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To: Dell-icious who wrote (86830)	12/23/1998 8:54:00 PM
From: Mohan Marette	Respond to of 176387

<--OT-->CNBC Makes Rules for Guest Analysts By ERIC R. QUINONES AP Business Writer NEW YORK (AP)--CNBC tried to put to rest an ethics controversy about a guest analyst Wednesday, issuing rules to ensure that investment professionals don't use their appearances on its programs to line their pockets. The rules require that analysts disclose their trading in any stock they discuss. And they prohibit analysts from buying a stock, touting it on the network as a good investment, then selling it as soon as the price goes up--a practice known on Wall Street as ''pump and dump.'' CNBC published the rules on its Internet site. It said they already existed informally, but it wrote them down in an attempt to ease viewers' worries about conflicts of interest. At the same time, the business network permitted analyst James Cramer to return to its morning program ''Squawk Box.'' Cramer, a well-known money manager appears as an unpaid guest host of the program every other week. Cramer was pulled off the show last week after questions arose about whether he was commenting on a stock and trying to trade on it at the same time. Media ethics watchers said the rules should protect consumers from traders who could seek to influence the market, while still providing insights from people who buy and sell stocks for a living. ''It is perfectly OK to have people who speak from an interest, but you just have to have an understanding of what that interest might be,'' said Jack Cox, president of the Foundation for American Communications, a Los Angeles-based journalism think tank. CNBC and other business programs have long used professional investment managers to comment on the ups and downs of the market. The public-television program ''Nightly Business Report'' has similar disclosure rules to CNBC, said managing editor Rodney Ward. CNNfn, CNBC's smaller rival, researches the holdings of Wall Street insiders before they appear on the cable channel but does not have written disclosure policies, said Debra Kocher, vice president of editorial for CNN's financial news operations. Bloomberg Television, whose programming is seen on cable's USA Network and public television, also does not have formal disclosure guidelines, but announces guests' holdings on the air if they are discussed, said spokeswoman Lisa Chajet. The controversy over Cramer arose when a small Internet company, WavePhore Inc., complained about his comments on ''Squawk Box'' Dec. 2. Cramer described many small Internet players as ''Fraud-U-Net'' companies and said recent rapid gains in their stocks are unjustified. He went on to say that WavePhore stock gains in particular were based on speculation. Cramer said on the program that he had tried to ''short-sell'' WavePhore stock--an investment strategy based on the expectation that a company's stock price will fall. In short-selling, an investor borrows stock and sells it immediately. If the price drops, he buys shares at the lower price, repays the loan and pockets the difference. Cramer has since denied that he tried to short the stock. He said he merely inquired with a broker about shorting to see if others were doing the same thing. CNBC did not accuse Cramer of any wrongdoing, but asked him not to appear on last week's program while the network reviewed his comments. While the new rules don't prohibit analysts from commenting on stocks in which they trade, CNBC spokesman George Jamison said they are sufficient to protect viewers. ''We believe that the consumer is educated and intelligent enough to understand and make decisions as to what makes sense to them,'' he said. Steve Geimann, chairman of the Society of Professional Journalists' ethics committee, agreed. ''Short of not using those kinds of people, I don't think there is a way to have a more rigorous kind of disclosure,'' he said. AP-NY-12-23-98 1758EST