BROOKE GLADSTONE: Reuters Breakingviews, a financial news website owned by the Reuters wire service, announced this week that it had launched an internal investigation of some of its journalists who had apparently invested in the securities they were reporting on. One of those journalists has already resigned. The allegations, if true, are bad. It’s hard to imagine how having a financial stake would not, even unconsciously, influence your reporting. Would disclosure resolve the conflict of interest conundrum? Dan Gross covers business and economic issues for Yahoo! Finance. He says that for mainstream media outlets, disclosure is not the preferred option. They stipulate that most reporters who cover the market simply should not invest in it.
DAN GROSS: Yeah, you are generally prohibited from having a Schwab account that you are trading for yourself, although I guess they can't stop your spouse or an uncle for doing that for you. And I think in many ways you can argue that that’s sort of ridiculous, because, you know, when you have a mutual fund or an index fund, you, in effect, own Apple and Google and every single stock.
BROOKE GLADSTONE: Yeah, but, I mean, if you judged purity by that standard you'd really be up a creek, because even if you don't own any stock at all, the company that employs you probably owns a bunch of other companies.
DAN GROSS: Absolutely, so if you work for the Wall Street Journal, you work for News Corp, which also owns the FOX News Channel and movie studios and all sort of other businesses that they are constantly covering, and when they do that, they make a disclosure. They say, you know, our parent company owns this other company.
BROOKE GLADSTONE: Which brings me back to the first question: Why not simply disclose and direct readers to a website where it’s listed – just put it out there somewhere?
DAN GROSS: Well, I think old habits die very hard in our industry. And there’s been this divide between personal finance journalism, just telling people what to do with their money, and covering the news of corporate America. In personal finance journalism, it is perfectly acceptable for the people who are writing and giving advice to own shares and be trading them. And, in fact, that’s part of the idea. But where somebody is covering an industry, where they're covering a particular company, you could see why you would want a blanket prohibition on people trading or owning shares of those types of companies, because their news has the ability to move the market. And once you have the ability to do that, then you have the ability to profit on a move in the market. When, I think, you’re dealing with people writing about the culture of money or economic news or big trends like globalization, that prohibition doesn't make sense because there’s really very little you can do that will move the market.
BROOKE GLADSTONE: So what do you do for a living?
DAN GROSS: I'm the economics editor and a columnist at Yahoo! Finance.
BROOKE GLADSTONE: So you do global, you do national, you do -
DAN GROSS: I write about individual companies, when it makes sense. I write about –
[OVERTALK] – economic trends.
BROOKE GLADSTONE: So you’re all over the--
DAN GROSS: All over, yes.
BROOKE GLADSTONE: What stocks do you own?
DAN GROSS: I'd rather not say.
BROOKE GLADSTONE: Seriously?
DAN GROSS: Yeah. We invest for our kids’ college education through these 529 plans. We invest in our 401-K through index funds or mutual funds. And that’s largely it.
BROOKE GLADSTONE: Do you think that the public has a right to know what you invest in?
DAN GROSS: The public has a right to know that the journalist who is covering a certain company is not trading in those shares, but that presumption is implicit and embedded.
BROOKE GLADSTONE: It’s embedded in a code of journalistic ethics, which is currently very much in flux in a new media environment.
DAN GROSS: It’s embedded in the code of journalistic ethics but also in the policies of the employers. A blogger who’s on their own and self-employed and covering the markets and they're writing about stuff and they're saying, you know, I own this stock and here’s what I think of it, there’s no problem with that. When you are bringing in the brand of your parent company, and your parent company is The New York Times or Yahoo!, and what that brand stands for is unbiased information, not giving stock market advice that becomes a much bigger issue.
BROOKE GLADSTONE: The best way to address this issue of conflict of interest is to keep mum, or to just disclose yourself to the world and then prove by your journalism it’s not an issue?
DAN GROSS: The onus, I think, is on the journalists and the journalistic organizations to maintain their standards, ensure that those standards aren't violated and prove that their work is clean and above suspicion rather than to say, just so you don't think anything is fishy, I own 100 shares of Apple and 200 shares of IBM, and my mother day-trades solar company stocks all day. I mean, you know, where does it end?
BROOKE GLADSTONE: [LAUGHS] Dan, thank you very much.
DAN GROSS: Well, I have one disclosure. Last time I was here, Bob Garfield sold me a thousand shares of [BROOKE LAUGHS] WNYC, and I was just curious if there’s an active market for those [BROOKE LAUGHS] and if I could trade them.
BROOKE GLADSTONE: [LAUGHS] Did he sell you a chunk of the Brooklyn Bridge, too? [LAUGHS] Dan Gross is economics editor and columnist for Yahoo! Finance.
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"Keeping The Flame"
by Kelley Stoltz