A wolf of Wall Street
These press tactics are common in the financial world, says Heidi N. Moore
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.