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The Man Comes Down on Rumormongering

Rumors.Photo: Courtesy of Bantam USA

In Rumors by Francine Pascal (Sweet Valley High #37) Susan Stewart is besieged by rumors that very nearly ruin her reputation at Sweet Valley High. Because they are sympathetic to Susan, who is nice and pretty even though she is poor, Elizabeth and Jessica Wakefield go on a mission to find the source of the rumors, and it turns out, to the surprise of no one, to be popular mean girl Lila Fowler, who was trying to sabotage Susan because she was jealous that wealthy Gordon Stoddard asked her to the Bridgewater Ball. Lila is shamed by Elizabeth and Jessica, and in the end everyone agrees that rumormongering is bad and wrong.

You may not think this is relevant to what’s currently going on on Wall Street, but it totally is.

As Elizabeth and Jessica decided to track down the source of the rumors about Susan Stewart, the SEC yesterday announced that they, too, would come down on rumormongers, specifically the short-sellers and others who have profited from tall tales that were responsible, many believe, for the collapse of Bear Stearns and the current troubles with Lehman Brothers, Fannie Mae, and Freddie Mac. Because like high-school girls, bankers cannot be expected to act conscionably on their own: They have to be threatened with grounding or humiliation. Or, you know, jail. According to the Times:

Traders know there is false information in the market. They need to think twice if they are going to pass it on,” said Lori Richards, director of the S.E.C.’s Office of Compliance Inspections and Examinations.

Think twice! Good line. Very poster-from-a-guidance-counselor’s-office. They began their anti-rumor campaign Friday, according to sources quoted in the Journal, by subpoenaing records from hedge funds related to Lehman. But outside of a town like Sweet Valley, finding the source of a rumor is difficult to do. Perhaps the SEC will find the question that Elizabeth and Jessica Wakefield put to Lila Fowler effective: By spreading rumors, they can say to the bankers, you may get to go to the ball. But who are you on the inside?

S.E.C. Warns Wall Street: Stop Spreading False Rumors [NYT]
Related: DealBreaker’s Andrew Ross Sorkin vs. DealBook’s John Carney

The Man Comes Down on Rumormongering