CNBC Dorfman Probe Finds No Evidence of Illegality

CNBC said Thursday that a network-sponsored review of commentator Dan Dorfman--launched amid allegations that he was under federal investigation regarding his market-moving reports--found no evidence that he broke any laws.

Dorfman, published reports had said, was the target of a federal investigation into his relationship with a stock promoter and into whether he profited from his commentaries by either trading on them or tipping others in exchange for favors.

“Dan will continue working for CNBC with the complete and ongoing support of the network,” said Jack Reilly, vice president and managing editor of CNBC Business News.

Federal authorities have never confirmed or denied the published reports. Dorfman has always maintained his innocence.

Dorfman, 64, suffered a mild stroke May 7 and since then has been recovering at home and receiving physical therapy. Late last month, he filed his first report since the stroke, but his words were read by an anchor and he did not appear on air.

CNBC says he is making progress toward a full recovery and will return to the network once his therapy is complete.

The cable network’s independent review was conducted by the law firm of Shearman & Sterling and was initiated by NBC-TV, the parent network of CNBC, said Philip Recchia, a CNBC spokesman. CNBC worked closely with NBC as the review moved forward, he said.

“Dorfman told me that he had maintained from the very beginning that allegations of possible wrongdoing were groundless,” Recchia said after speaking with Dorfman. He quoted Dorfman as saying, “I’m pleased but not surprised that CNBC came to the same conclusion.”

CNBC said the review began immediately after allegations surfaced in October. It said Dorfman and his attorney cooperated fully with the review, turning over copies of his records of securities accounts, bank accounts and tax returns.

“After a lengthy review process, the law firm found no evidence that Dan broke any law or violated CNBC policy relating either to his own activities or to his relationship with third parties,” Reilly said.

In addition to examining Dorfman’s records, CNBC said Shearman & Sterling analyzed whether there were any patterns of suspicious trading before his CNBC reports during the relevant period. It said the law firm was unable to turn up any such trading patterns.

Reilly, however, noted that the law firm did not have all the resources available to the government, such as the power of subpoena. If the government develops information not available to Shearman & Sterling, he said, “we’ll of course take it into consideration.”

When asked if the government had contacted CNBC, Recchia would say only, “It’s best left to the government to comment on any investigation.” CNBC would not provide a copy of the law firm’s report.

The allegations first came to light when BusinessWeek magazine reported that Dorfman and a stock promoter were under investigation.