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Coverage of Lehman-KDB Deal Lacks Sources

The news broke without telling Lehman's side of the story.

Some count sheep to fall asleep, but The Business Press Maven counts sources. Unfortunately, this means I too often don't have much to count.

Take the news that broke this weekend of apparent renewed interest by the Korea Development Bank to buy a big chunk of

Lehman Brothers


. And the news -- for lack of a better word -- about whom Lehman Brothers might turn to if interest from the Korea Development Bank snaps off or fizzles.

The story igniting this latest round of talk appeared over the holiday weekend in London's


: "

Korean Development bank in talks to buy Lehman stake


When The Business Press Maven performs his vaunted Source Analysis on the article, here is what we come up with:

As a source on the Korean Development/Lehman Brothers negotiations, the article uses KDB Chief Executive Min Euoo-sung. He hardly says a deal is a forgone conclusion, noting how far apart the two sides are on price, the only thing that matters.

Despite this good source from the KDB side, a big limitation to the article is that no one from Lehman Brothers -- named or unnamed -- gives the savvy investor s sense of where Lehman thinks things stand. The article really can't be seen as predictive in any reliable way without Lehman's side of the story -- especially with the difference in price.

Interestingly enough, the first reference we see to what Lehman wants is unattributed and vague, and though it makes intuitive sense, it is written generally enough to lead you to believe that the journalist might have garnered it from Min's take on Lehman instead of the more appropriate and useful angle of Lehman's take on Lehman.

Look at this somewhat puzzling reference: "The acceleration of the negotiations, which Lehman wants to have wrapped up before it reports third-quarter earnings in mid-September, underlines the urgency with which one of the U.S. banking industry's most venerable names is seeking capital."

So "Lehman wants" to wrap up negotiations by mid-September? Says who? It certainly stands to reason that Lehman wants something done by then, but with no reference even to an anonymous source, The Business Press Maven is a bit suspicious.

And that's where things get worse.

The article also doesn't cite any Lehman sources when addressing Lehman Brother's options if Korean Development Bank negotiations fall through:

"If the talks with the Koreans fall through, Lehman is lining up alternative investment from other sources, including Citic Securities, a Chinese brokerage which was on the verge of investing in Bear Stearns before its implosion earlier this year, which resulted in a cut-price takeover by JP Morgan, another Wall Street banking group.

"Lehman is also holding talks with a number of sovereign funds from the Middle East, which have been invited to participate in a capital-raising. These are understood to include investors from Abu Dhabi and Qatar."

Look at what we are told and how we are told it. Who is speaking for Lehman Brothers here? The wind? Min used to be the head of Lehman's operations in Seoul, so perhaps that gives him some insight into the situation -- but if he is the one passing along the information, doesn't the savvy investor deserve to know? After all, Min is a full step removed from Lehman Brothers now, and besides, he's hardly a disinterested party, as he is by his own admission negotiating with Lehman on price.

Like everything in the educated guessing game of the stock market, Source Analysis not perfect. You can watch The Business Press Maven

eat total crow




bid for



in a deal that was preceded by what I took to be worthlessly unsourced articles in the

New York Post

.Clearly, my bad there. But, again, we are just playing odds here, and you are almost always better off not blindly following what appears to be weakly sourced reporting.

One more item: In the current news environment, when a story breaks (especially over a slow weekend), many articles follow, repeating what the original story said. When this happens -- and summaries are made for space -- we lose even more sight of what sources there were to what claims.

Anyhow, bad examples abound, but look at this good summary article from our own

: "

Lehman Working on Deal With Korea Development Bank: Report

." In a short amount of space, the article gets right at the issue of source quality: "The Telegraph report didn't cite sources. It said that Lehman hoped to wrap up talks with KDB this week but added that Lehman `is understood' to be working on alternative plans."

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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