Oh, the Power of the Media

March 10th, 2006

Oh, the power of the media. We’ve seen its role in making and breaking reputations. We’ve witnessed its ability to stir up fear – or offer comfort – in the wake of national events. And we know all too well its role in uncovering scandals.

Apparently, the Securities and Exchange Commission (SEC) also knows that power. The SEC served subpoenas to several financial journalists in February hoping to uncover a scandal of its own. The Commission has suspicions that short sellers may have colluded with research firms and business journalists to drive down stock prices.

It’s a scam called “scalping.” In this practice, the reporter would buy stocks in a company it intends to profile and then dump the stocks after the story generates positive publicity and a rise in stock prices.

Overstock.com CEO Patrick Byrne is alleging that his company’s stock has been illegally naked shorted, meaning that it has not been legally borrowed. Could this be the reason for Overstock.com’s falling prices?

I’m not taking a guess on that one, but it does show the media’s muscle, doesn’t it? The pen is indeed mightier than the sword. Apparently, even the stock market is subject to its power.

Entry Filed under: King Content