Best Practices: Financial Investments and Potential Conflicts

The Best Practice column is an occasional look at foundational best practices in journalism ethics. In this post, we are exploring how journalists should navigate potential conflicts of interest that could arise because of their financial investments.

Journalists, especially those who cover business and financial news, are often privy to sensitive or private information that could move markets upon publication. Therefore, it is critical for journalists to consider how investments and holdings in these financial instruments may open them up to perceived or real conflicts of interest or serious legal issues. 

Best Practice: If a journalist or a close family member has a financial interest in a company, entity or industry that is part of the journalist’s coverage or editing responsibilities, the journalist should disclose the investment to their senior editors and either sell the security in question or take on a different assignment where no potential conflict exists. 

A key point to remember: It’s not just an actual conflict, but even an appearance of a conflict that can quickly erode the trust of your audience.

So, what kinds of investments can a journalist hold? 

In order to determine if a certain investment is ethical, a journalist should consider the following: 

  • Is the company or entity within my current or future reporting beat? 
  • Do I have access to nonpublic information that could potentially alter the value of the security? 
  • Has this investment been disclosed with my employer prior to assignment on a story? 

As a journalist, you will likely be limited in your freedom to invest. In some newsrooms, journalists are allowed to hold investments in diversified mutual funds, money-market funds, or other diversified investments that are pooled and therefore less likely to be affected by reporting about a specific company. 

In addition to these funds, a reporter may be able to own treasury bills, investment-grade municipal bonds, debt securities outside of speculative bonds, and securities issued by their employer. Freelancers and stringers who contribute to certain publications are also subject to disclosure about their securities holdings. 

What happens if a journalist (or a family member) holds a security that is related to their beat or a story? 

Journalists and members of their family are prohibited from making financial gains on the basis of any information obtained through their employment before it is known to the general public. Such information includes hold-for-release materials, publishing plans, and other sensitive information about a security or company. Sharing this information with others or trading securities on the basis of material, non-public information can be a violation of insider-trading rules and has landed journalists in federal prison and subject to hefty fines. 

Most news organizations have rules that staff must follow regarding financial investments. The New York Times’ editorial standards, for example, provide more stringent requirements for reporters working in business/financial, technology, and media news. Reporters working these beats are not allowed to “play the market,” which involves short-term trading of stocks, buying and selling of options and futures, or shorting securities. Journalists at The Wall Street Journal who are “assigned to report on a specific industry may not buy or sell any tradable instruments in any company fully or partially engaged in that industry or in any non-diversified pooled investments.” (You can find many other newsroom ethical codes here.)

Regardless of your newsroom’s position on financial investments, you should have your own strict code that helps protect you from being tainted by even the appearance of a conflict. Unethical investment practices or the appearance of such behavior causes damage to a reporter’s personal reputation, as well as their news organization’s. And once lost, those reputations are difficult to reclaim.