Asked why she thought journalists like herself were sought to speak at Wall Street events, Tett, whose 2009 book Fool’s Gold skewered the financial industry, replied: “We’re paid to think on our feet. It’s not because they’re trying to buy our minds or influence.” And indeed, her book is proof that even a journalist who takes Wall Street’s money can still be appropriately skeptical of Wall Street’s practices. Similarly, writers such as Lewis, Nocera, and Stewart all have established reputations as tough critics of Wall Street. It seems unlikely, in any case, that an investment firm paying a journalist for a speech could be shameless enough to expect the “return favor” of positive coverage. “It’s never occurred to me that anyone is paying me for anything other than the talk, and no one has ever suggested it,” Lewis said. Even so, just as journalists prize inside sources at Wall Street firms, even the most private of firms, knowing there could come a day when scandal darkens their door, have a natural interest in cultivating ties with influential journalists.
Firms may also use speaking gigs to reward a journalist whom they have reason to believe is friendly, or at least not inveterately hostile. In May 2006, The New Yorker published a “Financial Page” column by James Surowiecki arguing that “hedge funds have been far more of a boon to financial markets than a bane,” despite being “easy to hate.” Later he gave a paid speech to a group of hedge-fund clients. He confirmed his participation in the event, which until recently was listed on the website of the Leigh Bureau. “As a rule the talks I give are about the ideas in my books, and aren’t connected to the topics I write about in my column or the arguments I make,” Surowiecki says.
The best answer I heard to why Wall Street hires journalists for speaking gigs came from a hedge-fund manager who is familiar with the practice but doesn’t employ it himself. He says high-profile journalists have a certain glamour or celebrity appeal that makes them a price-effective marketing lure, even when a speaking fee approaches six figures. “The event is surely put on by someone who is inviting his best clients,” this source says. “The firm paying the speaking fee is getting a bunch of high rollers who might invest in their funds—and who surely wouldn’t be there without the speaker. It’s not just a Fareed Zakaria, it is anyone who is interesting and famous.”
Suppose, the hedge-fund manager continued, that the outcome is that just one guest—the manager of a pension plan, say—decides to invest $10 million in a fund of the firm staging the event. Under typical Wall Street practice, the firm will snag a 2 percent management fee—which works out to $200,000 for a $10 million investment. Plus, there’s the prospect of earning a standard 20 percent performance fee on any gains. That’s a pretty nice return.
Martin Wolf, the FT’s chief economics commentator, also gives paid speeches to financial firms. “Speaking engagements have always been an accepted part of the FT’s practice, and my representation by the Leigh Bureau is not in any way hidden,” Wolf told me. “I give my views on aspects of the world economy. I do not see an issue.”
As comfortable Wolf is about the ethics of giving paid speeches to financial firms, for other financial journalists the matter is one of growing angst. These folks worry that their readers and viewers will think they are too close to Wall Street, even if their coverage of the financial industry is hard-nosed and penetrating.
As a result, they weigh each invitation carefully. Take the case of Gretchen Morgenson, an assistant business and financial editor and a financial columnist at The New York Times who won a Pulitzer Prize in 2002 for her “trenchant and incisive” coverage of Wall Street. On occasion she gives paid speeches to universities, as Times policy permits, and sometimes she appears, for free, at financial-industry events—but not without doing due diligence. “I did recently participate in a one-hour question-and-answer session about the state of the economy and markets with about 50 clients of First Long Island Investors, a small, local registered investment advisory firm,” she said in an e-mail. “It does business only in New York and Florida, has 200 or so accounts, and does not conduct securities underwriting or trading for its own account. As such, it would not be a firm I would cover. I received no honorarium for my participation in this session and before I agreed to participate, I checked that the firm had not been subject to any regulatory or disciplinary actions.”