No matter how much of a service Mark Cuban and Christopher Carey insist their investment website called Sharesleuth provides to readers and investors, the guardians of American journalism ethics still aren’t buying it. That was apparent over the weekend when Carey, editor and president of the site majority-owned by Cuban, showed up in Indianapolis for a national business-journalism ethics discussion moderated by Larry Ingrassia, business editor at The New York Times.
At the forum Carey (pictured) found himself defending the 5-year-old website, which uses public documents like court filings to investigate and identify shady companies. While that part’s fine, critics contended, the problem is that Cuban bankrolls Sharesleuth with profits he makes off “short-selling” some of the companies the site writes about.
Carey said that’s happened just four times since 2006 — and the Dallas billionaire’s involvement was fully disclosed each time. Sharesleuth stories are fact-checked independently and are absolutely accurate, he added, so “I … believe it’s journalism. But I don’t care what you call it.”
“What Chris does is definitely journalism,” said Bob Steele, a professor of journalism ethics and scholar-in-residence at the DePauw University Janet Prindle Institute for Ethics. “I am troubled by the underlying financial model of the short-seller, because it pushes very hard on the principle of independence. You cannot be beholden to others who would deter us from getting to the truth.”
But, “people know if Mark Cuban has a position,” Carey stressed. “They know that when we start.”
“Disclosure is healthy, but it doesn’t eliminate problems,” Steele said. “No matter how much he holds up his hands and says they’re clean, that doesn’t eliminate problems.”
Since Cuban reviews all Sharesleuth stories in advance, he has time to buy stock in a targeted company as a “short-seller” before the article appears. If the share price then proceeds to tank, he may profit on the price differential. That happened in 2006, when Carey exposed a company called Xethanol on the website. Cuban had already snapped up 10,000 shares at $12.65, then sat back and watched as the stock nosedived. He later pumped his profits from the short-selling back into the website, Carey said.
While some legal experts say there’s nothing illegal about it all, mainstream journalists like Ingrassia of the Times wish Sharesleuth’s motives were more pure, because doubts about Cuban’s MO get cast on journalism in general. What’s legal and what’s ethical, Ingrassia says, are two different things.