WSJ - CBS MarketWatch's Calandra Quits Over Informal SEC Probe
By CARL BIALIK
THE WALL STREET JOURNAL ONLINE
Financial-news publisher MarketWatch.com Inc. said Thom Calandra, the writer of a stock-picking subscription newsletter, has resigned in the face of internal and Securities and Exchange Commission inquiries into his trading activities.
Larry Kramer, MarketWatch's chairman and chief executive, said in an interview that Mr. Calandra submitted his resignation Thursday rather than submit documents about his trading. Mr. Kramer said the company had set a deadline of Thursday for receiving the documents, which it requested last month in response to the SEC's informal inquiry.
The SEC has asked MarketWatch, based in San Francisco, for information about the company's policies for its editorial staff's equity trading, as well as any internal communications specifically about Mr. Calandra's trading, Mr. Kramer said. He added that the company is fully cooperating with the SEC inquiry, which the company said in a statement it first learned about last month. The inquiry is looking at Mr. Calandra's trading dating back to October 2002, the company said.
Mr. Calandra, 47 years old, who had been with the company since its founding in 1997, had written The Calandra Report since last March. Previously, he wrote columns that appeared on CBS MarketWatch.com, the company's free financial-news Web site. Mr. Kramer said the company was terminating the newsletter and the $299 subscription fee would be refunded on a prorated basis to the newsletter's "several thousand" subscribers. Mr. Calandra's last column appeared Tuesday.
"I've worked hard for the past eight years helping to build MarketWatch and for the last year I've worked hard creating The Calandra Report," Mr. Calandra told CBS MarketWatch.com. "While it's been tremendously rewarding professionally, it has also been stressful. And the SEC's informal inquiry adds to this stress. So I've decided to take this time off to focus on my family, whom I adore. I look forward to the conclusion of the SEC's inquiry."
The news comes as MarketWatch is trying to grow again after weathering the dot-com downturn. Last week, MarketWatch closed the purchase of Pinnacor Inc., a provider of financial information and analysis tools, in a cash-and-stock deal initially valued at about $103 million.
MarketWatch has been expanding into paid services, acquiring Hulbert Financial Digest, a subscription newsletter, in 2002 and launching more paid newsletters last year. With the Pinnacor purchase, the company adds several Web-based tools that include applications for charting financial performance or screening stocks according to criteria such as price/earnings ratio and industry.
Its shares, which sank under $2 apiece in 2001, have rallied strongly in the past year, hitting a 52-week high of $11 on Tuesday. But they dropped sharply Thursday on news of the probe, down $1.03, or 9.4%, to $9.90 in afternoon trading on the Nasdaq Stock Market.
Mr. Calandra was governed by looser 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. (For instance, in his last column, Mr. Calandra wrote, "I (and members of my immediate family) own securities in the following companies that are written about in this specific report: Harken Energy, Ivanhoe Energy, Nevsun Resources, Intraware and Illumina.) 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. Kramer said that MarketWatch's board was reviewing its current policies and may require greater disclosure and stricter enforcement guidelines for its reporters going forward. The changes have been under consideration for several months, and the review began before the Calandra inquiry surfaced, he added.
Write to Carl Bialik at carl.bialik@wsj.com
Updated January 22, 2004 4:21 p.m.
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