, and is beneficial to the actual market maker that wants to short. On the outset, this looks a little bit like ghosting.
Now I know some people will be able to poke holes in my argument, and I do want to say that I am novice investor that has been burned so far (I’m staying put). And neither am I against big bad corporations or people that want to profit from things. These are all find things. But, I feel there is a little more to this story than meets the eye.
Comment by T Man -
Can’t you think of other worth while things to invest your time and energy with? Like doing some Bill type worth while activities?
What you’re doing is fine but I don’t think it classifies as top-notch to invest time value on.
Comment by Milo Riano -
Mark,
Sharesleuth’s first report was really first rate. If the sell side did half as good a job with their analysis, I’d probably give them a closer read.
My question is this, what’s your motivation behind sharesleuth? It seems to me that you’re unlikely to make enough money from it to really make it worth your while, so why did you even pursue the venture in the first place? Don’t get me wrong, I like the work being done on it, and I look forward to the next report, but I just can’t figure out why you’re doing it.
Thanks
Comment by BP -