Last week, we got an email from the CEO of private-stock-market company SharesPost, David Weir.Weir’s email blasted a Wall Street Journal reporter, Dennis Berman, for signing up for SharesPost under false pretenses: Berman, Weir says, pretended he was a real investor and submitted “fraudulent information” to SharesPost–while in fact Berman was just investigating the site and the company so he could write about them in the Wall Street Journal.
(The email is below. And here’s Berman’s article. Berman pretended to be his dead 107-year-old grandmother–and submitted her information instead of his. SharesPost’s screening process caught the “fraud” and prevented him from actually trading.)
So here’s today’s journalism ethics question: Did Dennis Berman behave unethically?
We’ll let you read Weir’s letter for yourself. Then we’ll tell you our take on the behaviour. And then we’ll invite you to weigh in.
Here’s the letter we received from SharesPost:
Dear SharesPost Member,
On Tuesday of this week, a columnist from the Wall Street Journal named Dennis Berman published an article that badly misrepresented our company’s policies and procedures and was based on questionable journalistic ethics. His story was based on results he contrived by submitting false information as part of our Accredited Investor vetting process. He defended his actions by saying that he is in “the business of truth telling.” Unfortunately, though, his article omits large portions of the truth.
The fact is that Mr. Berman’s “test” confirmed that our qualification system works. Our broker and electronic systems detected his fraud and barred him from our platform within six hours of submitting his fraudulent information and long before he would have been able to execute trades. Somehow that fact was treated as a mere footnote to the story, leaving readers largely misinformed and our company unfairly maligned.
Other facts about our compliance system that were left out of the story:
- Mr. Berman failed to mention that his fraud only enabled him to view information on our site. Had he attempted to transact, he would have been required to undergo a second level of compliance review and direct dialogue with one of SharesPost’s FINRA registered brokers;
- Had he actually entered into agreements with a seller, those agreements would have required him to make multiple contractual representations to the seller, the company and SharesPost that he had provided accurate information and was in fact an Accredited Investor;
- Had he actually entered into a contract to purchase shares, the transaction would have been processed by U.S. Bank, a third party escrow agent, which first verifies buyers’ and sellers’ identities by collecting all the documents required under the Patriot Act and Anti-Money Laundering regulations.
SharesPost has invested heavily in building its marketplace and has established processes and procedures that meet and often exceed the highest standards of market practice. For the sake of some glib one-liners and a pre-determined “gotcha” story that he was determined to write, Mr. Berman lied about who he was and ignored and embellished the facts to suit his story line. We think the Wall Street Journal can and should do better.
Chief Executive Officer
So what’s our take on this?
At least as Weir tells it, Berman’s behaviour does sound unethical. At Business Insider, we’re “in the business of truth telling,” too, but we consider it unethical to tell lies to get at this truth. So if Berman did, in fact, submit “fraudulent information” just to gain access to SharesPost’s system, we would consider that unethical.
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But interestingly, we received the letter above because we, too, had submitted information to SharesPost. Specifically, we had become a member of SharesPost because we had an interview coming up with David Weir and we wanted to learn more about the company. We didn’t submit “fraudulent information” to SharesPost–we submitted accurate information and identified ourself accurately. But we signed up primarily to see how the system worked–not because we desperately wanted to trade private stocks. And, in the follow-up interview with David Weir, we used the information we had gleaned from the sign-up process as fodder for some questions.So, from our viewpoint, signing up for SharesPost and poking around in preparation for an interview is ethical, as long as we don’t submit fake information or misrepresent our reasons for signing up. Berman, meanwhile, appears to have crossed the ethics line by submitting, as Weir describes it, “fraudulent” information.
But some folks might say that even giving real information and signing up for a look-see is unethical–unless we get permission from the company first. And others might say that, as long as you’re in the “business of truth telling,” it is perfectly fine to lie through your teeth.
So now it’s your turn. What do you think? (We invite Dennis and the Wall Street Journal to weigh in as well, especially if his behaviour was different than what David Weir has described here.)
UPDATE: The Columbia Journalism Review has weighed in on this issue. They say Berman acted unethically — not just because of the way he misrepresented himself to gain access to SharesPost’s system but by making several untrue statements in his article.