BUSINESS WEEK Investigation: Hard questions for Dan Dorfman.are as influential as CNBC's Dan Dorfman Dan Dorfman (Born Oct. 24, 1931) is a columnist for the New York Sun newspaper. Dorfman was a prominent CNBC commentor in the 1990s and a columnist for Money magazine. . Yet for years, a small chorus of critics has complained that Dorfman's dependence on inside tips allows his sources to use him -- since many of them stand to make big money from his power to move markets. BUSINESS WEEK reports this week that those criticisms have now emerged as far more serious allegations. BUSINESS WEEK has learned that the U.S. Attorney's Office for New York's Eastern District is looking into Dorfman's relationship with Donald Kessler, a stock promoter A person who devises a plan for a business venture; one who takes the preliminary steps necessary for the formation of a corporation. Promoters are the people, who, for themselves or on behalf of others, organize a corporation. who is a frequent source of tips for Dorfman's TV program and articles in USA Today USA Today National U.S. daily general-interest newspaper, the first of its kind. Launched in 1982 by Allen Neuharth, head of the Gannett newspaper chain, it reached a circulation of one million within a year and surpassed two million in the 1990s. and Money Magazine. The story appears in BUSINESS WEEK's Nov. 6 issue, out today. Sources close to the investigation tell BUSINESS WEEK that both Dorfman and Kessler are under investigation for activities including possible illegal insider trading, wire and mail fraud, and violations of securities laws. The prosecutors are looking into the sometimes-hefty payments Kessler allegedly receives in exchange for introducing company managers to Dorfman, as well as whether Kessler in turn compensates Dorfman for writing about some of his clients. BUSINESS WEEK has turned up no evidence that Dorfman receives anything from Kessler. But their relationship is at the heart of the U.S. Attorney's inquiry. Dorfman contends that he did not treat Kessler any differently than any other PR person seeking to get a client mentioned favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. on his broadcast. But a 6-month BUSINESS WEEK investigation indicates that Kessler used his access to longtime long·time adj. Having existed or persisted for a long time: a longtime friend; a longtime resident of Detroit. longtime Adjective friend Dorfman to earn fees that were huge by industry standards. It also suggests that Dorfman wrote stories about companies with doubtful business prospects that were Kessler clients, raising the question of whether his journalistic jour·nal·is·tic adj. Of, relating to, or characteristic of journalism or journalists. jour  nal·is objectivity was blurred blur v. blurred, blur·ring, blurs v.tr. 1. To make indistinct and hazy in outline or appearance; obscure. 2. To smear or stain; smudge. 3. by his friendship and whether investors trading on Dorfman tips may have suffered as a result. Both Dorfman and Kessler say they are aware of no investigation, and they dismiss the allegations as groundless. "Who cares?" says Dorfman. "I assume the SEC and others are always looking at me." He denies vigorously any suggestion that he takes money or is aware of any insider trading based on his tips. "I would never jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. my career and integrity for a fast buck," he says. Adds Kessler: "They can look at my relationship with Dan if they want to. I've never done anything wrong." CONTACT: Business Week Christine Summerson, 212/512-2882 |
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