interactive.wsj.com
July 11, 2000
An Online Name-Caller Suffers Wrath of Ex-Boss at Value Line
By AARON ELSTEIN
WSJ.COM
Christopher Bischof couldn't resist a parting shot.
About a year after he was dismissed as a top fund manager at Value Line Inc., the New York-based mutual-fund firm with $5.1 billion in assets, he joined an online discussion about his former boss, Chairman and Chief Executive Jean B. Buttner. Mr. Bischof, 48 years old, called Ms. Buttner, 65, an "old dodo" and suggested she inherited her position from her father, who founded Value Line.
Now Mr. Bischof is facing a lawsuit and wishing he had held his tongue about Value Line, best known for its weekly Investment Survey that provides financial data on some 1,700 companies.
Mr. Bischof, currently working as a convertible bond analyst with a Chicago money-management firm, says he deleted the offensive messages at Value Line's request and seeks to settle the suit, which seeks $3 million in damages. A hearing is scheduled for Aug. 9.
"Of course I'm sorry for what I did," he says. "This hasn't exactly enhanced my career."
His story underscores the possible risks of airing workplace frustrations on the Internet. In the past year, several companies have taken employees to court for posting on the boards, alleging that they posted confidential information or defamed management.
Value Line doesn't allege that Mr. Bischof leaked any sensitive information. Rather, the firm says he insulted Ms. Buttner "with the malicious and unlawful intent of injuring or humiliating Buttner personally and/or destroying her reputation," according to court papers.
In one of his posting, Mr. Bischof described Ms. Buttner as "a leading member of the Lucky Sperm Club" -- a reference to her succession of the company's founder, Arnold Bernhard, her father.
Ms. Buttner and her lawyer, Irwin Echtman, didn't respond to repeated requests for comments.
Value Line has been tightly controlled by Ms. Buttner since she took the helm in 1988. She runs a family trust that has owned more than 80% of its stock since the firm went public in 1983. Four of Value Line's seven directors work at the firm, while one outside director is Ms. Buttner's cousin.
Some former employees criticize Ms. Buttner's management style, saying she doesn't pay her staff well and spends too much time on trivial matters, such as reminding employees on how to keep their computers clean. In an office memo Mr. Bischof included in court documents, Ms. Buttner directed employees to clean their computers by "Spray[ing] a small amount of Formula 409 onto a clean rag (not the computer) and wipe the plastic surfaces being careful not to get the Formula 409 near the screen or mahogany."
Gripes about Ms. Buttner migrated from inside Value Line's midtown Manhattan office to the Internet in the fall of 1998, when employees discovered the Yahoo message boards and started posting messages.
Some messages criticized Ms. Buttner's decision not to offer funds in the red-hot technology and Internet sectors. (The firm's assets under management grew 41% from 1996 to 1999, but its menu of mutual funds is virtually unchanged.) Posters alleged that Ms. Buttner was "the reason why this company is not going anywhere," according to court documents.
In June 1999, Value Line and Ms. Buttner responded by filing suit against 50 "John Does" in New York state court. It then subpoenaed Yahoo and America Online to discover the identities of the people behind the critical messages.
The company acknowledged in letters to the court that it struggled to find the anonymous writers, including one who was posting using the alias "Matt Drudge_VL." (The firm named Matt Drudge as a defendant when it filed suit. When the real Mr. Drudge learned of that, the online gossip columnist says he notified the firm that he has never posted anything about Value Line or Ms. Buttner.)
After Value Line discovered Mr. Bischof was its "Matt Drudge," it amended its complaint and sued him for defamation in New York state court in February 2000.
Mr. Bischof worked a variety of jobs at Value Line since joining in 1989, rising up in 1993 to co-manager of the Value Line Aggressive Income Fund, which invests primarily in high-yield bonds. In 1995 and 1996, the fund was ranked among the top 10 percentile of funds in its category, according to Morningstar, a mutual-fund tracker.
But in early 1997, Mr. Bischof says he was fired for violating the firm's policy on how many unregistered bonds he could buy. Value Line officials confirm the time of Mr. Bischof's departure, but decline to say why he left. While unemployed, he started posting messages hammering Ms. Buttner in September 1998 and continued for a year.
When Value Line found Mr. Bischof, it went after him hard. The firm demanded he produce every document that he had ever written about Value Line, published or otherwise, and also demanded he hand over his telephone and Internet service bills from July 1998 to March 2000. Mr. Bischof, who acknowledges posting as "Matt Drudge_VL," refused to turn over the documents or bills.
Ms. Buttner's suit against Mr. Bischof comes at a time when Value Line's stock has been languishing amid growing competition in the mutual fund and financial-publishing business. Since reaching a high of $49.5 in July 1998, its stock skidded to as low as 33 last summer and closed Monday at $36.125, down $0.625, on the Nasdaq Stock Market.
According to its most recent financial statements, Value Line reported net income of $27.4 million, or $2.75 a share, for the three quarters ending Jan. 31, a sharp increase over the profit of $20.1 million, or $2.02 a share, for the same period a year earlier.
But much of the gain was attributed to income from securities transactions, the company said in a regulatory filing, as revenue derived from subscriptions to its financial publications shrank 6% to $43.8 million, and revenue from its flagship Investment Survey fell 8%, which the company said was due to a decline in advertising.
Ultimately, Mr. Bischof's biggest mistake may have been to attack the head of one Wall Street's most distinguished family-run firms. Since it was founded by Ms. Buttner's father in 1931, Value Line has developed a name not only for its funds and investment guides, but also for developing top-shelf talent. Alumni include Jeff Vinik, former manager of the Fidelity Magellan Fund, and Zalman Bernstein, founder of the money manager Sanford C. Bernstein, which recently agreed to sell to Alliance Capital Management Holding for $3.5 billion.
Write to Aaron Elstein at aaron.elstein@wsj.com
KJC |
