While the Securities and Exchange Commission has withdrawn recent subpoenas for journalists' records, it has not ruled out issuing them in the future.
And the fact that there were subpoenas in the first place is indicative of a bigger trend between the media and government agencies, one that could ultimately impact financial communicators.
Subpoenas were issued last month to Herb Greenberg of MarketWatch, Carol Remond of Dow Jones Newswires, and Jim Cramer, host of CNBC's Mad Money and TheStreet.com columnist, to obtain phone, e-mail, and other documents related to the online retailer Overstock. com. They were part of an SEC investigation into allegations of stock manipulation, so, if anything, it would seem as if it was business as usual for the SEC.
Except for one thing: In the past, the SEC has seldom considered subpoenaing news organizations or journalists as a way to obtain information for investigations. "It is exceedingly rare for the SEC to subpoena journalists," SEC chairman Christopher Cox told the AP. So one has to wonder if special prosecutor Patrick Fitzgerald's relentless pursuit of Matthew Cooper and Judith Miller to name confidential sources in the Valerie Plame CIA leak case last year could have set a dangerous precedent.
"People who are in the position to issue subpoenas feel much more empowered than they have in the past to go after journalists as sources of information," says Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press. "I'm sure that the fact that there are so many cases pending out there led these investigators at the SEC to think, 'Hey, why not? Everybody else is doing it, why don't we?'"
Harlan Loeb, director of Financial Dynamics' litigation support practice, adds, "We've seen a spike in the willingness of government entities to use their subpoena powers against the press."
In fact, so overzealous was the SEC in trying to get a hold of the records in question that it closed lines of communication within its own organization. Cox told the AP that neither he nor the SEC's other commissioners were consulted in the matter, adding that it would have been preferred, given the sensitivity of asking journalists to turn over their records.
And so the SEC has since announced plans to craft a formal strategy for issuing subpoenas to journalists. In addition to outlining the circumstances by which it is appropriate to subpoena journalists, it will also call for consultation from SEC commissioners before issuing a subpoena.
All of this means one thing: Financial journalists are still in danger of having their confidential records, interviews, and e-mails subpoenaed. And while there is no immediate threat, it still provides a challenge and opportunity for financial communicators.
"Any time the government uses the media or engages the media for the purposes of pursuing a case, there is always the concern that it will have a chilling effect on the open flow of information between parties where the necessity of open communications is critical," says Loeb.
And while he stresses that it is far too early to tell whether this case will have any long-term effect on how companies communicate financial information with the media, he does see an impact on the job of the financial communicator.
"There is now more risk management going on that is a daily function of any good media department as it relates to with whom you interface in the media world," he says. "The relationship of trust is more important than ever."
In other words, establishing the rules of engagement with a reporter off the bat is something that will become a necessity for those in the position of communicating sensitive information. Because for the company that's unlucky enough to be involved in an SEC investigation, it helps to have friends in the media.