PikeNet Dispatch, June 10, 2003
Vol 8 No. 45 (674), "More than 9,000 subscribers"
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What (Real Estate) Information Should Be Confidential?
 
What Would You Tell Martha? ...
To me, the most intriguing aspect of the Martha Stewart imbroglio is the role of "confidential information" and specifically the allegation that her Merrill Lynch broker, Peter Bacanovic, communicated private information from one client (Waksal) to another client (Stewart), thus violating Merrill Lynch rules. As outlined in the indictment, Merrill Lynch has the following policy limiting disclosure of business and client information.

"You may not discuss the business affairs of any client with anyone, including other employees except on a need-to-know basis. Information or records concerning the business of the Firm and/or its clients may not be released except to persons legally entitled to receive them." (See Paragraph #16 in the SEC Complaint.)

Sounds eminently reasonable. Right? But holy cow. Do real estate companies have similar disclosure policies? If so, we're all treading on pretty thin ice. That's because real estate information almost by definition is private. With the exception of public tax records, sale transfers, and construction permits (although not in all states), the majority of statistics -- like space available, sales comparables, and average lease rates -- exchanged by real estate professionals presumably would be categorized as non-public, confidential data.

Of course, exchanging such (confidential?) data is vital to the creation of an efficient real estate marketplace. So for the real estate industry, the concept of confidential information probably needs to be looser than the securities industry. What do you think? (Full Disclosure: I am not an attorney!)

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--Peter Pike

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