Wednesday, Jul 9, 2008
A San Jose Mercury News columnist's suspension reveals less about ethics than about the newsroom's changing balance of power.
Jul 27, 1999 | Most of the time Chris Nolan, who writes the San Jose Mercury News' Silicon Valley gossip column, gathers the buzz from the technology industry and serves it up to her readers with a hard-bitten edge worthy of her profession's "Front Page" tradition. But this past week she has become an object of newsroom conversation herself: Her paper suspended her because she'd participated in an Internet initial public offering and pocketed around $9,000.
What Nolan did was "flip" some shares in AutoWeb's IPO, shares she had bought on "friends and family" terms offered to her by the company's CEO, who, she has said, is an old friend. In other words, she got an insider's opportunity to buy the AutoWeb shares at their initial offering price -- and when the stock price soared, as Internet stocks have been known to do, she sold for a profit.
In the annals of Silicon Valley finance, $9,000 isn't exactly a sum to e-mail home about -- it is, for example, less than the market value of venture capitalist John Doerr's tie, as determined by cash-flush Net entrepreneurs at a recent charity auction. But among journalists, $9,000 is significant; $9,000 is something to ponder, and question, and weigh, and maybe lose your job over.
At first glance, the issue in Nolan's case seems pretty straightforward: Conflict of interest is a bad thing. Journalists shouldn't invest in companies or industries they write about. Editors need to enforce ethics in the newsroom. Nolan got nailed for violating the basic rules of her profession. End of story.
But is that the right story here? First of all, there are some details that just don't jibe: Nolan -- along with friends who have set up a Web page to make her case -- maintains that she never wrote about AutoWeb in her column, and that she fully disclosed her investment to the editorial powers-that-be at the Merc. Furthermore, she intended to write about the experience of participation in IPO frenzy in a piece for Fortune magazine, which she says Mercury editors knew about. One aspect of the Mercury's ethics policy that Nolan is charged with violating covers investments in "local" firms -- but on the Web aren't all businesses local?
As conflicts of interest go, Nolan's is a murky one -- there are clearly some troubling aspects, but it's hardly an open-and-shut case. One can't help thinking that what really got the Mercury News brass upset wasn't Nolan's transaction itself but the Wall Street Journal gossip item that first reported it. What might have remained an internal matter suddenly became a matter of credibility for the newspaper and a public-relations black eye. Heads must roll!
Nolan's punishment makes a lot more sense if you think of it not as a conflict-of-interest story but as a conflict-of-cultures tale. Sure, there are ethical issues here -- but what really gets people worked up are the emotional issues.
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