Posted on 03/16/2002 8:06:27 AM PST by GeneD
After threat of a libel suit, the publisher HarperCollins is taking the rare step of destroying its inventory of a new book that attacks James J. Cramer, the journalist and former hedge fund manager.
James A. Fox, vice president and general counsel of HarperCollins, conceded in a letter to Mr. Cramer's lawyer that three pages of the book, "Trading With the Enemy," by Nicholas W. Maier, contained false assertions that Mr. Cramer had traded on inside information about the Western Digital Corporation.
Lisa Herling, a spokeswoman for HarperCollins, said the company would pulp the roughly 4,000 copies of "Trading With the Enemy" that it has in stock. HarperCollins shipped 10,000 copies beginning in the middle of February. The company will send an errata notice to bookstores and reviewers correcting the text and will reprint new copies without the erroneous pages.
But Ms. Herling said that HarperCollins, a division of the News Corporation, stood by the remainder of the book and planned to continue promoting it as soon as new copies became available.
HarperCollins's retraction is the latest development in a media battle over the book by Mr. Maier, a disgruntled young former employee of the hedge fund company Mr. Cramer used to run.
Mr. Cramer occupies an unusual position at the juncture of the financial and media industries. For decades, he was one of the best known and most outspoken money managers on Wall Street. He has also often worked as a journalist and television commentator and includes a handful of prominent journalists among his investors. Last year, he gave up managing the hedge fund to devote himself full time as a columnist for the financial news Web site TheStreet.com, of which he is a co-founder. He also appears as a commentator on CNBC.
Mr. Maier contends in his book that Mr. Cramer used his media connections to manipulate stock prices and on other occasions traded on inside information for his own financial advantage.
HarperCollins is now retracting some of the book's most serious accusations: that Mr. Cramer used inside information to profit by trading in shares of Western Digital, that he was investigated by securities regulators and that he denounced the regulators as stupid when he was exonerated.
The errata notice sent to bookstores and reviewers reads: "Cramer & Company did not conduct any trading activity in Western Digital Corporation in reliance on inside information. The Securities and Exchange Commission never investigated any of Cramer & Company's trading activities in securities of Western Digital Corporation."
But the retraction does not touch on other sensational charges in the book.
Mr. Maier asserts, for example, that Mr. Cramer provided various stock tips to Maria Bartiromo and David Faber of CNBC so he could profit from subsequent movements in the stock prices. Mr. Maier also writes that he quit the hedge fund company in part because Mr. Cramer was hot tempered and ill mannered.
In a statement issued when the book appeared, Mr. Cramer dismissed it as the author's "revenge for my firing him in 1998 for his gross negligence in failing to carry out simple instructions." Mr. Cramer continued: "He quotes me as saying outrageous things I never said (and would never say), meeting with people I never met and being the subject of investigations that never occurred. The book contains page after page of lies and innuendo."
Mr. Cramer said he had always taken care that "my firm's trading did not inappropriately benefit from my journalism" and that he had never been found guilty of improprieties.
CNBC said in a statement: "Any insinuations that our reporters' journalistic practices have been anything less than completely ethical are outrageous. These accusations are filled with innuendo and insinuation. They portray as improper, routine phone calls that may or may not have happened. David Faber and Maria Bartiromo have the utmost integrity."
HarperCollins's acknowledgment that some of the most serious aspersions in the book were unfounded is a significant victory for Mr. Cramer, Ms. Bartiromo and Mr. Faber, all of whom have also tried to discredit the rest of the book.
Robert Stein, a publishing industry lawyer, said HarperCollins's decision to pulp and reprint the book was unusual. "Ordinarily when something like this happens it can be the end of the book," he said, "It is just not worth it to destroy the books and then remanufacture them. Plus there is always the issue of the author's reliability after something like this."
In a letter earlier this month, the lawyer for Mr. Cramer enumerated several parts of the book that he said were false and defamatory.
In response, Mr. Fox of HarperCollins said in his letter to the lawyer that the description of the inside trading activities was "based on a reliable source," although upon investigation the accusations proved "erroneous."
"We have carefully reviewed all of the other allegations contained in your March 4th letter and no further action is appropriate," Mr. Fox wrote.
This is all the more reason to get it today. If you can get your hands on one or better yet all the stock, you will have a valuable collectors item.
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