- The Washington Times - Monday, February 27, 2006


The Securities and Exchange Commission is taking the unusual step of halting pursuit of a subpoena for records from two columnists until the agency considers the matter, SEC Chairman Christopher Cox said yesterday.

Mr. Cox said that neither he nor the SEC’s general counsel nor any of the other four SEC commissioners had been informed or consulted regarding “such an extraordinary step” before press reports appeared on it over the weekend.

Normally, SEC enforcement lawyers issue subpoenas in an investigation without specific approval by the commissioners, who approve only the overall investigations.

The five SEC commissioners will consider the issue of subpoenaing journalists “before this matter proceeds further,” Mr. Cox said.

After issuing a subpoena Feb. 7 to two financial journalists, the SEC decided last week against compelling them, at least for now, to surrender records as part of an investigation into charges of stock manipulation.

The subpoena went to columnists Herb Greenberg of MarketWatch and Carol Remond of Dow Jones Newswires, both Dow Jones & Co. online publications. The subpoena sought telephone records, e-mail and other documents related to the online retailer Overstock.com. Mr. Greenberg and Ms. Remond have written columns about Overstock.

The SEC, an independent regulatory agency with only civil powers, rarely subpoenas journalists or news organizations.

“The issuance of a subpoena to a journalist which seeks to compel production of his or her notes and records of conversations with sources is highly unusual,” Mr. Cox said. “The sensitive issues that such a subpoena raises are of sufficient importance that they should, and will be, considered and decided by the commission before this matter proceeds further.”

The SEC is investigating accusations by Overstock.com that a research firm, Gradient Analytics, issued negative reports on the retailer in exchange for payments from a hedge fund seeking to profit from a drop in its stock price. Overstock.com has sued Gradient and the hedge fund in question, Rocker Partners; they deny any wrongdoing.

Dow Jones spokeswoman Amy Wolfcale did not immediately return a telephone call seeking comment yesterday. She said Friday that the company had been told “that the SEC has decided not to seek production of any documents from Dow Jones at this time,” but added that “the SEC may come back in the future.”

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