Blinkx Plc (LON:BLNX) shares slumped this week in the wake of a blog posting by a Harvard Business School professor. Bloomberg reports that Benjamin Edelman, an associate professor of business administration, has now revised his post to say that U.S. investors paid him to research the company:
“This article draws in part on research I prepared for a client that sought to know more about Blinkx’s historic and current practices,” he wrote
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You may remember that Carson Block, who heads up notorious short-selling firm Muddy Waters, revealed this week that he was shorting Blinkx Plc (LON:BLNX). Block said they had been putting their own short thesis on Blinkx together and started shorting it after reading Edelman’s post.
Harvard professor amends disclosure on Blinkx
The blog was entitled “The Darker Side of Blinkx,” and the professor said his research suggested that Blinkx Plc (LON:BLNX) was using deceptive software which inflated traffic numbers and capture commissions. The London-based company is in the Internet video and advertising industry. Shares of its stock declined more than 40% after Edelman’s post. Later he amended the disclosure on the post to say that the “primary interest” of his clients was learning about the company’s business rather than making sure he tell other people what he found.
Blinkx Plc (LON:BLNX) refutes Edelman’s conclusions, saying that they are not accurate.
How the disclosure changed
According to Bloomberg, the first disclosure on Edelman’s post said he prepared parts of the article at the rest of an unnamed client who did allow him to use the research on his blog. However, the amended version of the disclosure gave a partial identity to the client, which he said was two U.S. investment companies. The professor said he sees the two companies as just one client because the work he did for them was under one contract.
Harvard Business School sent Bloomberg a statement saying that Edelman’s first disclosure “lacked clarity” and didn’t provide the reader with enough details to be able to see if there were possible conflicts of interest or to interpret the work with the right amount of care.
Edelman said he was “happy” to revise his disclosure on the original blog post and said he appreciated that the school pointed out that his disclosure “could have been better.” He also said that he wished he had “chosen better wording” and that he expects to take “more time on the disclosure next time around.”
Note: The first paragraph of this article has been corrected to state that investors paid Mr. Edelman to research Blinkx and that he then wrote an article about that research. For further clarification, his clients paid him for the research and not for the article he wrote.