The PR firm, which is part of WPP, confirmed that it was hired by an unnamed client to send comment letters to the U.S. Commodity Futures Trading Commission (CFTC) about proposed trading rules Bloomberg reports. However, the firm said it hired a subcontractor, Goggans Inc, to help “build support” for a grassroots campaign it worked on and didn’t know the letters were fraudulent. The CFTC has turned the letters over to the Justice Department. The letters violate the False Statements Act; violating the act is a felony.
“Dewey Square had no reason whatsoever to believe that the letters were not authentic and had no knowledge that they were in fact unauthorized until questions were raised in media accounts,” Dewey Square principal Ginny Terzano is quoted saying in the story. (Updates after the jump.)
One of the organizations suspected to be the Dewey Square client is the Nasdaq, but its SVP of corporate comms, Frank DeMaria, had no comment for Bloomberg. Goggans says a subcontractor it hired is to blame.
Clearly, the number of cooks in this kitchen is one of the major issues here. If a PR firm (or any other firm) is going to hire a subcontractor to do work for its client, then that work and that relationship needs to be closely managed.
Also, for those who want to build a case that so much of PR is unethical, this is one more example that they will point to, no matter the ultimate outcome (the story says no charges have been filed). If the industry wants to rid itself of that perception, it must take full responsibility for the campaigns done on behalf of clients. Passing the buck isn’t going to cut it.
Update: PRNewser just received statements from Dewey Square’s Ginny Terzano on this issue. Terzano would like to emphasize that Dewey Square is a public affairs firm (which has been noted above). And below are statements from Goggans and Dewey Square.
Statement by Miles Goggans
November 30, 2010
Little Rock, AR – Yesterday I learned a contractor to my firm submitted unauthorized letters from several Arkansas businesses and individuals.
I have been in this profession for sixteen years, and have had a working relationship with Dewey Square Group for the same period. Never in all those years has anyone ever betrayed my trust in this manner and I take full responsibility for this lack of judgment by my sub-contractor.
Furthermore, there is no reason for the Dewey Square Group or me to have believed that these letters were anything but legitimate. This action was the sole doing of a subcontractor of mine who has worked for me only this past year.
I deeply regret what this has done to these Arkansas businesses and individuals, and deeply regret that this inexcusable conduct occurred in the course of work I performed for Dewey Square, a firm that has the highest standards of professionalism and ethics.
This is not an issue I take lightly and offer my deep apologies to everyone affected. I will do whatever necessary to correct the record.
Media Statement by The Dewey Square Group
Washington, D.C. – November 30, 2010 – The Dewey Square Group ran a multi-state
grassroots campaign to encourage strong regulatory rules in support of the financial
services legislation that would bring greater transparency to derivatives markets.
Yesterday Dewey Square learned that as part of this campaign, a subcontractor in the
state of Arkansas submitted several letters to the Securities and Exchange Commission
(SEC) and Commodity Futures Trading Commission (CFTC) in the names of individuals
who had not authorized those letters to be sent.
Dewey Square relied on a contractor in Arkansas who had performed exemplary
professional work for Dewey Square over many years. Dewey Square had no reason
whatsoever to believe that the letters were not authentic and had no knowledge that
they were in fact unauthorized until questions were raised in media accounts. We
deeply regret that these misrepresentations were made in the course of work that our
firm had requested.
We fully understand the seriousness of the issue. With more than 18 years as a firm
we have built a reputation of being honest, thorough and professional and of
compliance with the highest ethical standards. Moving forward we will take steps and
redouble our efforts to ensure this mistake does not happen again.