One panelist suggested they give themselves a "Cassandra Award" named after the Greek god who was able to predict disasters but could find no one who would believe her.
She checked with option traders who said Madoff could not possibly get the results he was reporting. Arvedlund’s major piece, the result of months on the story, ran May 7, 2001 under the title “Don’t Ask, Don’t Tell” (highlighting the secrecy that marked the Madoff operations).
“There was no reaction,” she moaned, adding, “I wish I had followed up…I wish I had proceeded further.” She then expressed sympathy for the people who lost billions (total was about $65 billion), saying further stories by her might have prevented it.
Moderator Myron Kandel, former CNN financial editor, said it was not enough for journalists to expect action just because they wrote a story that appeared on the front page of a major medium.
Arvedlund should have pressed her case with SEC commissioners and gone over their heads to the legislative and executive branches of the government, he said.
Kandel is on the right track.
Reporters can learn a lot from PR pros, many of whom have switched from just “getting ink” to getting “results” or “outcomes,” as they also call it.
Arvedlund should have asked herself, “What is my goal?” The goal was to save investors from being bilked out of billions. She and her editors should have called a press conference. Barron’s should have shared its research with other media.
Big companies, many of them fierce competitors, often band together in trade associations to push their causes.
They not only work via their trade associations but create “coalitions of coalitions” in Washington, D.C.
Avredlund’s “trade association” was the New York Financial Writers Assn., which Kandel headed in 1986-87. She should have made speeches to financial and general audiences and tried to obtain time on TV and radio.
She could have become a “Joan of Arc” dedicated to leading the financial reporting press corps. She could have sought the help of a PR firm.
One panelist noted that editors rarely let a reporter concentrate on one story to the exclusion of others.
Kandel said failure to follow up on stories and seek action was a major flaw of financial journalism.
As evidence that financial journalism mostly failed in warning about financial abuses he noted that no Pulitzer Prizes were awarded for financial journalism in 2008-09.
Diana Henriques, NYT senior financial writer who is writing a book about Madoff, asked, “What do you do when what you report is ignored?
“Remember who Cassandra was,” she said. “She was able to predict disasters but no one would believe her. What is the appropriate media response when a story like Erin’s and other fine stories…are ignored by policymakers and lawmakers…at what point does the subject for criticism become a dead horse…you keep saying it over and over again?”
Kandel noted at the beginning of the panel, which took place April 30, 2009 at the CUNY Graduate School of Journalism (and which we just discovered) that good stories “were rarely followed up.”
He said reporters incorrectly believe that people are going to read their stories and “do something.”
Kandel noted that financial fraud investigator Harry Markopolos complained to the SEC for years about Madoff and was ignored.
Markopolos called the SEC a “captive of the industry it regulates that is afraid of bringing big cases against the largest and most powerful firms.” He said that as he dug into Madoff’s affairs he began to fear for his life because he was convinced that Russian mobsters and Latin American drug cartels were Madoff clients.
Avrelund’s article focused on the wall of secrecy around Madoff. After months of compiling details about him, she finally caught up to him on a “scratchy international telephone line” while he was traveling on a boat in Switzerland. He wouldn’t go into “details” and did not tell her “anything of note.”
Avrelund. who worked at a hedge fund start-up from 2006-08 and was a reporter for the Times, Wall Street Journal, Barron's and TheStreet.com, talked to more than 100 people in researching Madoff but fewer than five had ever met him.
Jon Friedman, MarketWatch.com columnist, said many financial reporters were lacking in basic knowledge about such financial instruments as credit default swaps and collateralized debt obligations.
Kandel asked those in the audience how many were familiar with such devices and only a few raised their hands.
Sal Nuccio, a life active member of the NYFWA who has written on insurance for the NYT, said the credit default swaps were actually insurance used as a gambling device and the CDOs had “no backing whatever,” providing a “false sense of security.”
Markets were doing so well that no one wanted to look too closely at what was happening, he said.
There was agreement that financial news is not a hot topic with TV producers.
One producer told Susan Lisovicz, CNN stock market correspondent, “We know financial news is important but try not to make it seem like medicine.”