Write, then Sell for MarketWatch.com columnist.
Conflicts of Interest at MarketWatch: Thom Calandra, a former columnist for MarketWatch.com,
has agreed to pay more than $540,000 to settle SEC's civil fraud charges for using
his news column to pump up the prices of certain stocks and then profiting by
secretly selling them.
was accused of buying shares of stock in small, thinly-traded companies, writing
articles for MarketWatch.com recommending the companies. Calandra then sold his
shares when the stock price went up shortly after his article was published. Calandra
allegedly profited on 23 stocks that he covered.
to the SEC, Calandra also failed to tell his readers that he was able to purchase
shares of stock at a deep discount directly from a stock promoter associated with
2 mining companies that Calandra favorably profiled in his newsletter.
this may be viewed as some as a personal matter, MarketWatch should be thinking
about beefing up their insider trading policies. As a provider of financial news,
MarketWatch's reporters and columnists can influence markets with the stories
they write and even learn of material information before it is in public domain.
minimize conflicts of interest, MarketWatch should have in place rules prohibiting
reporters and columnists from directly owning stocks in companies that they regularly
my own experience with the financial services industry, all employees were required
to use the services of 2 brokerage firms. A full service brokerage house and a
discount brokerage house.
All buying and selling of any stock had to be
cleared with the legal compliance officer who tracked all inquiries on a computerized
database that would be cross referenced with the databases from the brokerage
firms. If approval was given to buy or sell a stock, the employee had a 2 day
window to execute the transaction. The list of exempt stocks was never distributed
and restricted to the legal department to control investment speculation should
the list be made public.
If a trade were made without prior approval,
the employee would be forced to reverse the trade immediately at their expense.
Any "profits" would be returned and the employee reported to senior
Equity analysts would also be subject to management review
of their brokerage accounts and trading activity on a regular basis.
personally reviewed monthly activity for my division and periodically questioned
employees about certain activity in their accounts. (All activity was compliant).
the SEC alleges 23 incidents, I have to question the management review and internal
controls at MarketWatch.
2005 Nelson Chin.
inquire about consulting or speaking engagements, e-mail: Nelson