So what’s the point of hiring journalists for such unpublicized events? It’s possible that attendees glean insights that are useful for their investments in the securities markets—as suggested by some of the comments on Gillian Tett’s speeches. But it’s hard to see how professional investors are going to learn much of actionable value from a journalist, even an accomplished one. The exception might be for political insights about, say, government regulation or taxation of an industry. Journalists often do possess such insights—and Wall Street firms employ an army of political-intelligence gatherers in Washington, typically lobbyists and consultants, to be as up-to-date as possible on actions that might affect investment holdings and strategies.
Asked why she thought journalists like herself were sought to speak at Wall Street events, Tett, whose 2009 book Fool’s Gold skewered the financial industry, replied: “We’re paid to think on our feet. It’s not because they’re trying to buy our minds or influence.” And indeed, her book is proof that even a journalist who takes Wall Street’s money can still be appropriately skeptical of Wall Street’s practices. Similarly, writers such as Lewis, Nocera, and Stewart all have established reputations as tough critics of Wall Street. It seems unlikely, in any case, that an investment firm paying a journalist for a speech could be shameless enough to expect the “return favor” of positive coverage. “It’s never occurred to me that anyone is paying me for anything other than the talk, and no one has ever suggested it,” Lewis said. Even so, just as journalists prize inside sources at Wall Street firms, even the most private of firms, knowing there could come a day when scandal darkens their door, have a natural interest in cultivating ties with influential journalists.
Firms may also use speaking gigs to reward a journalist whom they have reason to believe is friendly, or at least not inveterately hostile. In May 2006, The New Yorker published a “Financial Page” column by James Surowiecki arguing that “hedge funds have been far more of a boon to financial markets than a bane,” despite being “easy to hate.” Later he gave a paid speech to a group of hedge-fund clients. He confirmed his participation in the event, which until recently was listed on the website of the Leigh Bureau. “As a rule the talks I give are about the ideas in my books, and aren’t connected to the topics I write about in my column or the arguments I make,” Surowiecki says.
The best answer I heard to why Wall Street hires journalists for speaking gigs came from a hedge-fund manager who is familiar with the practice but doesn’t employ it himself. He says high-profile journalists have a certain glamour or celebrity appeal that makes them a price-effective marketing lure, even when a speaking fee approaches six figures. “The event is surely put on by someone who is inviting his best clients,” this source says. “The firm paying the speaking fee is getting a bunch of high rollers who might invest in their funds—and who surely wouldn’t be there without the speaker. It’s not just a Fareed Zakaria, it is anyone who is interesting and famous.”
Suppose, the hedge-fund manager continued, that the outcome is that just one guest—the manager of a pension plan, say—decides to invest $10 million in a fund of the firm staging the event. Under typical Wall Street practice, the firm will snag a 2 percent management fee—which works out to $200,000 for a $10 million investment. Plus, there’s the prospect of earning a standard 20 percent performance fee on any gains. That’s a pretty nice return.
Martin Wolf, the FT’s chief economics commentator, also gives paid speeches to financial firms. “Speaking engagements have always been an accepted part of the FT’s practice, and my representation by the Leigh Bureau is not in any way hidden,” Wolf told me. “I give my views on aspects of the world economy. I do not see an issue.”