the audit

WSJ Buries Wylys Story, Ignores GOP Angle

July 30, 2010

The SEC is charging the billionaire Wyly brothers with a massive fraud involving $550 million in ill-gotten gains from a scheme it says involved insider trading, overseas accounts, and front companies

Big story, no? But how big? The Financial Times‘s Alphaville says “Knocks Martha Stewart, Galleon, etc into a cocked hat…” I think that means it’s big.

The New York Times
and The Washington Post both put the news on page one. The Journal squeezes it into a single column on C1. That takes some doing—jamming such a big thing into so small a space. Sure, the paper does make the story the top blurb in the “Business & Finance” column on page one, but that only makes the case for bigger play.

I hate to be cynical here, but the paper is making its own bed on this, and I get the feeling that had the Wylys been two of the biggest Democratic Party donors rather than Republican ones, the main question for the WSJ would have been: Four-column hed—or six? In fact, I don’t see how you keep this story off page one.

I’d be inclined to let it slide if it weren’t for the fact that the words “Republican” and “conservative” aren’t mentioned once in the Journal‘s story.

Meanwhile, the Times notes the political aspect in its lede, and the Post has it in its headline. These Wylys are bigtime political patrons.

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“They are among the biggest of the big when it comes to campaign bank-rollers, and their donors list is a who’s who of the Republican Party over the past decade,” said Dave Levinthal, a spokesman at the nonpartisan Center for Responsive Politics. “It’s almost hard to find prominent Republicans who haven’t been a beneficiary of their financial largess. They’ve definitely been very kind, financially speaking, to a number of Republicans.”

Plus, it’s a juicy story. Come on, Rupe! Here’s the Post on what the SEC alleges went down:

According to the SEC, the brothers, who live in Dallas, created an elaborate and clandestine network of accounts and companies on the Isle of Man and in the Cayman Islands. The brothers then used these accounts and companies to trade more than $750 million of stock in four public companies on whose boards they served, not filing the disclosures required for corporate insiders, the SEC said.

In one case, the SEC alleges that the Wylys traded based on insider information they learned as board members, netting a profit of $32 million.

This story is right in the WSJ’s wheelhouse. And it pops it up.

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 Follow him on Twitter at @ryanchittum.