Back in February, a story in The Wall Street Journal about an “idea dinner” in which representatives of major hedge funds discussed how the Greek debt crisis might affect the value of the Euro over "lemon-roasted chicken and filet mignon at a private townhouse in Manhattan" made major waves in financial and political circles. The story, written by Journal reporters Susan Pulliam, Kate Kelly, and Carrick Mollenkamp, implied that subsequent to the dinner, the hedge funds had all placed simultaneous bearish bets on the Euro, driving the currency to a new low and raising the value of insurance on the currency — insurance that is held by the hedge funds. The implication — that it was basically an act of collusion — prompted public statements from various European leaders about negative influence of hedge funds on the global economy and prompted the Antitrust Division of the Department of Justice to open an investigation into the matter.
All of which irked one of the hedge-fund managers present, Greenlight Capital's David Einhorn, who had apparently just come for the chicken and the conversation.
Or so he insisted in a multi-paragraph rant to Greenlight Capital's investors, which was reprinted on Wall Street blog Dealbreaker Friday under the headline Greenlight Capital Shames Wall Street Journal for Making Stuff Up. The letter starts out mildly enough, humorously dismissing the idea that there was anything nefarious about a group of top hedge-fund managers eating and talking together. "For geeks like us, it is fun to gather with smart people and discuss the markets," he explains. But then he gets more heated, going on to accuse the paper of fear-mongering, "yellow journalism," and having an agenda. "The article suggested that discussing the Euro might be manipulative and practically begged regulators to investigate possible collusion," he wrote, adding that in fact:
The discussion of one manager's view about the Euro lasted about a total of about three minutes (the host recorded the "secretive" event so that he could type up and circulate notes afterward) David did not mention gold or inflation, which the Journal reporter probably knew, as she inquired about CIT. Apparently our decline to comment left her feeling she had free reign to report whatever she wanted. That is shameful. We have complained to various people at the Wall Street Journal, but it has to date failed to run a correction.
Contacted by Daily Intel, Wall Street Journal senior editor Mike Siconolfi begged to differ.
Mr. Einhorn’s complaints, made two months after the fact, are baseless. The story was thorough and accurate, and we're mystified by his protestations that the Journal has ignored his complaints about errors in the article. We take matters of accuracy very seriously, and neither Mr. Einhorn nor his spokesperson has approached the reporter or me regarding any alleged errors, nor have they contacted the office of the managing editor with any complaints.
Idea dinners always cover a wide range of topics. But the buzz in hedge-fund circles after the Monness dinner focused on one thing: the massively bearish view on the euro that came out of the dinner. Unlike many other idea dinners, the Monness gatherings are closely guarded, secretive events, and lawyers for hedge funds have at times given managers instructions about what they are allowed to say to avoid being accused of collusion.
At the Journal, we practice what we call no-surprises journalism. Mr. Einhorn was told before the publication of the article everything that we would say about him, and he was given ample time to comment on what we would be reporting. He chose not to discuss any aspect with us. While we would have been happy to share Mr. Einhorn's comments with readers of the article, his lack of participation wouldn't and didn't stop us from publishing the facts that we knew to be true.
And while he was at it, Siconolfi had this to say about Dealbreaker.
Meantime, it's clear that dealbreaker.com operates under a much different set of journalistic standards. The web site's employee Bess Levin at no time sought out either the reporter or me for comment before this was published. Had she done so, we would have corrected her misleading assertions. The language in the headline and story is not only factually inaccurate, but personally and professionally offensive. I can assure you, Ms. Levin and Mr. Einhorn, that the Journal is proud of our reporting on this article and the way in which we practice journalism.
For her part, Bess says:
"All I have to say about this is that I'm sorry if I hurt anyone's feelings and to remind everyone that Dick Fuld got into a similar huff when called out by Mr. Einhorn."
And look what happened to him. Anyone else want to get involved in this? Greece? Oh, sorry, you guys are probably kind of busy.