10 February 2000 – It was, of course, mere coincidence. When Mirror editor Piers Morgan rang up his broker on January 17 to buy £20,000 worth of shares in Viglen Technology, he could have had no idea that his paper’s financial wizards were to tip the share next morning, earning him a nice profit of almost 100%. After all, it is bad enough to be held responsible for the contents of a paper like The Mirror, without being expected to read the contents before publication.

The deeply embarrassed Mr Morgan, who was promptly jumped on by the whole of the national press and by The Sun in particular, at least had the common sense not to cash in his winnings but to wait a while and then donate the diminished profits of £13,000 to charity. He has been cleared by The Mirror‘s board of directors, though the Stock Exchange and the Press Complaints Commission are still conducting their own investigations.

The immediate question has to be whether this sort of thing is widespread among financial journalists and their editors. The PCC Code of Conduct is quite explicit. Clause 14 says:

Financial Journalism
(i) Even where the law does not prohibit it, journalists must not use for their own profit financial information they receive in advance of its general publication, nor should they pass such information to others.
(ii) They must not write about shares or securities in whose performance they know that they or their close families have a significant financial interest, without disclosing the interest to the editor or financial editor.
(iii) They must not buy or sell, either directly or through nominees or agents, shares or securities about which they have written recently or about which they intend to write in the near future.

According to The Guardian (Media section, Feb 7) six out of seven national newspaper editors say they do not deal in shares and do not believe they should be allowed to do so. Nor do most financial journalists.

So the problem may be merely one of perception. But it is a perception that matters in the eyes of the public, and most especially those of politicians – some of whom have suffered grievously from press exposure of their own share dealings. There is the smell of hypocrisy here, even if unjustified.

What’s to be done? The PCC Code provisions seem adequate, though they suffer from the usual lack of teeth. They could hardly be expected to cover the sort of naive act committed by Mr Morgan – though the Commissioners might suggest, politely, that part of an editor’s role is to read his own newspaper before publication.

A more effective safeguard would be to insert a clause into the contracts of all editors, financial journalists and sub-editors, prohibiting them from share-dealing and insisting that existing shareholdings be placed in blind trusts (as is required of Ministers).

Such a move by proprietors would restore public confidence. And since insider trading is, in any case, illegal, it is hardly a restriction which could raise many objections. It might even be welcomed by financial writers who are currently having their private affairs scrutinised in the name of yet another Red Top circulation war.

Bill Norris
Associate Director

(Bulletin No. 6)