The Ninth Commandment says to avoid “bearing false witness.” It enjoins people to tell the truth, especially in interpersonal matters.
The Commandment is consistent with other scriptures—the Old Testament is full of prohibitions against false testimony, spreading false reports, lying, and so on. It is an encouragement to show oneself true in deeds and truthful in words, guarding against duplicity, dissimulation, and hypocrisy.
Imagine how market integrity would be improved if everyone adopted such a policy—excessive fees would be disclosed, fraudulent investments would be abandoned, scandals like the rate-fixing imbroglio that cost Robert Diamond—head of Barclay’s Bank, PLC—his career wouldn’t happen.
But that’s not the world we live in.
In the real world, people lie, cheat, and steal in order to gain an advantage for themselves. Financial products are especially prone to distortion and deception, with complicated provisions and math-based payment formulas. Expecting financial professionals to abide by the Ninth Commandment seems hopelessly naïve.
But the point of the Ten Commandments isn’t to describe what people do, it’s to prescribe what they ought to do. It’s a normative code. And the advantages to investors from truth-telling—facing the brutal facts, acting in a timely manner, and so on—are significant.
The Ninth Commandment focuses on integrity: doing what you say, saying what you mean. “Spin” is excluded. It helps us to focus on what’s real. Because eventually, the truth comes out.
Douglas R. Tengdin, CFA
Chief Investment Officer
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