Rocky Agrawal, who writes regularly for VentureBeat, is getting some criticism on Twitter for slamming Groupon repeatedly without disclosing that he has financial bets against the company.
A recent post – Why Groupon Now won’t work, where he heavily criticizes the company. Or yesterday – Why Andrew Mason is still wrong about Groupon’s prospects, where he again criticizes the company.
None of these posts have any disclosure of his short position or various bets on the company’s downfall. He does list all of those on his personal blog. One example: “I have a bet with Mark Rogowsky that Groupon goes to zero by 4/5/13. I can claim early if it is delisted for being worthless.”
He also apparently attempted but failed to get directed shares in the IPO at the offering price. Which is weird (that he tried) given how negative he is on the company.
VentureBeat, which has occasionally (and erroneously) criticized TechCrunch over ethical issues, needs to button this up.
The issue isn’t that Agrawal has a short position and is criticizing the company, in my opinion. Transparency in such a situation is fine by me (the SEC might be a different issue). The issue is that there’s no disclosure in the post, or even on the author page. And his personal blog isn’t linked from that author page, either.
The disclosure needs to be right up front in each and every blog post he discusses Groupon. Anything else is dishonest and unfair to readers and Groupon.
I note with interest that Agrawal thought the Yahoo CEO resume issue was about Silicon Valley snobbery over computer science degrees. It wasn’t about that, it was about the character of the man running Yahoo.
Similarly, this issue isn’t about the conflict of interest (to me at least). It’s about the failure to disclose it in the posts.
I should also add by way of disclosure that Agrawal wrote guest posts for TechCrunch for a time in 2011, before their IPO. We stopped working with him for a variety of non-ethical reasons.
Uncrunched 
Totally right — I read a few of his posts — mostly agreed with him, but assumed he had no position (either long or short) in their stock. Feels shady.
Stupid of him not to disclose, but at the same time at least his money is where his mouth is.
Guess what, these articles now have a disclaimer. Well done!
This is blogging ethics 101. Amongst the financial blogs and on Seeking Alpha, if you don’t disclose the symbols of the stocks you have an interest in or related stocks in a post your name is complete mud and you are never, ever taken seriously again.
I wondered if he had ever posted in financial blogs and it turns out one of his GroupOn rants was an editors pick on Seeking Alpha:
http://seekingalpha.com/article/470311-why-groupon-is-poised-for-collapse
Again, no disclosure, and an audience of traders big enough that stories can move a stock
“We stopped working with him for a variety of non-ethical reasons.”
Haha…that can be read either of two ways.
When it comes to things financial people should and can always assume that that person writing or saying something is just taking his or her book. Why? Because that’s what’s happening most of the time whether it is disclosed or not. Finance is about finding the bigger fool who is willing to hold the bag. If said fool doesn’t show up all by himself, you try to create one. That’s how the game is played.
In many cases there will likely be a conflict of interest whether or not a disclaimer is present. That’s why disclaimers are useless. If you simply always assume that a person is conflicted, no disclaimers are needed and you learn to think critically about financial assessments in the media.
Why is it weird that he tried? He recognized that there was some interest in the company. He estimated the interest was irrational and tried to push back, but why should he not try to cash on it. Keeping the stock long term would be a weird contradiction. But all his positions on the mid term are short, so probably wasn’t his plan. But trying to cash in on the first day hype, not weird at all. Guess what: stock went up what, 25% on the first day?
that he tried to get in on the IPO…