Reuters editor-in-chief David Schlesinger told staffers in a conference call Wednesday that an investigation into billionaire hedge fund manager Steven Cohen that he killed last month after Cohen called to complain was "not a bad story" and "could have run."

Which doesn't really explain why he killed it, does it? In the tense call, a recording of which was provided to Gawker, Schlesinger faced down a string of angry and confused Reuters journalists demanding to know precisely why their boss spiked an investigation into accusations that SAC Capital Advisors' Steven Cohen engaged in insider trading in the 1980s.

Reuters, which makes money both through reporting on the financial world and by selling its data services to financial firms—perhaps even Cohen's—has long been vulnerable to the perception that its business priorities are in conflict with its editorial mission. Many of the people it reports on are, after all, clients. But the launch of a new enterprise unit last August, including the hiring of former New York Times editor Jim Impoco and a raft of veteran investigative reporters, were intended to show that Reuters was getting "more aggressive about hitting the big stories hard," as the news service's U.S. editor put it in October. The suspicious circumstances surrounding the spiking of the Cohen story suggest that Reuters may not have been prepared for the blowback that can result from bare-knuckled reporting on powerful men.

TalkingBizNews's Chris Roush reported last month that the story by reporters Matthew Goldstein and Svea Herbst-Bayliss was killed after Cohen called Thomson Reuters Markets CEO Devin Wenig to complain about it. Wenig passed Cohen's concerns onto Schlesinger, who put the kibosh on the story, raising question about what, precisely, the point of Reuters is if rich people can quash inconvenient stories with a phone call. The day after the Reuters story was killed, Cohen's ex-wife filed a suit against him claiming, among other things, that he had profited from insider knowledge of General Electric's 1985 sale of RCA. The episode is particularly disconcerting to some Reuters staffers considering the fact that Goldstein and Herbst-Bayliss had been leading the pack on the FBI's ongoing investigations into SAC Capital—just this morning, Goldstein exclusively reported that a former SAC executive is linked to yet another insider trading investigation. To judge by the conference call, the Cohen episode has severely demoralized the wire service's staff, which was already preoccupied by bitter contract negotiations between its union members and management.

Schlesinger acknowledged that Wenig had called him about the Cohen story, and that after reading it at Wenig's request, he told his deputy Jack Reerink that he had problems with it. But he denounced the "false blog stories" accusing Reuters of caving to a wealthy hedge fund manager and insisted that his concerns had nothing to do with Cohen's complaint. And he lambasted his staffers for "running to a blog and spreading[ing] tittle-tattle" (or maybe "piffle-paffle? We couldn't quite hear) instead of raising concerns internally. Here's the audio—we've inserted digital bleeps to indicate edits:

But to the utter bafflement of the staffers on the call, Schlesinger refused to say what was wrong with the story, and readily admitted that it was solidly reported.

When Reuters media reporter Robert MacMillan asked his boss what actually happened, and what was wrong with the story, Schlesinger immediately became testy, and bizarrely seemed to say that there wasn't anything wrong with it: "We're not going to do news editing by I'm not going to go into the details of it. The story could have run. I mean, it was not a bad story. It could have run. But I had questions about it." Schlesinger said that the decision to kill it wasn't actually his—he raised his questions with Reerink, who made the ultimate decision: "I was actually in Tokyo. I said, look, it's up to you, I'm going to bed. He made a decision not to run it. That's it."

Gawker actually came up in the call when MacMillan asked Schlesinger about the perception the story created: "Gawker's headline—give them as much seriousness, or don't read them at all—it still said, 'Reuters will kill the story if a hedge fund manager asks nicely.'"

"That doesn't bother me," Schlesinger responded, "and Gawker doesn't bother me because they'll write about anything." It's true—even the fact that the editor-in-chief of Reuters can't explain why he killed a perfectly fine story after its billionaire subject asked him to kill it! (And if anyone wants to run to a blog and "tittle-tattle," you know what to do.)

The call went downhill from there. One staffer whose name we couldn't make out raised "scuttlebutt" that Goldstein and Herbst-Bayliss' editors had already approved the story for publication—and that Reuters' attorney Thomas Kim had signed off on it as well—before Schlesinger swooped in to kill it, and the two men had this exchange after Schlesinger stonewalled on his justification:

UNIDENTIFIED REUTERS EMPLOYEE: People involved with the story said that every point was covered with documents, and was actually backed up with paper.

SCHLESINGER: There was nothing wrong with the reporting.

UNIDENTIFIED REUTERS EMPLOYEE: Then why was the story killed?

SCHLESINGER: Because we don't write every story that we have a document about.

Another staffer, Brian Ellsworth, claimed that Cohen is a Thomson Reuters shareholder, suggesting that Cohen could have leveraged a threat to dump his shares in order to get Schlesinger to kill the story. (UPDATE: Commenter FormerEnglishMajor, citing data from a handy Bloomberg terminal, reports that Cohen's hedge fund owned 60,268 shares—.01% of the company, worth about $2 million—as of September 2009.) When Ellsworth referred to Reuters' "investigative unit," Schlesinger interrupted him: "Hang on a second. We have an enterprise unit, not an investigative unit. I think there is a distinction here.... Investigative has a sense of sort of flag-carrying, 'I have a cause'—that's not something we want to get into. We're not like a newspaper that embraces a particular cause." Enterprise journalism, on the other hand, has the ring of stories with "real relevance to our customers." Sounds nicer, doesn't it?

The low point of the call came when reporter Toni Clarke told Schlesinger, "Your editorial judgment is what is on trial here." After Clarke accused Schlesinger of overturning the decision of his "most senior editors" to run the story, he angrily replied, "Please at least do accurate reporting if you're going to insult me." (He quickly apologized for losing his temper.)

Nothing was resolved in the call, which was also taken up by complaints about Reuters' latest proposal to the Newspaper Guild of New York to cut compensation. Schlesinger refused to explain his decision beyond this: "You obviously have a choice—you can either believe me or not. And if you don't believe me, fine. But I'm telling you that I was hired as an editor to make judgments. And I make those judgments free of pressure."

UPDATE: A Reuters spokeswoman has responded to our request for comment, saying, "We run stories when our editors think they're ready, and not before. We've run plenty of stories about SAC, including a scoop last night."