An unusual event occurred at 4:01 PM on September 1st, 2009 as video game investors were staring intently at their Dow Jones Newswire streamers.  Take Two Interactive was to announce earnings on that day and news hit the streamer, “Take-Two Swings To 3Q Loss; Co Cautious On FY Outlook.”  Opening up the report revealed an extensive analysis by Jay Miller of Dow Jones.

Jay Miller of Dow Jones?  Where was the actual company press release?

Oh there it is: “Take-Two Interactive Software, Inc. Reports Third Quarter Fiscal 2009 Financial Results.”  But wait, which came first, they both say 4:01 PM and some of us clearly got the analysis ahead of the actual press release?  I asked a Dow Jones representative who insisted that the extensive ten paragraph story came 48 seconds after the press release.

Hold on.  48 seconds?  Dow Jones:

“We, like other newswire organizations, are often able to issue analysis articles very quickly because companies provide releases under embargo slightly before the releases are broadly distributed.  The embargo prohibits us from distributing a release or related article before an agreed upon time.  In the case of Take-Two’s earnings, the embargo was until the company issued the release over Business Wire.”

In other words, certain news organizations are receiving sensitive information in advance just so they can write out their stories in advance.  Is this really necessary?  Wall Street does not have enough scandals to go around?  Take Two, specifically, has a long history and maybe even a culture of scandal considering, for example, having a founder who pled guilty to first degree felony criminal charges for falsifying business records.

Just a couple months ago, a jury found an ex fund manager liable for insider trading on news embargoed information.  Just last week, bizarre trading in Dell, Inc. before the official press release caused some to wonder whether or not everybody was getting the same news at the same time.

As Jacob Goldstein recently observed in his Wall Street Journal blog, “Information wants to be free — all the more so when there’s money to be made.”  There are a large number of cases by the SEC involving leaked news information.  You just have to wonder how many people don’t get caught.

Investors would be much better served by companies that prevent leaking sensitive information from members of the media by not giving them any more information than they need in advance.  It is shocking that after so many Wall Street scandals, this kind of unnecessary news distribution occurs at all.