The murky world of business journalism ethics

When I worked as a markets and business correspondent at Bloomberg News, the rule was clear: you were not allowed to report on any company in which you held shares, mutual fund holdings excepted. That seemed to me a sensible rule, because it eliminated any possible conflicts of interest., one of our premier financial media organisations, has a different rule. Reporters have to declare their holdings in a companies that they report on. But is that enough?

Having read Marc Ashton’as report on the performance of South Africa’s big four banks, I have my doubts. The report is headlined “Standard Bank tops”, and the lead states:

“Standard Bank has come out as the clear favourite among South Africa’s big four retail banks after the release of their respective results for the year to end-December 2008. ”

It then compares the financial results of the four banks, and from the comparison it seems clear to me that Absa was, in fact, “tops”. It performed better than Standard Bank at earnings level, and declared an increased dividend while Standard’s remained unchanged. So why is the writer punting Standard? On the basis of three portfolio managers’ opinions that Standards Bank’s results, given the context of its international exposure, represented the best performance out of the four banks. Now the three portfolio managers in question are highly competent people, and I don’t doubt their integrity – but at the same time, I don’t know what shares they hold. They may be talking their books, as they say in the industry (Bloomberg News had another good rule: when quoting a portfolio manager, you had to say whether or not he held or had recently bought or sold shares in the company he is commenting on).

Then, at the end of the report, we are informed that Ashton holds preference and ordinary shares in Standard. Does that change my evaluation of his story? You bet it does.

Ashton is a good business journalist, and I regularly read his reports on I have no reason to doubt his integrity either, and at least he is telling me that he has an interest in the company he is reporting on (I’m sure many business journalists don’t). But still… I would have taken him so much more seriously if I knew he didn’t have shares in any of the four banks. I may even have bought his opinion that Standard Bank came out tops. As it is, I’ll trust my own judgment.


14 Responses to The murky world of business journalism ethics

  1. Marc Ashton says:

    Hi Robert

    Thanks for the mention. I’ve mailed you a response via David. Could I ask you to just correct the typo in my name.

    I’m sure you’ll be able to publish my response if you like.

    Suffice to say – what you have said is noted however it should be pointed out that directors of listed companies are not obliged to declare off-market dealings in their shares, fund managers don’t have to disclose their holdings even to shareholders in some cases (RMB), and these practices are accepted by the regulatory authorities…

    Anyway check out my e-mail when it comes through and am happy to debate in online or offline format

  2. Marc Ashton says:

    Some other thoughts on the topic.

    1. I’m looking at my investment portfolio – I have 27 shares in it of which 20 are in the JSE Top 40 at the moment. We have such a small investment universe in comparison to what Bloomberg covers that any decent sized equity portfolio would be hard pressed not to hold some of the blue chips.

    2. In terms of new world media – How many radio talk shows, blogs, trading boards etc are managed by active professional day traders and analysts? They don’t at this moment in time declare their investments or positions.

    3. How many columnists in print and online media are active traders for sizeable asset management firms – they also don’t declare their interest.

    I don’t think there is any straight-forward answer on the subject and the argument will always be there that if the professionals don’t have to declare their positions but a journalist will be held up to scrutiny then it is hard to justify.

    As an example – a director can quite legally short his own company’s stock (see Investec) but a passive shareholder who happens to be a journo will take some criticism for writing a story which is positive on a stock he happens to hold? Again – which is the lesser of two evils?

  3. David McKay says:

    Hi Robert

    The subject of whether financial reporters should hold shares in listed firms about which they write, and how they should disclose such holdings, is a regular debate at At the moment, we allow writers to hold shares but insist that they declare their interests.

    I’m satisfied we can continue with this, but I also find myself partial to the Bloomberg editorial policy of asking asset managers to declare their own holdings. It’s one we may adopt.

    In the end, however, questioning a reporter’s credibility on the basis of a single story, while an interesting exercise, is not the acid test it would appear.

    My personal belief is that users of a publication get to know their reporters, and the publication gets to stand for something, both achieved by being consistently fair.

    During his time at, Marc Ashton has not hesitated to rattle Standard Bank’s cage. He reported on its questionable exposure to the UK football club Portsmouth. He was similarly acute in reporting on the stresses of Standard’s Blue Granite securitised portfolio.

    In both cases, Standard Bank was roasted by Marc. I believe his consistent adherence to the principles of good journalism speaks louder than a declaration of interests in shares.

    And then there’s our ever vigilant community.

    It’s great Bloomberg News has this watertight standard of not allowing journalists to hold shares. But let’s consider the wider question of credibility: how, for instance, does it handle queries by users that it has been biased or even incorrect?

    At, our comments section beneath each story makes the credibility of our reportage a public debate 24/7, and on a platform provided by

    And believe me, our community doesn’t allow us to get away with jack. One only has to read the grilling and praise Marc has received on the banking story about which you write (and which may have provided you with the inspiration for your blog in the first place) as proof of this.

    Overall, you raise a good debate and one we take seriously as, indeed, “one of SA’s premier financial organisations” must.

    I’d love to hear other views on this.


    David McKay

  4. Robert says:

    Hi Marc
    Sorry about the typo in your name! I have corrected it.
    I do understand your problem in terms of synchronising (if that is the right term) your investment portfolio with your reporting, and’s policy of disclosing your interests is one way of dealing with it. As you say, many other market commentators, including journalists, do not.
    I do not, however, agree that it is “hard to justify holding journalists up to scrutiny” but not some other market participants. The journalists is not just another market participant, like portfolio managers, traders and equity analysts. The journalist is supposed to be an independent voice, and your audience understands your role as such. That is why you disclose your interests – so that your readers know you are not pushing an agenda we are not aware of (and we are grateful to you for that!).

  5. Robert says:

    David – thanks for your response. I think it is good that financial jnournalists debate these issues. I appreciate that it may not be feasible to prohibit your reporters from holding shares in companies they report on, so we (your readers) are grateful that you disclose your reporters’ interests. That way, we all know where we stand and that nobody is pushing an agenda we, the readers, are unware of.
    My point was that, objectively, it does affect the credibility of a report if I know the reporter holds a financial interest in the company he is reporting on. I say “objectively”, because I don’t for one moment think that Marc is being subjectively dishonest, or that he subjectively allows his financial interests to override his journalistic objectivity.
    It is, in a way, like a political reporter being a member of a particular political party, and disclosing it to his/her readers. Even if the particular report is not biased, I would in the long run be just a little bit more skeptical about that reporter’s, and news organisation’s coverage.
    Be that as it may, I remain a keen follower of!

  6. Reg Rumney says:

    Ages ago – I’m talking about the days of the Rand Daily Mail business section – it was common practice for financial journalists to include a paragraph at the end of financial reports, however brief, declaring any interest in the company being covered.

    It’s in the interests of the credibility of the publication.

    It’s also in the interests of the writer.

    The argument that professionals don’t declare their interests it is a red herring.

    The Journalist’s currency is credibility.

    If you are more credible than the next guy, then that’s another competitive edge.

    So let the reader decide. Robert’s reaction shows that readers do.

    I have known financial journalists who, while writing about the market, owned no shares themselves, either because they believed this would cloud their judgement or because they better things to do with their money.

    Des Kilalea, a winner of the Sanlam Financial Journalist of the Year Award, was one. He was writing for Finance Week at the time.

    On the other hand, knowing that the writer holds at least some shares shows that he is a participant in the field he’s writing about.

    A final thought: it would be nice to know how much exactly Ashton holds. There’s a big difference between holding a few hundred rands and a few hundred thousand.

    The writer may now want the world to know the details of his wealth or lack of it, however. So the answer would be for there to be a principle in place that if the writer holds more than a certain amount, he should declare it to the editor.

    The editor could then decide whether he wants to risk having that particular journalist write the story. Perhaps he does. The story should then indicate that the writer holds a substantial interest.

    This may be purely theoretical: few journalists are in a position to buy substantial interests in anything.

  7. Marc Ashton says:

    Really great debate and will be something worth following.

    Well done Robert.

  8. Marc Ashton says:

    Hi Reg —-> “This may be purely theoretical: few journalists are in a position to buy substantial interests in anything.” < —- too true… For transparency sake I did afterwards post that the grand total of my investment in Standard Bank was R1400 and some change which if I were to sell would mean I would go backward on the trading costs alone.

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  10. warwick lucas says:

    Should anyone believe in a s*x therapist who is a virgin? Or a chef that doesn’t eat their own cooking? Then why would the opinion of someone on the trading or investment merit of shares be worth reading if they didn’t stick their necks. As far as I’m concerned a lot of so-called best practice is justa triumph of form over function.

    • Robert says:

      Warwick – the Afrikaans writer CJ Langenhoven once said: you don’t have to be a carpenter to know that a table is badly made.
      Hell, a lot of people with a stake in the market have been getting it very wrong ober the past year or so!
      But remember, a journalists is not an investment manager or adviser; he fulfills a different role in th emarket mechanism. If I want to invest my hard-earned money, I’ll go to you. If I want to know how a particular company has performed, I’ll read a journalist who knows his stuff.
      If you really believe people without a financial investment in the markets aren’t qualified to comment on them, then you’re dismissing the whole of Bloomberg News, the Wall Street Journal, the Economist, the FT: the most highly respected financial news organisations in the world!

    • Robert says:

      Warwick, see the excerpt below, from the New York Times’ code of ethics. This is fairly standard throughout US news media. So you’re saying the opinions of all these journalists are worthless?

      125. Because of the sensitivity of their assignments, some business/financial
      staff members may not own stock in any company
      (other than the New York Times Company). These include
      the Market Place writer, other market columnists, the regular
      writer of the daily stock market column, reporters regularly
      assigned to mergers and acquisitions, the daily markets editor,
      the Sunday investing editor, the Sunday Business editor, the
      business and financial editor and his or her deputies.
      126. Masthead editors and other editors who play a principal part
      in deciding the display of business and financial news, including
      its display on Page 1, may not own stock in any company
      (other than the New York Times Company).
      127. The editorial page editor, the deputy editorial page editor and
      the Op-Ed editor may not own stock in any company (other
      than the New York Times Company). Nor may editorial
      writers and Op-Ed columnists regularly assigned to write
      about business, finance or economics.

  11. […] about business journalism ethics, and virginal sex therapists In a recent blog post, I argued that business journalists shouldn’t be allowed to report on companies in which they […]

  12. warwick lucas says:

    Robert, while I know a bad table when I see it, I still will think very carefully before placing the opinions of any other professional above those of a carpenter on the matter of table making. It is for this reason that my favourite column/s in any publication are those of guest experts.
    In so far as people in the market getting it wrong are concerned, I’m not sure what your point is. I would also have to ask why you would consult a journalist over someone working extensively on financial results on the matter of how a company has performed? Be that as it may, surely a more constructive approach would be for journalists not to comment on stocks in which they hold stakes.
    As for dismissing an opposite attitude on the grounds that large American news houses have done otherwise – well imagine if last year SA Banks had followed American Banking practice and pushed subprime loans in SA – well what a mess that would be.
    Let me offer an alternate view on best practice. Igor Sikorsky noted that in the early days of aviation, inventors flew their own contraptions – which served to swiftly eliminate bad designers. Similarly best practice in the US was for analysts as a bare minimum not to own stocks in sectors they cover. What a load of rot! Analysts in my opinion should be FORCED to trade their own recommendations. The feedback on incompetence would be more immediate than any other.
    I think it is quite sufficient that Ashton discloses his position. Soceity does not need more prescription. It needs more honesty and candour.

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