In the Media

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Judgment Call; Class Bias
By Jacob H. Zamansky
The Deal
November 21, 2005

Why the Media Absolved Henry Blodget but Remains Hostile to Dick Grasso

Lest anyone doubt that the media is as elitist as ever, one need only examine the disparate treatment afforded to Henry Blodget and Richard Grasso in the aftermath of their much chronicled charges of wrongdoing.

Blodget is the former Internet analyst who pocketed millions for himself while touting stocks he privately disparaged. Forever banished from Wall Street in April 2003 for his deceptions, Blodget has since reinvented himself as a credible journalist. In addition to publishing multiple articles in Slate, a cover story in New York, and a feature story in Business 2.0, the discredited analyst was even tapped by The New York Times to pen an op-ed pegged to the 10-year anniversary of Netscape's initial public offering in which he argued that boom-and-bust cycles historically have accompanied all revolutionary technologies and that "exuberance helps build industries." What Blodget shamelessly never mentioned was that he was among those responsible for driving the Internet exuberance.

Surprisingly, Blodget's emergence as a journalist has sparked relatively little media criticism. Quite the contrary: The disgraced analyst even received a resounding endorsement from New York Times business columnist Joe Nocera, who urged readers to give the man a "break" and openly admitted that he is "rooting for Henry Blodget's redemption."

No one in the media is urging for the redemption of Grasso, the former head of the New York Stock Exchange who was forced to resign two years ago amid criticisms that he was simply paid too much money. New York Attorney General Eliot Spitzer took up the NYSE's cause and is suing Grasso for the recovery of about $100 million, maintaining that Grasso, along with his associate, Ken Langone, somehow duped some of the greatest minds in American business into paying the sizable compensation.

The media has uncritically embraced Spitzer's campaign against Grasso, which at the end of the day is merely a commercial pay dispute involving an institution owned by millionaires.

Grasso's case has received more blow-by-blow media coverage than was afforded to Bernie Ebbers from WorldCom Inc. or Dennis Kozlowski from Tyco International Ltd., both of whom were charged and convicted of criminal wrongdoing. One of the more damning articles about Grasso was published by Fortune last year. Nocera, quite fittingly, was then an editor at Fortune.

A look at the respective pedigrees of Blodget and Grasso helps explain their contrasting treatments in the media. Blodget, like Harvard-educated Spitzer, was born into a life of privilege. According to Charles Gasparino in his book "Blood on the Street," Blodget grew up on Manhattan's affluent Upper East Side, attended the exclusive Phillips Exeter Academy, and subsequently graduated from Yale with a degree in history. After failing his first time around as a freelance journalist, he went to work on Wall Street, where he ultimately earned millions of dollars a year for misleading investors.

Grasso didn't have it so easy. According to Gasparino, one of the only reporters not to join Spitzer's media cheerleading squad, Grasso was reportedly born in a working-class neighborhood in Queens, was raised by a single mother and never finished college. He joined the NYSE in 1968 as a clerk and ultimately ran the place. Even his critics concede he did a remarkable job.

It's telling how Blodget and Grasso have responded to allegations of wrongdoing. Blodget negotiated a settlement, agreeing to pay a paltry $4 million fine (the equivalent of three months' pay in one year) and a lifetime ban from giving investment research. On his blog he conveniently claims that he wants to address the charges against him but says the terms of his settlement preclude him from doing so. For Blodget, holding on to his millions was clearly more important than defending his honor.

By comparison, Grasso wants to clear his name. He has steadfastly refused to give back even one dollar of his pay, maintaining that doing so would be an admission of wrongdoing. Grasso is no match for Spitzer in mastery of media manipulation, but he has chosen to defend himself in a venue where the attorney general is not often found: a court of law. A jury of everyday people might just rule in his favor.

That would no doubt be a hard pill for the media to swallow. At the end of the day, journalists appear more forgiving of a disgraced Ivy League analyst than a Horatio Alger-like figure whose only possible offense is that he was paid too much money. Spitzer's case against Grasso has not yet been proven. What has been proven is that Blodget has demonstrated that he cannot be trusted with the written word. How shameful that he has been welcomed into the journalism fraternity, a profession that is supposedly built on the bedrock of public trust.

Jacob H. Zamansky is principal at Zamansky & Associates, a securities arbitration law firm in New York. He was the first attorney to win an award from Merrill Lynch & Co. in connection with Henry Blodget's research.

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