“She sells seashells… by the seashore.”
How about “Senator sells stocks…
by the… boatload.”
(I really wanted to say “sh*t ton“ just to keep the alliteration going… but I tried to refrain.)
The stories (here’s one, here’s another, oh, and here’s a new one today) about senators trading stocks on the eve of the coronavirus crisis caught my attention. The question has been repeatedly asked is, was the conduct legal? Apparently, the legal process will play out over an extended time to answer the question as a matter of law.
But my question is, was the conduct ethical?
No doubt there will be a politically fueled investigation by congressional ethics committees. But sadly, I doubt that a congressional investigation conducted by conflicted parties is going to answer the question for us.
The question, more specifically, is what should be the standard for ethical conduct in a situation like the senators faced?
I definitely do not believe the standard is simply, “was it legal?” After all, think about Enron’s executives’ behavior that was guided by lawyers saying there was no finding of malfeasants on the eve of Enron’s collapse.
What the senators should have been asking themselves was this: Is trading stocks soon after an apparent confidential hearing on the state of the coronavirus truly ethical?
A good way to answer the ethics question is to think of how you would feel if you were the person who bought the stocks from the senator with full transparency. The senator tells you that he/she just left a confidential briefing and it appears the world could be headed for big trouble. Therefore, I’m going to dump some stocks and I would like you to buy them.
If the senators asked themselves the question – are my actions ethical? – in that scenario, do you think they would conclude that they were acting ethically? What if they were the ones on the other side of the transaction?
One of my favorite ethics books, by John C. Maxwell, is:
There’s No Such Thing as “Business” Ethics: There’s Only One Rule for Making Decisions
He makes the amazingly simple point that people could live with so much more integrity if they just followed the golden rule.
Now I think that is a true ethics test.
Just treat others as you would like to be treated.
Senators… perhaps you should give it a try?
Amanda “Jo” Erven, CPA, CIA, CFE, teaches ethics as a part of the curriculum for accounting and auditing college students. She also trains and speaks on ethics to finance, accounting, and audit professionals globally. Contact Jo to book your next virtual or live Behavioral Ethics CPE event.
