Mr. Appleton receives an e-mail from "Steve Pluvia,"
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KEY DATES OF THE INQUIRY
Events in the inquiry into Thom Calandra, according to MarketWatch general counsel Doug Appleton:
Nov. 7, 2003: Mr. Appleton receives an e-mail from "Steve Pluvia," who claims to have damaging information about Mr. Calandra's connections with Ivanhoe Mines. (A respresentative for Ivanhoe Mines didn't return a call seeking comment.) Mr. Appleton asks for contact information, and receives an e-mail reply that "Steve Pluvia" is a nom de plume for several people doing research into stock fraud. "Steve Pluvia" is a well-known name on stock-chat boards, and previous news reports have named him as a short-seller who makes negative comments about companies in an effort to drive their stock price lower. Mr. Appleton says that, at the time, this information "discredits" the e-mail, but nonetheless the e-mail "started our whole thought process on it."
Mid-November: Forbes Magazine publishes an article on Ivanhoe Mines that mentions Mr. Calandra's frequent plugging of Ivanhoe Mines and his ownership of stock in Ivanhoe Energy. Mr. Appleton and MarketWatch management meet with Mr. Calandra. He says he has duly disclosed his stock holdings and doesn't own shares of Ivanhoe Mines, according to Mr. Appleton. (Mr. Calandra's lawyer, Dana Welch, declined Thursday to comment on the inquiry, but said all her client's disclosures in his newsletter were accurate.)
Late December: Mr. Calandra receives a letter of inquiry from the SEC dated Dec. 19 requesting information about his trading dating to Oct. 2002. He immediately shows the letter to his bosses. MarketWatch initiates its own investigation. Mr. Calandra hires Ms. Welch, of Ropes & Gray in San Francisco.
Jan. 22, 2004: Mr. Calandra faxes his letter of resignation to MarketWatch at 9 a.m. Ms. Welch said the inquiry wasn't the sole cause of her client's resignation, and that she planned to turn over information to the SEC, as requested, by Jan. 29. Mr. Appleton said, "We've reacted from day one by jumping on this, and working with the top people at the company, because we are a news organization and have to do it the right way."
MarketWatch's Co-Founder Resigns
Calandra Leaves Amid Probes
Into His Trading Activities
By CARL BIALIK
THE WALL STREET JOURNAL ONLINE
Financial-news publisher MarketWatch.com Inc. said former editor-in-chief and co-founder Thom Calandra has resigned in the face of internal and Securities and Exchange Commission informal inquiries into his trading activities.
Larry Kramer, MarketWatch's chairman and chief executive, said Mr. Calandra, a writer of a MarketWatch-sponsored stock newsletter, submitted his resignation Thursday rather than submit documents detailing his trading. Mr. Kramer said the company set a deadline of Thursday for receiving the documents after learning of the SEC's informal inquiry.
In a letter dated Jan. 14, the SEC requested that MarketWatch, based in San Francisco, furnish information about the company's policies for its editorial staff's stock trading, as well as any internal communications specifically about Mr. Calandra's trading. Since learning about the informal investigation last month, the company is cooperating fully with the SEC, Mr. Kramer said.
Thom Calandra
Mr. Calandra's lawyer, Dana Welch, said the deadline didn't cause the resignation. "He's been under enormous stress personally and professionally for a while," said Ms. Welch, of Ropes & Gray in San Francisco. She said her client wasn't available for comment, and additional efforts to reach Mr. Calandra were unsuccessful.
Ms. Welch said the SEC's inquiry was in an early phase, akin to "kicking the tires." She said the inquiry was spurred by an article in Forbes magazine in November that cited Mr. Calandra's frequent plugging of Ivanhoe Mines Ltd. and Ivanhoe Energy Inc., two affiliated Canadian companies. He has disclosed in his newsletter that he owns shares in Ivanhoe Energy and has traveled to Beijing and Mongolia on trips funded by Ivanhoe Mines.
An SEC spokesman declined to comment on the matter.
People familiar with the inquiry said it is centered on whether Mr. Calandra bought stock ahead of news about the companies he was writing about and then sold the stock after prices rose. Ms. Welch declined to comment on the nature of the inquiry. Doug Appleton, general counsel for MarketWatch, said Mr. Calandra, when asked, denied "pumping and dumping" stocks. An SEC letter indicated that the inquiry was seeking information back to October 2002. Mr. Calandra, 47 years old, began writing his newsletter, Calandra Report, in March 2003.
Doug Appleton, general counsel for MarketWatch, said the company doesn't have access to Mr. Calandra's trading records and has been sifting through Mr. Calandra's past newsletters and e-mail alerts about his newsletters, and looking for other public disclosures about Mr. Calandra's holdings or trading patterns.
Mr. Kramer said the company was terminating the Calandra Report newsletter and the $299 subscription fee would be refunded on a prorated basis to the newsletter's "several thousand" subscribers.
The Calandra Report published on Tuesday
Mr. Calandra, as a newsletter writer, was governed by looser trading restrictions than MarketWatch's news reporters, Mr. Kramer said. Mr. Calandra was barred from trading in stocks for 48 hours after the publication of the newsletter, and he had to disclose at the end of his column ownership of any stocks he was recommending. Reporters, by contrast, are barred from trading stocks in companies they cover.
"He came out from under being a news reporter," Mr. Kramer said. "We said we wouldn't feel it would be right to hold him under the same restrictions our journalists are under. We felt his subscribers would want him to be a trader."
Mr. Calandra's newsletter focused on smaller stocks, especially in the mining, technology and biotechnology sectors, according to David Callaway, MarketWatch's edtior in chief.
Mr. Kramer said that MarketWatch's board was reviewing its current policies and may require greater disclosure and stricter enforcement guidelines for its reporters. The changes have been under consideration for nearly a year and the review began before the Calandra inquiry surfaced, he said.
MarketWatch shares, which sank under $2 in 2001, have rallied in the past year, hitting a 52-week high of $11 on Tuesday. But they dropped Thursday on news of the probe, and were down $1.03, or 9.4%, at $9.90 as of 4 p.m. in Nasdaq Stock Market trading.
-- Mylene Mangalindan and Deborah Solomon contributed to this article.
Write to Carl Bialik at carl.bialik@wsj.com
Updated January 23, 2004 |
