New York Post Reporter Peter Lauria Poses an Ethical Puzzler

March 8, 2010

Family ties bind analyst to NBC's Zucker

Sanford Bernstein analyst Michael Nathanson has been quite bullish in research notes and press reports about NBC Universal's competitive position against its peers -- but he hasn't disclosed lately that his brother-in-law is NBCU boss Jeff Zucker. that puzzler got your attention.  It certainly got me thinking.

Post reporter Lauria presents a glimpse of the ticklish intersection of compliance, regulation, legal, and ethics.  My guess -- you ask a dozen lawyers whether Nathanson should be publicly commenting about his brother-in-law's company without ensuring full disclosure of the familial tie, and you will get twelve different answers. 

Personally, I think it is legally acceptable for Nathanson to provide most of his sector's analysis without the revelation, but I think that his relationship to Zucker would constitute a factor that an average investor would deem material in weighing his analysis of NBCU or its competitors. Further, I would probably counsel Sanford Bernstein to prohibit him from directly commenting on NBCU; or, I would at least require full written and on-air disclosure of his relationship in connection with his comments on NBCU.

Lauria's article presents the public with the classic lawyers conundrum, which many of us practitioners refer to as the "Yes (or no), but . . ." dilemma.  Yes, you can do that but.  No, you can't do that but.  The facts drive lawyers nuts.  The equivocating answer drives the clients nuts. 

Often, these things come down to the Sniff Test. So much for paying the big bucks for high-priced legal advice. 

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