Flap Over Article

When Barron’s, the weekly business journal, ran a 10,000-word story in its May 4 issue contending that Carter Hawley Hale Stores didn’t give its shareholders a fair shake when it fought off two takeover efforts by the Limited, one fact wasn’t brought up.

The story’s author, Benjamin J. Stein, had “previously served as a paid consultant to the law firm representing plaintiffs in a class-action suit against CHH involving the very subjects he wrote about in the article.” So notes a Carter Hawley letter to the editor to be published by Barron’s this weekend.

James P. Meagher, deputy editor of Barron’s, acknowledges the law firm connection but said there was “no real reason” to mention Stein’s prior association when the article ran.

In a written response to the Carter Hawley letter, Stein, an economist and lawyer, maintains that he was asked by Barron’s to look into Carter Hawley in December, 1986. Subsequently, he said, he was hired by a law firm representing some small investors in Carter Hawley to “give them an arithmetic evaluation” of the stand-alone specialty store and department store businesses to be formed by a pending restructuring of the Los Angeles-based retailer, parent of the Broadway and Neiman-Marcus.

“I started to do that evaluation, not in terms of ethics but as a matter of mathematics,” Stein said. But Stein adds that his association with the law firm ended when a Feb. 16 Barron’s article on a separate matter angered other lawyers who lobbied to have his consulting arrangement terminated. The consulting role, Stein said, ended “long before I had decided to accept the Barron’s assignment on CHH.”

One of Stein’s arguments against Carter Hawley and its chairman, Philip M. Hawley, was that the company prevented shareholders from receiving $60 a share in cash in last December’s takeover effort by the Limited, a level that was then well above the going market price. But now, the company’s shares are trading somewhat above that amount.

It’s not likely that Stein and Carter Hawley will let bygones be bygones anytime soon, but Stein did proffer an olive branch of sorts in a telephone interview. “I will say that the Broadway (a Carter Hawley unit) is my favorite store, and I do shop there all the time. The prices are fabulous. And I told Phil Hawley that.”