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Easy Money
Journalists covering fledgling Internet companies are constantly dazzled by the huge profits involved. A San Jose Mercury News reporter decided to get in on the action--and wound up getting suspended for an indefinite period.
Chris Nolan, a high-tech gossip columnist, accepted an offer of 500 shares of Autoweb.com, a Net car-shopping service, before it went public in the spring. Nolan was given the opening price of $14 a share--the sort of deal generally available only to insiders and top brokerage customers--and sold after the stock hit the market for $29 and $45. Her profit: $9,000.
"What Chris Nolan did clearly creates the appearance of a conflict of interest, if not an actual conflict," says Editor David Yarnold. "What she did was wrong and cast the credibility of the Mercury News into question, and that makes me angry and upset."
Nolan told the Wall Street Journal, which disclosed the transaction, that "I frankly needed the money. We don't take vows of poverty and chastity when we go into the newspaper business." Yarnold calls that claim "an insult to the Mercury News. She makes a six-figure salary. I think that's preposterous."
Nolan told her paper she is friends with the Autoweb executive. She mentioned him once in a column about a fund-raiser but said she planned never to write about him again. Nolan tried to clear the deal with an assistant business editor who now says the matter slipped his mind.
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