A wolf of Wall Street

These press tac­tics are com­mon in the fi­nan­cial world, says Heidi N. Moore

The Washington Post Sunday - - OUTLOOK - Heidi N. Moore has worked as a re­porter and edi­tor for the Wall Street Jour­nal, the Guardian, Mash­able and the Daily Deal. Twit­ter: @moorehn

When An­thony Scara­mucci took over as White House com­mu­ni­ca­tions di­rec­tor, prompt­ing the res­ig­na­tion of press sec­re­tary Sean Spicer, the ini­tial re­ac­tion from Wash­ing­ton jour­nal­ists was war­ily op­ti­mistic. Where Spicer was ag­gres­sive and hos­tile, Scara­mucci would be “smooth” and af­fa­ble. He even blew a kiss to end his first press brief­ing. These looked like signs of a thaw. Af­ter all, of­fi­cials and re­porters in Wash­ing­ton may still joke around af­ter a bad story or a slight; the hos­til­ity is of­ten for show. Pol­i­tics is com­mu­nal and built on co-de­pen­dency.

Fi­nance is dif­fer­ent. It is in­di­vid­u­al­ist and zero-sum. As a re­porter and edi­tor cov­er­ing Wall Street for 18 years, I stud­ied the in­dus­try’s ag­gres­sive ap­proach to­ward the press: Fi­nanciers, and the multi­bil­lion-dol­lar com­pa­nies they work for, are friendly and charm­ing as long as you see things their way, and they do every­thing they can to win re­porters over. But when re­porters don’t buy their line, the Wall Street an­swer is to get in­tran­si­gent jour­nal­ists re­moved from sto­ries.

Scara­mucci’s vul­gar phone call to the New Yorker this past week was far more typ­i­cal than his gen­teel first brief­ing was. If the Trump ad­min­is­tra­tion’s ap­proach to the me­dia was alarm­ing be­fore, im­port­ing the at­ti­tudes and prac­tices Scara­mucci learned in New York will only make things worse.

Scara­mucci, who ran a rel­a­tively mod­est firm in the enor­mous world of hedge funds, has proved him­self adept at this style. Pres­i­dent Trump re­port­edly liked that Scara­mucci’s push­back about an in­ac­cu­rate CNN story — com­plete with ru­mored threat of le­gal ac­tion — led

to the de­par­tures of three vet­eran in­ves­tiga­tive jour­nal­ists. Scara­mucci point­edly called on a CNN re­porter at his first brief­ing and a few days later said, on a hot mi­cro­phone, that net­work boss Jeff Zucker “helped me get the job by hit­ting those guys,” re­fer­ring to the un­em­ployed re­porters. To Trump, the fact that Scara­mucci kneecapped three jour­nal­ists in one swoop surely made him the kind of press guy he was look­ing for: ef­fec­tive in elim­i­nat­ing en­e­mies.

There’s ev­ery rea­son to be­lieve that the White House team sees this as a model: It will not worry about the ac­cu­racy of what is pub­lished, only whether the tone is Trump-friendly. Of his new job, Scara­mucci says, “It is a client ser­vice busi­ness, and [Trump] is my client.” Wall Street’s meth­ods of fight­ing neg­a­tive cov­er­age are more ex­ten­sive, bru­tal and per­sonal than Wash­ing­ton’s. The reign­ing phi­los­o­phy is: “I can win only if you lose.”

As a re­porter at the Wall Street Jour­nal dur­ing the fi­nan­cial cri­sis, I was bog­gled by the lengths to which hedge funds and banks would go to kill a story.

When a neg­a­tive re­port was in the works, com­pany rep­re­sen­ta­tives of­ten called up the jour­nal­ist writ­ing it and tried to in­gra­ti­ate them­selves with a charm­ing in­tro­duc­tion and some light chitchat. The point was to hu­man­ize the peo­ple at the firm so that jour­nal­ists would feel guilty re­port­ing neg­a­tively about it. (This al­most never worked.) Maybe they’d in­vite the jour­nal­ist to an out­ing — a bank-spon­sored ten­nis game, a clas­si­cal mu­sic con­cert — or a party held by the firm to get the jour­nal­ist “in the fold.” When a piece was in process, they’d fol­low up daily, try­ing to get a sense of who the jour­nal­ist’s sources were and the di­rec­tion of the story. The key at this point was to keep their en­e­mies close.

For ex­am­ple, when I was re­port­ing on an ex­ec­u­tive coup at Mor­gan Stan­ley, the bank’s rep­re­sen­ta­tives were in touch with me more of­ten than I spoke to my own mother. “Why would your pub­li­ca­tion waste time on a story like this?” they’d ask. “It’s all go­ing to blow over.”

My fa­vorite of their tech­niques, used by two ma­jor in­vest­ment houses, was to flatly deny a story that I knew was ac­cu­rate. When I of­fered to call my sources to re­con­firm, the re­sponse I re­ceived was: “That’s it? That’s your ne­go­ti­a­tion?” As a jour­nal­ist, I didn’t see the truth as sub­ject to ne­go­ti­a­tion. But Wall Street did; it’s all about what you can get.

When charm didn’t work, I saw or heard about firms wheedling, plead­ing, threat­en­ing, call­ing ed­i­tors and even con­tact­ing me­dia ex­ec­u­tives. In­sults and ob­scen­i­ties were com­mon. One trou­bled hedge fund’s foul-mouthed man­ager called me ev­ery day for a week with some new litany of abuse.

Other com­pa­nies tried to co-opt ag­gres­sive re­porters by of­fer­ing them lu­cra­tive jobs (fi­nan­cial jour­nal­ists can­not re­port on com­pa­nies to which they have ties, in­clud­ing po­ten­tial job of­fers — at the Wall Street Jour­nal, we weren’t even al­lowed to be friends on Face­book with PR peo­ple). As I was re­port­ing one crit­i­cal story about a hedge fund, it had a friendly PR firm dan­gle op­por­tu­ni­ties in front of me. I had no in­ter­est, but I told my edi­tor and handed the story to an­other re­porter nonethe­less. Some jour­nal­ists took those jobs, work­ing for com­pa­nies they once cov­ered. That’s the kind of trap that for­mer Wall Street Jour­nal re­porter Jay Solomon ap­par­ently fell into; he was fired last month for al­legedly try­ing to bro­ker arms deals be­tween his sources to strengthen the re­la­tion­ships.

An­other com­pany, alarmed at my front-page story about the im­pend­ing fail­ure of a multi­bil­lion-dol­lar merger, spammed me with off-there­cord calls from ex­ec­u­tives and sicced around 50 in­vestors on me. It took two weeks to clear out my voice­mails. The vol­ume of email was un­speak­able.

If the full-court press failed, the next step was usu­ally to call the re­porter’s edi­tor and com­plain that the sub­ject didn’t feel he or she was get­ting a fair shake. The point was to un­der­mine a re­porter’s sup­port within their or­ga­ni­za­tion, with a view to­ward neu­tral­iz­ing their re­port­ing. Any­thing the re­porter had said, even in a ca­sual con­ver­sa­tion, could be used as ev­i­dence of an ul­te­rior mo­tive. Re­fus­ing to fi­nesse quotes was seen as bi­ased in­tran­si­gence. A pow­er­ful in­vestor I in­ter­viewed in­sisted that the quote he gave me about a col­league — “He and I were in a lot of fox­holes to­gether” — be changed to: “As Win­ston Churchill once said, there is noth­ing more ex­hil­a­rat­ing than to be shot at and missed.” When I de­clined, the firm’s PR per­son called me mul­ti­ple times and sent nasty emails al­leg­ing that I had it in for the ex­ec­u­tive.

That was rel­a­tively mild. Ev­ery jour­nal­ist who cov­ers Wall Street knows that banks keep tabs on them, some­times spo­ken of as “dossiers,” though they’re noth­ing fancy: re­porters’ ar­ti­cles, back­grounds, ed­i­tors, po­ten­tially re­veal­ing com­ments they may have made to the bank’s com­mu­ni­ca­tions team. Fi­nan­cial firms have mul­ti­ple peo­ple pick­ing over jour­nal­ists’ past work, look­ing for a word or phrase that could be in­ter­preted as bi­ased. In one case, a jour­nal­ist who re­ported a tough story on a cor­rupt Wall Street ex­ec­u­tive spoke en­thu­si­as­ti­cally about the scoop in the news­room. A col­league sit­ting nearby who con­sid­ered that ex­ec­u­tive a valu­able source de­nounced his co-worker — to the ex­ec­u­tive, who called the edi­tor. The first re­porter, whose writ­ing about the ex­ec­u­tive won mul­ti­ple awards, was taken off the story, os­ten­si­bly for the ap­pear­ance of bias. In Wash­ing­ton, it would be as if Wood­ward and Bernstein were re­moved from the Water­gate in­ves­ti­ga­tion be­cause they were a lit­tle too ex­cited to be break­ing news.

These episodes didn’t al­ways end with a trip to jour­nal­is­tic Siberia, but ac­cu­sa­tions of bias hurt ed­i­tors’ faith in re­porters, and when they ac­cu­mu­late, a re­porter can lose in­sti­tu­tional sup­port. That “di­vide and con­quer” ap­proach puts re­porters on the de­fen­sive about their be­hav­ior. It plants doubt — not just about their re­port­ing but also about their rep­u­ta­tions and abil­i­ties.

And some­times com­pa­nies go much fur­ther. Hewlett-Packard paid a pri­vate in­ves­ti­ga­tor to go through the trash and the per­sonal phone records of one of my for­mer col­leagues, PuiWing Tam. Over­stock.com’s CEO cre­ated a fake Face­book ac­count and sifted through the so­cial net­works of dozens of jour­nal­ists and an­a­lysts, al­leg­ing that they were con­spir­ing to lower his com­pany’s stock price. A se­nior ex­ec­u­tive at Uber once sug­gested that the com­pany com­pile op­po­si­tion re­search on jour­nal­ists who wrote crit­i­cal sto­ries. Mi­crosoft once broke into the Hot­mail ac­count of a blog­ger while pur­su­ing the source of in­ter­nal leaks.

The last tech­nique I saw used against news or­ga­ni­za­tions was threats, and this is what Scara­mucci ap­pears to have mas­tered with CNN. At dif­fer­ent publi­ca­tions, I saw the names of Rus­sian oli­garchs re­moved from sto­ries af­ter threats of law­suits. Once, an edi­tor killed an en­tire in­ves­ti­ga­tion be­cause the Koch brothers threat­ened a law­suit if it went for­ward. In my first job, writ­ing for a tiny fi­nance trade pub­li­ca­tion, the trea­surer of a multi­bil­lion-dol­lar com­pany told me in an in­ter­view that the firm planned to raise money by sell­ing bonds — then called back and threat­ened to sue if I quoted his on-the-record com­ment. (We printed it any­way; he never sued.)

These com­pa­nies are worth bil­lions, and they work hard to pro­tect ev­ery last cent. If they ap­pear weak or wounded, ri­vals steal their busi­ness. Neg­a­tive me­dia cov­er­age can lead to lost stock value, lost deals and lost face. Busi­ness is of­ten a zero-sum propo­si­tion, and ex­ec­u­tives some­times see their re­la­tion­ships with jour­nal­ists that way, too.

This tac­tic clearly ap­peals to Trump — the pres­i­dent has threat­ened re­porters with law­suits and once sued a bi­og­ra­pher for sug­gest­ing that he wasn’t a bil­lion­aire. A Trump ally, Sil­i­con Val­ley mogul Peter Thiel, fi­nanced mul­ti­ple law­suits against the web­site Gawker, even­tu­ally forc­ing the site to close down.

Scara­mucci is al­ready show­ing signs that he won’t worry too much about whether sto­ries are true be­fore he at­tacks them. Less than a week af­ter his kissy de­but at the White House lectern, he blamed the press for cap­i­tal­iz­ing on “leaks” that were in fact onthe-record quotes he him­self had made. Then he de­manded an FBI in­ves­ti­ga­tion over how Politico ob­tained his fi­nan­cial dis­clo­sure form — which is pub­lic in­for­ma­tion. On Thurs­day night, he tweeted that he’d “made a mis­take in trust­ing a re­porter,” Ryan Lizza of the New Yorker, who had quoted his on-the-record com­ments about White House col­leagues. “It won’t hap­pen again.”

So for­get the pleas­ant tone and the cheerful smiles that Scara­mucci brought at first. The White House press corps now faces a much more ag­gres­sive, much more per­sonal fight than the Belt­way is used to. It’s not crazy to be­lieve that a few more jour­nal­ists may lose some­thing be­yond their ac­cess to the White House — they may lose their beats or even their jobs.

It pays to be wary. On Wall Street, there’s a say­ing ad­vis­ing pru­dence to those who com­plain about crazy stock move­ments: “The mar­ket can stay ir­ra­tional longer than you can stay sol­vent.” Maybe this White House can, too.


New White House com­mu­ni­ca­tions di­rec­tor An­thony Scara­mucci talks with re­porters out­side the West Wing on Tues­day. By Thurs­day, he was tweet­ing that he had “made a mis­take in trust­ing a re­porter,” af­ter the New Yorker pub­lished his vul­gar, on-there­cord rants about fel­low White House staffers.


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