OPINION: SEC Hunt Silences Bank Watchdogs

Subpoenas are flying around Wall Street as the Securities and Exchange Commission embarks on a furious hunt to get to the bottom of the alleged "rumor-mongering" related to Lehman Brothers (LEH Quote) and Bear Stearns.

Numerous hedge funds and Wall Street investment banks have been targeted so far. On the face of it, the investigation is certainly a good thing, since the public markets can't function well if in fact stocks are being manipulated by false information.

Unfortunately, the SEC's broad sweep has already had another, not-so-positive effect: hampering the dialogue between hedge funds and journalists.

First, some background: In July, the SEC sent out subpoenas to various hedge funds and Wall Street trading desks to try to determine the root of possible unfounded rumors and manipulation that may have contributed to the severe declines in shares of Lehman and Bear Stearns this year. ...