1920s – Reporters for The Wall Street Journal accept bribes from investors to write favorably about certain stocks. The bribes are disclosed at a 1932 Congressional hearing on the stock market crash.
The Wall Street Journal was not immune to indiscretions by its reporters and editors. Scharff notes that many of its reporters and editors played the market in the 1920s, buying stocks of many of the companies they wrote about:
What drew most young men to the Journal was an open secret having nothing whatever to do with the fabled fun of the news business or the romance of the rolling presses. Newspapermen and radio newscasters were privy to inside information that could practically guarantee profits in the stock market. In addition, they were paid –sometimes handsomely – to work in conjunction with speculative rings and stock syndicates.
Scharrf later asserted that it was common knowledge on Wall Street that reporters from all the big newspapers could be bought. Klein’s research backs him up. He notes that one publicity man spent $286,279 on articles favorable to his pool’s stock before the October 1929 crash. Another published The Stock and Bond Reporter, a publication that touted favorite stocks in pools in return for information. The financial columnist for the New York Daily News wrote about stock tips given to him by a trader. In return, he received the profits from a trading account.
An investigation later discovered that business journalists for at least eight papers promoted stocks in their writing in return for bribes. The most embarrassing were at the Wall Street Journal, where reporters who wrote “Broad Street Gossip” and “Abreast of the Market” took payoffs for stock tips in the 1920s. The revelations about the Journal reporters came out during hearings by the Senate Banking and Currency Committee in 1932, more than three years later, when Congressman Fiorello LaGuardia produced cancelled checks written to the Journal reporters from publicist A. Newton Plummer. The stories based on the bribes had gone as far back as 1923. The Journal ran the story about the testimony before the committee on page 11 the next day.
Rosenberg states that the Journal had no specific rules against its business journalists playing the market. But it did have a written regulation that its staff should “bend over backwards to avoid any action, no matter how well intentioned, that could provide grounds for even suspicion.” The regulation, however, was written in such vague language to be interpreted in various ways. After the scandal broke, the paper instructed its staffers to avoid writing that would affect a stock’s price and to avoid using inside information before it became available to the public.