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Home Topic Phil's Favorites Felix Salmon: Henry Blodget Should Be Banned From The Industry

Felix Salmon: Henry Blodget Should Be Banned From The Industry


Felix Salmon: Henry Blodget Should Be Banned From The Industry

henryblodget5.jpgCourtesy of Henry Blodget at Clusterstock

The king of financial bloggers, Felix Salmon, is annoyed by me.

Specifically, if I read him correctly, Felix is annoyed that:

1) I have a job that in a just world would belong to a normal out-of-work journalist who hasn’t been at the center of a huge financial scandal, and

2) I have not explained every last detail of my scandalous background in my Business Insider bio, which states merely that, at the end of my Wall Street career, I was "keelhauled by then-Attorney General Eliot Spitzer over conflicts of interest between research and banking."

Well, it is no fun to annoy the king of financial bloggers, so let me address these points, starting with the second one.

In the 7 years since I settled the widely publicized civil securities-fraud complaint brought against me by Eliot Spitzer and the SEC, I have contributed commentary to more than a dozen news organizations, including Slate, Fortune, NPR, MSNBC, CNN, FT, the BBC, The Atlantic, Forbes, The New York Times, Bloomberg, EuroMoney, Yahoo (I’m a host of their finance show, TechTicker), and CNBC.  When appropriate, I have gone to great lengths to detail every last bit of what had happened, so the readers, viewers, and listeners of these organizations would know exactly who they were dealing with (cue scary music).

felix salmonIn the early years, I also launched my own blog, Internet Outsider, in which I addressed what had happened in as much detail as I was able to.  (Thanks to various legal agreements, I have never been able to discuss the allegations publicly.  Eventually, when there’s not a soul left on earth who gives a damn, I’ll be able to tell my side of the story.  My grandchildren will love it!) 

Two years ago, when we launched Business Insider, I again frequently discussed what had happened to me, lest there were any readers who had not already gotten sick of my story.  This effort was made easier by the help of the folks who posted Eliot Spitzer’s press release in the comments whenever I said something they disagreed with.  Whenever possible, I responded to readers’ questions about the allegations as directly as I could.  And I continue to do so today.

I am glad to say that, 7 years after my run-in with Eliot, 2+ million readers a month are now giving me the chance to earn back their trust one post at a time.  As I have often said, I will forever be grateful for that. 

In case there are some readers who do not fully appreciate the depths of my alleged depravity, however, here’s a quick summary:

  • From 1996-2001, I was a technology analyst on Wall Street
  • From 1999-2001, I ran the global Internet research team at Merrill Lynch, where, in 2000, I was the top-ranked analyst in the industry
  • In 2002, after I left Merrill, Eliot Spitzer attacked the way research analysts and investment bankers had worked together in the 1990s, alleging that the conflicts and tensions in this relationship had rendered some of my research fraudulent and/or misleading.  Eliot was kind enough to drop me from his lawsuit before settling with Merrill, but the SEC then brought the same civil charges against me. 
  • In 2003, I settled the SEC’s charges without admitting or denying them.  In the context of this settlement, I "disgorged" an astronomical amount of money ($4 million) to compensate those I had allegedly defrauded.  I also agreed to a bar from the securities industry.
  • From 2003-2007, I defended some of the hundreds of civil lawsuits that had been filed against me as a result of Eliot’s allegations.  The vast majority of these lawsuits, I am glad to say, were dismissed.  The others, I am even more glad to say, resulted in no judgements against me.
  • In June of 2009, the SEC announced that it had finally figured out what to do with the $4 million I had given it to compensate those I had allegedly defrauded: Turn it over to the Treasury.  As it turned out, to my great relief, so few investors had filed grievances that my disgorgement had mostly accrued interest for six years.  And now, I am happy to say, it has been used to reduce the national debt.
  • In August of 2009, I did a 45-minute video interview with Eliot Spitzer, in which we reminisced about our respective scandals, discussed politics, regulation, and Wall Street, and observed how ironic it was that the first step in each of our "comebacks" had been writing for Slate.  This interview was written up all over the place.

Over the years, I have described some of this for Business Insider readers (and others) who have not yet gotten completely bored of it.  Since we launched the site, I am also happy to say, I have not gotten a single complaint that my disclosure of my scandalous past is inadequate.

Until the king of financial bloggers became annoyed by me.

blodgetspitzer2.jpgAs I mentioned above, Felix is not just annoyed by my disclosure.  He is also irritated on behalf of journalists everywhere who have been downsized and now have no place to ply their trade.  If there was any justice in the world, Felix seems to be saying, one of these journalists would be sitting in my chair instead of me.

Well, let me first say to out-of-work journalists everywhere, I am sorry that the organization and industry that you poured your heart and soul into has cratered.  From the perspective of those getting disrupted, creative disruption sucks.  I can certainly sympathize with not being able to work in your chosen profession.  Happily, I can also respectfully suggest, that, with luck, your fresh start will lead to something better.

As to whether I deserve to be sitting my chair…

I feel like I do, in part because I helped create it.  Two years ago, where there is now a thriving company, there was nothing but air.  Now, thanks to the efforts of my colleagues, our investors, and our awesome readers and clients, Business Insider is read by more than 2 million people a month.  It has also, I am happy and proud to say, created 20 full-time jobs, including 10 for journalists.

In the next few years, if things go well, I hope we can employ 30 or 40 journalists.  This will not replace all the jobs wiped out by the collapse of the newspaper industry, but it will help ensure the success of the next generation of business journalism.  And, in some small way, it will help our economy crawl out of a hideous hole.

If we defy the odds and make that happen, will it erase my scandalous past?

Of course not. 

But, with luck, it will make the king of financial bloggers less annoyed by me.*

See Also: Blodget’s SEC Fine To Reduce National Debt By $4.2 Million

And Felix’s article:  Kicked out of finance, and into journalism