Did Goldman (GS) Leak News About Its Own Losses?


Yesterday’s front page Wall Street Journal quoted anonymous sources predicting a $2 billion quarterly loss for Goldman Sachs. The prominent placement of the story, on the front page, and the fact that Goldman is even quoted as declining to comment has some wondering if Goldman itself leaked the news of its loss.

Ryan Chittum at the Columbia Journalism Review explains the theory:

The paper reported that Goldman Sachs’s loss this quarter would be much worse than expected, news it attributed to “industry insiders.”

That’s funny attribution, but OK. But scan the rest of the story and you’ll find that it appears nobody from Goldman was ever given an opportunity to comment.

Now, it’s highly unlikely that these experienced reporters got a story on A1 in the WSJ without calling the company for comment.

What the lack of a Goldman attribution signals to us is that Goldman Sachs itself leaked this to the Journal as a way to feed hungry beat reporters and get bad news into its stock price before it reports earnings.

The Journal has a nearly iron-clad internal rule that says a story can’t say a source declined to comment if that source is quoted elsewhere in the story.

Felix Salmon, who came by the Wake Up Call this morning to chat about AIG and 100 year bonds, concurs, writing that “there’s no way that the WSJ would give this story such prominence if the source didn’t have first-hand knowledge of where Goldman’s earnings are likely to come in.”

Of course, this question of who leaked will become far more interesting if Goldman’s earnings are very different from the report. If Goldman beats the WSJ’s number, this could well look like some kind of strange market manipulation. If it is worse, well, we’ll know that someone at Goldman screwed up, big time.