AS THE STOMACH TURNS, In tonight's episode,
Dave Kansas, the editor in chief of thestreet.com has quit, partly from concerns about a private newsletter that TSCM had begun faxing to hedge funds. An article written about a small company, Research Frontiers, by Adam Lashinsky had been given to hedge funds first, moving the stock, and then published on realmoney.com. Apparently Kansas and Lashinky objected to the hedge funds "front-running" the public customer site.
I've mentioned before that I think highly of Lashinsky, have followed him since he was tech stock columnist at The San Jose Mercury News - I think he's not only honest, but (gasp) reform-minded.
The New York Times (on-line)was in a partnership with thestreet.com for some time, which gives the article extra interest. One gets the impression that to know Cramer is not necessarily to love him.
I've also included links for the articles written by Cramer and Luskin to justify their positions over the quitting spat, but I've been merciful and not included the whole articles. These should stay posted for awhile.
Don Luskin's site, metamarkets.com, looked interesting. It's a "transparent fund", where every stock transaction is public and debated by the experts-columnists there, in a format not unlike realmoney.com's "Columnist Conversation." I didn't linger long enough to evaluate the site; quitting so spectacularly was perhaps a good career move for Luskin.
The Cramer & Luskin Links:
Performance Can Be a Wicked Taskmaster
By James J. Cramer
6/8/01 11:15 AM ET
thestreet.com
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Why I Quit TheStreet.com
By Don Luskin 08:32 06.11.01
community.metamarkets.com
_____________________
nytimes.com
Editor Quits TheStreet.com, Partly Over Policy Concerns
By DAVID D. KIRKPATRICK
The financial news Web site TheStreet.com announced the resignation of its editor in chief, Dave Kansas, yesterday. The resignation came amid tensions within the newsroom over the company's efforts to augment its financial journalism with new sources of revenue, including the sale of specialized research to institutional investors.
David J. Morrow, an editor at SmartMoney magazine and a former business reporter at The New York Times, will succeed Mr. Kansas.
Mr. Kansas, 34, said he was leaving mainly because he had worked at the company "a long time" — since its founding five years ago — but he said the shift in the company's focus was also a factor.
The company was founded with promises to democratize access to minute-by-minute news and insights about the financial markets, helping to level the playing field between individual investors and Wall Street professionals. But it has struggled to make a profit as online advertising and subscription revenue from individual investors proved inadequate to its editorial budget.
The New York Times Web site previously operated a joint newsroom with TheStreet.com.
"The company is smartly trying to move into some new areas on the institutional side," Mr. Kansas said. "The news business was a piece of the strategy but not the whole strategy and I understand that, but directional issues were part of it."
Mr. Kansas also clashed with James J. Cramer, a founder of the company and its largest shareholder, over editorial issues, people at the company said. Mr. Cramer left his position managing a hedge fund in January to devote himself to writing for TheStreet.com and advising Thomas J. Clarke, its chief executive. Mr. Cramer had previously publicly criticized TheStreet.com's management, and he became a vociferous presence in the office.
Mr. Cramer declined to comment.
Selling specialized research to financial institutions has provoked some protests from TheStreet.com's staff of journalists about the potential for conflicts with serving its readership of individual investors.
TheStreet.com recently began publishing a faxed newsletter of investment tips for hedge funds, which are risky investment funds open only to wealthy investors. About two weeks ago, one of the Web site's columnists, Adam Lashinsky, contributed an article to the newsletter about a small company called Research Frontiers. Hedge funds made investments based on his comments, moving the stock's price. Then the same commentary was republished on Realmoney.com, TheStreet.com's Web site for individual investors who pay $200 a year for a subscription.
People in the newsroom say that Mr. Lashinsky, Mr. Kansas and others complained that providing the article to the hedge funds first put the individual investors at a disadvantage — potentially enabling the hedge funds to profit at the other readers' expense by trading shares of Research Frontiers first.
A spokeswoman for TheStreet.com attributed the incident to "human error." She said that new policies would prevent it from happening again. She added that only a few people contribute to both the newsletter and the Web site.
Executives at the company also said that the newsletters for institutional investors would generally offer tips riskier than the information provided to individuals.
Still, some journalists at the company said the distinctions were not yet well defined. Nor is the publication of the hedge fund newsletter noted on TheStreet.com Web site for its individual subscribers.
Mr. Morrow, 40, said he planned to add features aimed at attracting readers like those who read SmartMoney, typically most concerned with buying mutual funds and planning for their retirement. Mr. Kansas, a former reporter for The Wall Street Journal, briefly became famous after TheStreet.com's initial public offering in May 1999 when he reaped a windfall of more than $9 million in profits from the run-up in the company's stock. Most of that has now dissipated as the company's shares have fallen more than 95 percent from their peak. Mr. Kansas said he retains "a few hundred thousand dollars" in stock. |
