Wednesday, September 3, 2008

Investment Banking: PR Hits the Skids at Lehman Brothers

Talk about bad investment banking public relations: Lehman Brothers was caught red-handed, having plagiarized parts of a Sanford Bernstein report on virtualization technology, according to Wall Street Journal reporter Susanne Craig. Known for its research excellence, Bernstein is headquartered in New York.

A research report produced earlier this year by a Lehman analyst — who has since moved on to greener pastures — contained passages that were surprisingly similar to several notes written earlier by Bernstein analyst Toni Sacconaghi.

In a letter sent last week to its clients, Lehman acknowledged the plagiarism. “The material was not sourced to Bernstein and was used without the firm's permission,” Lehman wrote. “We sincerely apologize to Bernstein, the authors of the reports, and our clients for this incident.”

The apology was accepted, but this was a crisis that should never have happened.

Because Mr. Sacconaghi is an extremely well-regarded analyst, whose work is closely followed and widely quoted, it was almost inevitable that this misappropriation of intellectual property would be uncovered. What makes this an especially unfortunate PR issue for the investment banking sector is the fact that this scandal comes at a time when Wall Street firms are trying to rebuild the public confidence in the credibility of their research departments.

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High Tech PR Is Facing a Sea Change

The IFA fair in Berlin— one of the world's oldest consumer electronics shows — moved into new territory last month by making room for washers, dryers, stoves and other household appliances, alongside the more customary flat-screen TVs, digital video cameras and state-of-the-art mobile phones.

There are a number of good, sensible reasons for this change in the short-term, but the longer-term implications for high tech public relations practitioners are profound.

Today, many retailers (the IFA’s target audience) sell both types of products and many major electronic manufacturers (which underwrite the IFA) make both kinds of devices. What’s more intriguing — and this is what may make a difference ultimately in the practice of high tech PR — hybrids of the two kinds of devices are already in the works (e.g., refrigerators, with built-in LCD televisions, that send you your shopping list by email).

In high tech PR, we’re just beginning to wrap our minds around the concept of mobile marketing to cell phones. What about a future that promises DTF (direct to fridge) marketing?

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Poor Jobs is Dead … Not!

I hope Apple has a crisis management firm on retainer. It seems that an electronic misstep last week at the Bloomberg news outlet accidentally released a partial obituary for Steve Jobs. And the Apple CEO was still very much alive. Oops.

I would characterize this gaffe as rising to the level which requires intervention by a crisis management firm because, not so long ago, when Jobs was battling pancreatic cancer, he had kept it secret for months while he researched alternative treatments — a material issue for a publicly traded company, according to some. Then, according to CNET, “When Jobs appeared onstage at the Worldwide Developers Conference in June, his thin appearance led some bloggers and company critics to speculate that he was ill again. … So given a CEO whose health has been discussed so speculatively in the echo chamber of the blogosphere, and whose company's stock has been shown to be far from immune to the influence of the rumor mill, the appearance — however brief — of a Jobs obituary online must certainly have been disquieting for those who stumbled upon it.”

There was no animus in this crisis … no partisan battling … just an electronic glitch. But a crisis management firm can help anticipate and ameliorate the negative effects of even the most innocent of accidents.

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Brilliant Banking PR: Not Just Found in NY

The New York banking industry has not cornered the market when it comes to creative marketing and public relations initiatives.

GOOD magazine ran an interesting story recently about Committed Action to Reduce and End Smoking (CARES), a savings program offered by the Green Bank of Caraga in Mindanao, Philippines. Consumers who want to quit smoking open a deposit account with a minimum of one dollar. For the next six months, they make deposits equivalent to the amount of money they would otherwise spend on cigarettes. At the end of the six months, depositors take a urine test to confirm that they haven’t smoked recently. If they pass the test, they get their money back. If they fail, the account is closed and the money is donated to a charity. Research has shown that opening an account increases a would-be non-smoker’s likelihood of success by 53 percent. Not even a nicotine patch has such a high success rate!

This is banking public relations that does well by doing good. It’s the kind of tactic that should be considered from New York to Los Angeles.

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