Reuters has been in the legal news a bit lately, and not in a good way.
First, the Journal reported two months ago that the federal government had investigated whether Reuters, along with Bloomberg and Dow Jones, gave favored clients an unfair head start on market-sensitive government data.
Then, the feds indicted Reuters’s deputy social media editor Matthew Keys last month on charges of conspiring with the hacker group Anonymous to hack the website of his former employer, a Tribune Company TV station. Keys’s attorney came up with this rather unconvincing defense:
“This is sort of an undercover-type, investigative journalism thing, and I know undercover — I’m using that term loosely,” attorney Jay Leiderman said.
Now a former employee has filed a whistleblower lawsuit claiming Reuters fired him after he told the government that the wire service was aiding insider trading.
Here’s how it works, according to the plaintiff:
The Thomson Reuters/University of Michigan survey measures consumer attitudes and expectations about the U.S. economy. According to Rosenblum, the company releases the survey in three tiers.
At two seconds before 9:55 a.m., it goes to “ultra low- latency subscribers”; “desktop” subscribers get it at 9:55 a.m.; and at 10 a.m. it goes out to the general public, he said.
“By releasing the product to ultra low-latency subscribers two seconds early, those subscribers have a two-second head start to make transactions,” he said in the complaint.
Ultra low-latency subscribers are algorithmic or high frequency traders who jockey to get millisecond advantages over competitors.
While this case sounds similar to the FBI investigation into early release of government data, it’s at least somewhat different since it involves the Thomson Reuters/University of Michigan Surveys of Consumers. It’s the company’s product, in other words. (UPDATE: On second thought, Reuters apparently just pays the university to brand it and release it to its customers early)
Reuters says the suit is “unsubstantiated and without merit.”
— The Wall Street Journal is good to report on how car loans keep getting longer and longer: more than eight years in some cases now:
In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever, according to Experian Information Solutions Inc. Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months and there were even a few as long as 97 months. Four years ago, only 11% of loans fell into this category.
Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes car-buyers longer to reach the point where they owe less on the car than it is worth. Having “negative equity” or being “upside down” in a car makes it harder to trade or sell the vehicle if the owner can’t make payments.
If a borrower needs an interest-only adjustable-rate mortgage to get into a house, they almost certainly shouldn’t get the house. If a car buyer needs an eight-year payment plan to pay off a new car, they probably shouldn’t get a new car. That lenders are financing these deals is not a good sign.
That consumers need them is a worse one.
— Business Insider had the correction of the day yesterday, reporting that fired JCPenney CEO Ron Johnson would be leaving the company with $150 million. The actual amount? $150,000.
Where the original story said “Ron Johnson Was Guaranteed $150 Million If He Was Fired Or Left On His Own,” the headline now reads, “Ron Johnson Was Guaranteed An Identical Payout If He Was Fired Or Left On His Own.”
Which is no story at all, really, as you can see from this line presumably added in with the correction (but with nothing pointing out it has changed):
This is a pretty small sum, which is due to the fact that he was only at the company for a brief period of time.
It’s easy to see how this happened. Companies often abbreviate their numbers in securities filings because they’re so large. And we’re so used to obscene executive compensation that a $150 million golden parachute for a failed CEO if anything seems more likely than a mere $150,000.
This one’s a good reminder to always check for the “in 000s” on those securities filings.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum.
Tags: car loans, corrections, insider trading, Reuters, subprime