The Goldman fraud suit continues to dominate the media cycle. After the initial shock of the US government actually doing something to hold Wall Street accountable, the business press — led by Goldman Sachs and their lawyers at Sullivan and Cromwell — has turned to questions about the merits of the suit. Today, the New York Times gave A1 real estate to a piece headlined “A Difficult Path In Goldman Case.”
The article opens by saying that the SEC is “pursuing an unusual claim that could be difficult to prove in court” according to legal experts. But the article only quotes one legal expert clearly criticizing the substance of the case: Allen Ferrell, a professor at Harvard Law School. According to his CV, Ferrell has been engaged as an “expert for large financial institution involving subprime-related litigation (details confidential).”
This is clearly a potential conflict, but the entire article appears to be based around Ferrell’s lone, critical quote. This is irresponsible journalism, especially considering the landmark significance of the Goldman suit. So I wrote the following letter to the Times ombudsman to alert him to the conflict and request a proper correction/disclosure:
Dear Mr. Hoyt,
I am writing regarding the article “A Difficult Path in Goldman Case,” by Binyamin Applebaum, on page A1 of today’s New York Times (April 20, 2010). The article asserts that the fraud case brought by the SEC against Goldman Sachs is a challenging one, pointing to “several experts on securities law.” However, only one expert is quoted as questioning the substance of the SEC’s case: Allen Ferrell, a professor at Harvard Law School.
According to Ferrell’s CV (http://www.law.harvard.edu/faculty/fferrell/cv.htm), he was recently engaged as an “expert for large financial institution involving subprime-related litigation (details confidential).” This is clearly a potential conflict — it is impossible to judge, as long as the details remain undisclosed — yet Applebaum quoted Ferrell as an independent expert. In fact, his quote was the linchpin of the piece; no other securities law expert quoted in the article registered clear criticism of the SEC’s case.
This is irresponsible journalism. Given the significance of the SEC’s case against Goldman, an article headlined “A Difficult Path in the Goldman Case” and running on page A1 should draw on the arguments of independent legal experts who are subject to rigorous disclosure standards — not lawyers in the employ of large financial institutions.
Can you please clarify as to whether Ferrell disclosed this conflict to the Times, and issue a correction notifying readers of the conflict?
Co-Director, Public Accountability Initiative
Update: The New York Times has informed me that they’ve double-checked with Professor Ferrell and he is not working for Goldman Sachs. Regardless, the New York Times should not base this sort of analysis on a quote from a lawyer who works for big banks.