Matt Purdue
06/01/2007
You would be surprised how freely people speak to us—the media. I’ve been in this business for 20 years now, and I am constantly amazed at how easy it is to get a source to open up. Over the past two decades, I’ve conducted literally thousands of telephone interviews. They all begin in basically the same manner: "Hello, this is Matt Purdue from (insert media outlet here). Do you have a few minutes to talk?" Almost invariably, the source says yes, and away we go.
Mind you, the vast majority of these contacts are cold calls. Some of them are set up by intermediaries, but most are simply one human being (if you will allow me to expand the term to include journalists) calling another. Usually, I’m someone the source has never heard of, calling to discuss some matter of import with the full intention of making our conversation public yet I’m almost never turned away.
Script writers like to dramatize this interaction, with sources screaming, "No comment!" into the phone and slamming down the receiver. But I can count on one hand the number of times someone has actually uttered those words to me. If a source is acting guarded, he or she will say, "I can’t really talk about x right now." So, in all honesty, it’s my job to get them to discuss, if not x, then x-y.
If a source won’t even come near to talking about x, we usually begin a delicate dance of thrust and parry, parry and thrust. I try to obtain the most information possible for my readers, while the source attempts to reveal just enough to be interesting without giving away any secrets. It’s the way journalism works.
So you might imagine my frustration with the federal government telling me what I can and can’t discuss with sources. I’m referring specifically to SEC rules restricting the way private hedge funds advertise and market themselves. In short, hedge funds can only promote themselves to investors (both individual and institutional) with which they have a preexisting relationship.
Clearly this means no flashing billboards in Times Square and no topiary tie-ins with Edward Scissorhands as celebrity spokesmodel. But it also chills what hedge fund principals will say in public and to media. This month’s cover story focuses on some of the VIPs who have recently stepped into the alternative investment sector: names like Madeleine Albright, CNBC anchor Ron Insana and former SEC chairman Richard Breeden.
But, truth be told, they would not talk to us. We tried multiple times to get to every "celebrity" hedge fund executive we could find, and all of them declined interviews. One of them even agreed to our interview and set up a conference call for noon. A little after noon, we received an email from his "people" telling us that his lawyers had advised him against talking with Worth for fear of overstepping the SEC’s bounds.
So what journalists like us are left with are rumors, reports based on other reports and read-between-the-lines analyses of lectures given by these hedge fund principals. How are investors served by frightening fund managers to the point where they refuse to talk with the press? There’s a reason the First Amendment was written as it was—to give the Fourth Estate the freedom to represent the people as a check against abuses of power. Certainly our system is far from perfect, but why should government regulations be so authoritarian as to terrify Albright away from telling me how she intends to invest more than $300 million of Dutch pensioners’ money? Now that strategy should be on a billboard in Times Square—or maybe Amsterdam.
An interesting nugget unearthed during our reporting on this story is a tidbit we got on deep background from one source: The SEC reads Worth to find out what fund managers are saying in public. Well, Chris Cox, if you have a minute, give me a call: 212.230.0200.