'NY Times' Revises Employee Ethics Policy

By: Joe Strupp A revised ethics policy at The New York Times that places additional limitations on stock ownership by reporters -- and bars top editors from owning stock in any company other than the newspaper's parent -- takes effect this week, E&P has learned, and appears likely to cause ripples elsewhere. The tighter restrictions, which also clamp down on editorial staffers contributing or taking part in political activities, follow two years of review that included negotiations with Local 3, The Newspaper Guild of New York.

While the 38-page policy covers ethical issues related to everything from freelance work to awards-program participation, the major changes involve stock ownership and involvement in public life, said William Schmidt, the Times associate managing editor who oversaw the review.

Under the old policy, only some business-section employees were barred from owning stock in companies on which they directly reported. The revised policy bars all staff members from having a financial interest in an entity that they cover regularly, as a reporter or as an editor. "Information moves markets," said Schmidt.

A Pentagon reporter, for example, would not be allowed to own any defense-related stocks.

The policy also forbids any editors who appear on the masthead, columnists, and Op-Ed writers who regularly write about business from owning stock in any company except the New York Times Co. "I think it's a great thing to do," said Editorial Page Editor Gail Collins. "It is better to be safe than sorry." Top editors also will have to affirm, to the Times' chief financial officer, each year that they are not in violation of stock-ownership rules.

Some industry observers, however, such as Keith Woods, who teaches ethics at the Poynter Institute in St. Petersburg, Fla., believe the stock restrictions are too harsh. "It's like asking a reporter not to vote," he told E&P. Orville Schell, dean of the Graduate School of Journalism at the University of California, Berkeley, said such limits mean "everyone has to become a monk."

But Byron E. "Barney" Calame, deputy managing editor at The Wall Street Journal, said removing any doubts about potential conflicts of interest is worth tight restrictions. He said the Journal has long had rules barring its reporters from stock ownership in companies they cover, rules that extend to their immediate families. "Credibility is paramount," he said.

Local 3 President Barry Lipton said the Guild had won a provision in the policy requiring the Times, in some cases, to pay for employees to set up blind trusts for their investments to make sure no staffers lost money through liquidation of their stocks. The union also kept out a stipulation that would have included the stock holdings of an employee's spouse or immediate family in the potential-conflict category.

The revised policy also bars all employees from running for public office, even the school board; contributing to campaigns; or taking part in "public causes or movements." This includes wearing campaign buttons, marching in support or opposition of causes, or serving on government boards or commissions. The rules stipulate that a staffer might be reassigned to avoid conflicts if a family member or spouse is engaged in a political activity or other partisan action. "In the past, we had discouraged a lot of this, but it was not this explicit," Schmidt said.

He said the tighter stock controls are required because of "the growth of 401(k) stock" and the need, post-Enron, for greater scrutiny of companies.