Germany considers code for financial journalists

Alfred Kueppers

For decades, journalists in Germany have enjoyed lavish perks: a 15% discount on a Mercedes or half-price flights to the Canary Islands on Air Berlin. Many also own stocks in companies they write about, a practice frowned upon in many other countries.

Worried that these benefits could damage public faith in financial markets after a series of recent insider-trading scandals involving journalists, Germany’s economics ministry is deliberating a code of ethics to discourage journalists and financial analysts from owning shares in companies they cover.

The result could be a voluntary contractual code backed by the federal securities watchdog, the BAWe, which would have the power to fine violators for an undisclosed amount. The rule could be in place in the next few months.

Although details haven’t yet been made public, Wolfgang Gerke, a finance professor at the University of Erlangen and one of the proposal’s authors, said journalists and analysts would have to disclose shareholdings in companies they write about. He said the preliminary version of the code calls for time limits within which shares held by journalists or analysts couldn’t be traded. The code would also discourage favourable corporate coverage among journalists by requiring them to return gifts in excess of 100 euros ($85).

“Ideally, this will be a voluntary code that will restore credibility to German financial journalism,” he says. It is likely that banks and publications will sign on voluntarily to maintain the trust of the public, he says, adding that the code could be turned into law if it proves ineffective as a voluntary measure.

An economics ministry spokeswoman confirmed that discussions have taken place about creating a law out of parts of the code, but that for the time being the intent is to make it voluntary.

Later, if the government feels it necessary, it could become law. Such moves are not uncommon in Germany—in 1970, for instance, the government introduced a voluntary ban on insider trading. After that failed to curb the practice, the code became a law in 1994.

Germany’s professional group for stock analysts, the DVFA, says it is ahead of the government: It banned its members from holding shares in companies they analyse a couple of weeks ago.

But Germany’s journalists union, IG Medien, say such regulations are unnecessary. “It implies a certain level of distrust,” said Berthold Balzer, of IG Medien’s print journalists working group. “We think that journalists already know their professional obligations.” The union says it is awaiting a final version of the code before commenting further.

As in the US, many publications in Germany have their own internal rules governing these matters. For example, reporters at the weekly financial newspaper Platow Boerse are banned from holding any shares traded on any of Germany’s smaller stock exchanges, such as the Neuer Markt or the SMAX, since their articles might influence the share price movement. But they are still allowed to own shares on the DAX, Germany’s blue-chip exchange.

The proposed rules wouldn’t affect one widely used perk: the so-called journalist discount. Many German corporations, from car dealers to airlines, give a discount of at least 15% to anyone with a valid press pass.