The short-versus-public-company fracas peaked in May 2006, a few months after the Stahl piece. The SEC, which was probing Gradient because of the corporate complaints, subpoenaed three financial reporters—Herb Greenberg of Marketwatch, Jim Cramer of TheStreet.com (and CNBC’s Mad Money show) and Carol Remond of Dow Jones Newswires—sparking an uproar. Journalists and their supporters argued that SEC probe infringed on reporters’ First Amendment rights and chilled tough reporting.

The SEC later dropped the subpoenas and backed away from the idea of subpoenaing reporters altogether.

The SEC dropped its Gradient probe last year.

As it turns out, SAC and Gradient were doing investors a favor. Biovail traded around $24 a share when the Stahl piece ran. Now’s it under $11, a drop of 55 percent, including nine percent on news of the SEC settlement. Dow Jones provides this two-year chart:








One can only hope 60 Minutes viewers listened to the shorts and not 60 Minutes.

But the ongoing SEC probe of Biovail was always going to be a time bomb under this story.

This week, it blew up.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.