Eritrea Resource play (ERP)

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NSU a Calandra pick suffering the "Calandra effect"

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MarketWatch.com commentator Calandra resigns
Internal probe sparked by SEC request for records
By CBS MarketWatch
Jan. 22, 2004

SAN FRANCISCO (CBS.MW) -- Thom Calandra, chief commentator for CBS MarketWatch and one of the founders of its parent company, resigned Thursday amid an internal probe into his trading activities that was sparked by a query from the Securities and Exchange Commission.

Calandra, 47, who for the last nine months was the author of a subscription newsletter, The Calandra Report, said in a letter to the company that he was resigning immediately.

According to the company, Calandra told MarketWatch.com executives in late December that he received a letter from the San Francisco office of the SEC. The agency asked for records of his personal stock trades, copies of his newsletter and copies of the e-mail alerts he occasionally sent to his subscribers. MarketWatch.com (MKTW: news, chart, profile) launched an internal investigation the following day.

MarketWatch.com CEO Larry Kramer said Calandra missed a Thursday morning deadline to turn in his trading records to the company as part of the investigation.

Helane Morrison, district administrator for the San Francisco office of the SEC, said the agency had no comment. The SEC has in the past probed records of newsletter editors to determine whether they improperly profited from trading stock in companies they wrote about.

"I've worked hard for the past eight years helping to build MarketWatch and for the last year I've worked hard creating The Calandra Report," Calandra said. "While it's been tremendously rewarding professionally, it has also been stressful. And the SEC's informal inquiry adds to this stress. So I've decided to take this time off to focus on my family, whom I adore. I look forward to the conclusion of the SEC's inquiry."

MarketWatch.com said it received a letter last week from the SEC asking for a copy of its policy regulating trading by journalists and for any e-mails involving Calandra that discussed that policy. The policy, which is posted online, prohibits journalists from trading shares of any company if they are aware that a story about that company is going to be published. They are also prohibited from trading shares of that company for 48 hours after a story appears. Beat reporters are also barred from owning shares of companies within the industries they cover.

As a newsletter writer, Calandra was allowed to purchase the stocks that he covered as long as he disclosed his intentions to his readers, the company said. MarketWatch.com said it ordered Calandra to stop trading entirely two days after he received the SEC letter.

"We have told the SEC we will cooperate fully," said Kramer. "We are confident we have appropriate policies. What we don't know is whether they were followed, and that's what we're trying to find out."

Calandra's resignation comes amid growing scrutiny in the business press of trading activity by journalists. Two weeks ago, CNBC tightened its trading policy for journalists, effectively barring any of its reporters from owning shares of stock. Other news organizations said they are also considering tougher policies, and MarketWatch.com Editor-In-Chief David Callaway said his journalists will soon be covered by a new, tougher policy drafted after a request last fall from the company's board of directors.

Callaway said that, because he is participating in the company's internal probe, he will recuse himself from involvement in covering the story. Any future developments will be reported by MarketWatch journalists who will be kept out of internal discussions and will be assigned to cover the story as completely, and as objectively, as is possible, he said.

MarketWatch.com stock ended the session down 9.4 percent at $9.90 on heavier than usual volume of 254,000 shares.

Calandra, a former columnist for The San Francisco Examiner and an editor for Bloomberg News in Europe, was one of three founders of MarketWatch.com, joining in 1996 when the company was known as DBC News and was a unit of Data Broadcasting Corp.

Data Broadcasting is now a part of British publishing and education giant Pearson Plc. Pearson is a significant shareholder in MarketWatch.com.

Calandra was the original editor-in-chief of the Internet financial-news company and guided it through the development of the CBS MarketWatch Web site and the initial public offering of MarketWatch.com in January 1999.

Calandra gave up day-to-day management of the news organization in April 2000 when he moved to London for MarketWatch.com to start a joint venture with The Financial Times, a unit of Pearson. The online venture, FTMarketWatch, was folded into the Financial Times after a year. Calandra returned to San Francisco in May 2001 to become chief commentator for CBS MarketWatch.

While he no longer directed news coverage, Calandra retained his editor's title until March 2003, when he launched The Calandra Report, a newsletter that departed from CBS MarketWatch's straight news format and featured Calandra's own stock recommendations.

The Calandra Report focused on dozens of companies, most of them small-cap stocks and many involved in the minerals and mining business.

MarketWatch.com said in a press release that it would discontinue the newsletter and provide prorated refunds to subscribers