This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Murdoch Beats Banks in Ethics Department

Stocks in this article: NWS GS MS JPM OSTK HPQ CQB

(Adds that News Corp. has pulled its BSkyB bid.)

NEW YORK ( TheStreet) -- As I review the constant drumbeat of revelations vomiting forth from the News of the World spying scandals, I'm seeing a silver lining in this immense journalistic pile-on. I don't see this as a Rupert Murdoch issue or a journalism issue. What I see is something that's rarer than Halley's Comet: At last, moral yardsticks are being applied to corporate behavior! Journalists are actually getting mad at a company for doing something rotten.

The outrage is so immense that Murdoch's News Corp. (NWS) may ultimately lose its bid to acquire British Sky Broadcasting Group (BSY). Today, the company said it would table its offer.

Think a bit about what we are seeing: The media is actually making moral judgments. Spying on people is wrong. Bribing people is wrong. Hacking into telephone accounts is wrong. And what's more, actual consequences are a serious possibility. Murdoch is seemingly losing out on the BSkyB deal because of ethical lapses.

Remember that there is nothing in our legal system that requires companies to be ethical. If they are unethical, they can escape scot-free unless there is some collateral issue, such as fraud. From a securities law perspective, it's fine to be a skunk if you disclose that you are a skunk. Sarbanes-Oxley requires that corporations disclose that they have codes of ethics, and to disclose board approval of waivers therefrom. But SarbOx has been only rarely enforced by the Securities and Exchange Commission, and not at all, as far as I know, where it touches on corporate ethics. Even if it did, the impact would be marginal because SarbOx treats lack of ethics not as something intrinsically bad, but as a form improperly filled out.

The sad fact is that nobody much cares when corporations act unethically. There's a host of examples of this. On the other hand, journalist malfeasance tends to get a lot of attention, because journalists love feeding on their own.

A good example dates back to the late 1990s when a Cincinnati Enquirer writer named Michael Gallagher was found to have repeatedly broken into the voicemail system of Chiquita Brands (CQB). That example of journalistic wrongdoing has been mentioned in connection with the News of the World scandal. Gallagher was fired and then prosecuted for his misdeeds. But what about Chiquita paying $25 million in 2007 to resolve Justice Department charges that it paid off members of a terrorist group in Colombia? That flitted by practically unnoticed, because, as was demonstrated by the Gallagher case and now the Murdoch scandal, journalists view themselves as clean and pure but view corporations as intrinsically tainted. We get cynical about ordinary corporate abuses, rather than outraged.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs