The first rule of journalism is never to reveal the source of a story, and it's a mantra that any journalist worth his or her salt lives by. But the recent actions of one NYC hedge fund demonstrate not everyone feels the same sense of respect for the ethics of news reporting.
Elliott Management, a multibillion-dollar New York hedge fund, is on a witch hunt to identify who leaked its latest quarterly investment letter to AR:Absolute Return+Alpha magazine. The fund's founder, Paul Singer, has taken the unusual step of involving the New York State Supreme Court in an attempt to force AR to reveal its source. The company argues that publishing the letter, which includes details of the fund's performance, would “cause significant harm to Elliott and negatively affect its competitive advantage in relation to other market participants.”
The issue has already garnered significant coverage, and has once again brought to the fore the debate over the ethics of news reporting. Still, it is unlikely Singer will have his way, given New York's tough laws protecting journalists from revealing their sources. But even in the unlikely event that AR is forced to reveal its sources, it would be very surprising if it did as it would lose all credibility as a news publication. And, in fact, the whole furore has brought more attention to the subject rather than less, which presumably was not Elliott Management's intention.
Meanwhile, AR is reported to be ready to publish the information about the fund's investment positions as soon as next week.