Sorkin and rumor-mongers

Andrew Ross Sorkin writes in today's NYT about Credit Suisse’s Steven Rattner having to quit his job as head of DLJ Merchant Banking because of a relentless Internet campaign against him by a jilted husband. The story is about how the Internet run amok can destroy even basically good family men. Or, as Sorkin says,

this isn’t about a man who made a mistake and had an affair. It is a story about a man who said he was helpless against the destruction that can be wrought by aggressive campaigns on the Internet.

But in the press, and especially in the NYT, there’s usually something else going on just behind the newsprint. In this case, it’s hard not to think that it’s really all about dispute a few weeks ago between Sorkin and Dealbreaker’s John Carney.

Sorkin wanted the SEC to go after rumor-mongers. Carney called this “a frightening curtailment of freedom of speech. . . Your right to express your doubts about the financial health of a company would suddenly turn on ex post-facto decisions of prosecutors, judges and juries.” This sparked responses by Sorkin and Portfolio’s Felix Salmon, discussed here.

So now it seems Sorkin is switching gears, pulling a technique out of his colleague Gretchen Morgenson’s toolbox – that is, find a practice you don’t like, and then find an anecdote that has little to do with the general issue (Wall Street rumor-mongering getting an adulterer fired) that you can use to tar the practitioners you’re fighting against.

I’m with Carney on the basic issue. More information is good for markets. Yes, false rumors are bad. But sending the SEC out on a fishing expedition against rumors could have a very costly effect in chilling true speech.

Moreover, it’s hard to miss Sorkin’s motive here. Sorkin needs to be the one to break stories – that’s what he gets paid the big bucks for. So he’s in direct competition with other sources of information, particularly including Dealbreaker. This relates to the public choice argument about insider trading regulation – that it’s all about interest groups competing for information. See David D. Haddock and Jonathan R. Macey, A Coasian Model of Insider Trading, 80 Nw U L Rev 1449 (1986).

Just keep all this in mind the next time Sorkin or other MSM type goes on the warpath against rumor-mongering.