Last month, a Reuters Breakingviews writer resigned after it was discovered that he'd written about -- but failed to disclose -- stocks in which he had an ownership stake.
Reuters didn't find evidence that the writer benefited from "improper trading," but the disclosure failure was a violation of Reuters' ethics policy. Despite rules prohibiting such behavior, the incident "tarnishes" the company's reputation, AOL DailyFinance asserts.
Here at the Fool, we take disclosure very seriously. Every employee, contractor, and freelancer is required to sign the Fool Disclosure Policy and trading rules upon being hired. Employees and newsletter writers use a unique, robotic compliance officer -- known as Marthetron, after the inimitable Fool legal eagle Marthe LaRosiliere -- to assure that we're not trading based upon knowledge of upcoming publications. Within 24 hours of trading a security, we are required to report it to the Compliance department. Upon any suspicions, we face an audit.
That said, we aren't quite like Reuters. One of the many taglines we've used in Fooldom over the years is that we are investors writing for investors. As our Fool Disclosure Policy states, "Many financial publications do not permit their writers and editors to own stocks. The Motley Fool not only permits, but also encourages its staff to invest in common stock." We think it would be hypocritical to preach the power of investing in common stocks while prohibiting our writers, editors, and analysts from doing the same.
Today, I want to highlight two important changes we've made to the Fool's trading rules:
- We must hold any stock we own for at least 14 days. (No day trading allowed!) This has been reduced from a minimum required holding period of 30 days.
- We cannot write about a stock in the period from two days before to two days after purchasing or selling the stock. This has been reduced from a minimum required blackout period of 10 days before/after.
Why? In the words of Chief Legal Officer Lawrence Greenberg, "Given the speed with which information circulates, the longer periods didn't benefit the audience, but they deterred Fool personnel from investing."
Our updated disclosure policy and trading rules are now in effect. You can read the full details, or ask a question on our Fool Disclosure Policy discussion board. And remember, you can always view a Fool employee's or contractor's profile for his or her stock holdings (mine are listed here, for example).
Brian Richards is the managing editor of Fool.com. He does not own shares of any companies mentioned. Brian also has a recommendation for Reuters: Make writers disclose their relevant holdings at the bottom of an article.