Gary Weiss asks a heckuva good question: “What in heaven’s name is the SEC thinking? Is it completely out to lunch?”

Admittedly, you could say that about just about anything the SEC does. But Weiss reports that the bumbling agency has subpoenaed fraudsters-turned-fraud-fighters Sam Antar and Barry Minkow for records relating to their conversations with short sellers about several companies. Well, okay. But:

What gives this little-known story—here’s the only press coverage—a strange odor is that the SEC wants to know from both Minkow and Antar what they have been saying to the media. The agency has subpoenaed their emails to two reporters for Dow Jones News Service, Michael Rapoport and Ben Dummett, who both have written articles on Interoil. Neither journalist was subpoenaed.

So the SEC is going after journalists without actually having to take on their news organizations. It’s doing an end-run around its own guidelines, as Weiss points out:

What makes this all even worse than the Einhorn mess is that the SEC is probing the two men’s contacts with those two Dow Jones reporters. That can’t help but have a chilling effect on the ability of the financial press to do its job. The agency has rules strictly limiting subpoenas to the media. Similar rules are needed to keep it from engaging in fishing expeditions aimed at people talking to the press.

The SEC knows what a stink it would raise if it tried to go in the front door, which it’s done before. In fact, this smells an awful lot like when the agency subpoenaed Dow Jones columnists Carol Remond and Herb Greenberg in 2006, before doing an embarrassing about-face two weeks later and withdrawing the subpoenas.

That withdrawal came after reporters started sniffing around, asking questions. It would be good for the business press to do the same here.


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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 rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.