Insider Trading is Treif

PELCOVITS, NATHAN A.

INSIDER TRADING IS TREIF NATHAN A. PELCOVITS Why did Ivan F. Boesky ask to serve a three-year sentence for illegal insider trading at Lompoc, the southern California minimum security prison?...

...London-New York-Toronto: Abelard-Schuman, 1963, vol...
...Jewish religious leaders who would like to see rabbinic teachings absorbed into the moral lifestyle of the American Jew encounter two formidable hurdles...
...In Torah logic, Tamari argues, the legal-moral precepts governing chesed, loving-kindness, and those governing business practice are connected...
...from theft on the margin, such as padding expense accounts or exploiting consumer ignorance, to the regulations of the Corfu community in 1651 threatening to excommunicate wine merchants who mixed brands...
...The Conservative rabbinate has yet to produce a codification of business ethics comparable to Isaac Klein's Guide to Jewish Religious Practice on ritual...
...Tamari is impressive, moreover, in demonstrating the wide-ranging scope of the religious economic code: from damages for harm to a person—Tamari, incidentally, makes it clear that eye-for-an-eye was always interpreted as monetary compensation—to the penalty for stealing, which required restoration to the owner along with five-fold punitive damages...
...Not that the matter is entirely ignored...
...In times of economic decline and poverty, Jewish communities were often hardest hit...
...Nor is the Reform rabbinate contemplating such an undertaking...
...Yet, as far as I am aware, neither the Conservative nor the Reform movement has attempted a systematic exposition of the rabbinic code of business ethics as it applies to modern economic life...
...Jewish ethical behavior in commerce, Tamari observes, is more restrictive than the Roman-English legal principle of caveat emptor, let the buyer beware...
...knowledge, that the ethical code can be internalized through "learning" and parental and social example...
...How are we to interpret the verse in Exodus 22:20 mandating that "you shall not wrong a stranger or oppress him, for you were strangers in the land of Egypt" or Leviticus 25:14, declaring "When you sell property to your neighbor or buy any from your neighbor, you shall not wrong one another" or the more general command three verses later: "Do not wrong one another, but fear your God...
...If this is so, the appearance of these books, and especially the widespread attention paid to Tamari's With All Tour Possessions in both Jewish and rion-Jewish circles, holds promise that we shall finally get serious about the place of ethics in our religious priorities and that the next generation will be ethically more literate than our own...
...At Lompoc he may find time to reflect on a sobering thought in the Mtsilat Yeskarvn (Path of the Upright} of Moshe Hayyim Luzzatto, an early 18th-century Italian Jewish moralist, who prescient I v diagnosed the problem in which Boesky and others became entangled: "Most people are not outright thieves...
...With All Tour Possessions: Jewish Ethics and Economic Life, by Meir Tamari (The Free Press, 1987...
...Shopping for an etrog (the citron used at the Sukkot festival) last fall in Jerusalem, I discovered that at rabbinic order these were now sold in sealed boxes at a fixed price so as to break the spiral of ever-increasing prices as the pious competed for the most adorning, defect-free specimen...
...This is hardly an option even for the halachically directed Jew who accepts the modern world, makes his living there, is active in civic and Jewish Federation affairs and shares, say, the American baseball culture...
...And the recently published Emet Ve-emunah, a Conservative guide to Jewish belief as it "confronts the challenge to integrate tradition with modernity," barely touches on personal and business ethics...
...Ashkenazim and Sephardim might differ over whether beans may be eaten on Passover, but in the Lithuanian seminaries of Slobodka and Volozhin, the halachic rulings of the Maimonides including those on business ethics, were accorded the same credibility and reverence as those of the Ashkenazic greats...
...Tamari writes that Jewish economics was actually governed by the codes of halacha, applied by Jewish courts during periods of Jewish communal autonomy...
...Jung differs also with Tamari—and with many rabbinic authorities—in his view that the prohibition against neskech, lending money at interest, extends to non-Jews for both moral and prudential reasons...
...Both books are written from the perspective of halacha (the traditional law of rabbinic Judaism) as elaborated by codifiers and commentators across the ages...
...The implicit prescription in both Tamari's With All Tour Possessions and Jung's Business Ethics in Jewish Law is that practice follows * Literally, "god-fearers," the term is applied to some ultra-Orthodox groups...
...Their message was that Judaism must be as meticulous about observing the code of economic morality and social justice as the mitzvot dealing with prayer or mourning or the Sabbath or dietary laws...
...Halachic categories are also compatible with the idiom of modern economics, says Tamari...
...A unique Jewish ethos rarely comes into play...
...It is not merely the obvious and explicit theft with which we have to concern ourselves, but any unlawful transfer of wealth from one person to another that may occur in everyday economic actions...
...is no guarantee that increased knowledge will turn rules into reality...
...And in Judaism, ethics was defined not as pietistic behavior but as avoiding fraud in the marketplace and sharing with the less fortunate...
...But material success brings with it the obligation both to limit self-indulgence and to care for the less fortunate...
...256 pages, $27.50...
...A former chairman of the Securities and Exchange Commission, John S. R. Shad, has donated millions of dollars to establish a program to teach and do research on ethics at the Harvard Business School so students ' 'will not lose their balance when they leave the ivory tower...
...Rules against unfair exploitation and mandating a "just price" were halachically dictated and enforced by communal ordinances...
...But can moral suasion take the place of legal and social sanction...
...The outside— whether "Dallas" on television or the hashgacha (kashrut certification) of a rabbinic authority not vouched for by one's own spiritual leader— is unclean...
...Thus, the injunction against "stealing" another's mind would apply to modern advertising: calling your coffee ' 'mountain-grown" to distinguish it from other brands is deceptive since all coffee is grown on mountains...
...Nor is unethical business conduct confined to the Jewishly unlearned...
...Its mores and values—and for that matter the signals children get from parents and kin at home—will often clash with the teachings of the Hebrew school and are hard to resist...
...If anything, the Reform emphasis on prophetic Judaism, with its accent on the "ethical" rather than the ritualistic, would lead one to expect that this movement would be at the forefront of the ethical revival...
...Among the moralists and scholars of the last 100 years, Tamari singles out Samson Raphael Hirsch in Germany...
...A reasonable speculation would be that while the less halachically directed may believe as a. principle that personal and business matters should be guided by an ethical code that derives from traditional Jewish values, in day-to-day practice on the American scene questions of economic morality are judged to be matters for civil law or moral-ethical rules shared by Judeo-Christian society as a whole...
...These two volumes appear on the American scene just at the right time to help counteract a fairly pervasive ethical illiteracy in the marketplace and the street...
...The Jewish ethos as it applied to money matters was universal, Tamari recalls, embraced by the Franco-German communities as well as by the Sephardic communities of Spain and North Africa and the Balkans...
...Modernization with its seductive materialism can be hazardous to one's religious health...
...Tamari's argument is that the Jewish role in banking and in financing international trade was essential to Europe's emerging modernization at the close of the Middle Ages...
...He presents hypothetical cases that illustrate how the halachic code would deal with contemporary problems...
...Abraham Kook, the first chief rabbi of Israel...
...Religious rulings were sometimes altered to counter price gouging...
...Halachic moral and religious principles, he argues, create a framework within which Jews can make ethical decisions in personal and economic relations even though legal sanctions do not back them up...
...As I. B. Singer writes in In My Father's Court, in "our home [in Warsaw], the 'world' itself was treif...
...But Jews are free to discount or ignore communal moral displeasure and can readily opt out of the community...
...Business ethics and ritual, together, were linked parts of a full-service Judaism for centuries all over the Jewish world...
...The Tamari and Jung books, especially Tamari's, are riding this wave...
...The answer, incidentally, is no—thus following the ruling of Maimonides that "those who . . . play games of chance are guilty of theft according to rabbinic law...
...Regrettably, Levine from time to time slips into tortuous academese...
...It covers more or less the same territory as Tamari's book, but is a somewhat disjointed collection of homiletical pieces, which detracts from its value...
...This is not to say that the Orthodox have a monopoly on the ethical revival...
...the Sephardim gave rise to the great codifiers, the most notable being Maimonides and Joseph Caro, compiler of the halachic code titled the Shulchan Aruch...
...An extreme option is to give up modernity...
...While both books give prominence to the neglected concept ofona'ah, doing wrong to another, Jung sheds new light on the various senses in which the biblical verses are applied in Jewish law...
...Writing from American experience, Jung is also more sensitive than Tamari to the effect of unethical business practices on relations with non-Jews...
...And the underlying premise of his book is that traditional ethical rules can be adapted to our times...
...Still, the Jung-Levine book is a useful supplement to Tamari on a number of points...
...certain Chasidic rebbes...
...The so-called haredim* both in Israel and Brooklyn, erect a wall against the outside secular world, both Jewish and non-Jewish...
...Meir Tamari is chief economist at the Bank of Israel in Jerusalem and a highly regarded Judaic scholar...
...Those who were acquainted with Rabbi Leo Jung will not be surprised to discover that Business Ethics in Jewish Law is more inspirational and moralistic than expository...
...The leading halachic authority at the time, the Tsemach Tzedek, pronounceo\all fish treif (unfit to eat) and the price soon found a new equilibrium...
...some of these appear in the collections of Reform responsa edited by Walter Jacob and published by the Central Conference of American Rabbis in 1983 and 1987...
...For example, in 16th-century Moravia a cartel increased the price of fish, causing distress among poor Jews who traditionally prized fish for Shabbat meals...
...Rabbi Leo Jung, who died soon after publication of the book he co-authored with Professor Aaron Levine of Yeshiva University, was professor emeritus of ethics there and for some 60 years was the leading Jewish ethicist in American Orthodoxy...
...In the halachic scheme of things, the merchant and entrepreneur play a legitimate and desirable economic role...
...The tide, With All Tour Possessions, derives from the injunction in the shema to love God with all your heart, with all your soul and with all your might, which Rashi interpreted to mean "possessions...
...The students for whom this volume is primarily intended—the book is co-published by the New York Board of Jewish Education—may find off-putting such passages as: "Judaism considers ideal business conduct to be that of a market participant who acts in a manner making his integrity objectively evident...
...8' * Agus, Jacob B., The Meaning of Jewish History...
...The network of commerce between these two worlds was paralleled by a shared culture of religious norms and a vast correspondence in responsa on business ethics...
...Business Ethics in Jewish Law, by Leo Jung, with a concluding section by Aaron Levine, "Jewish Business Ethics in Contemporary Society" (The Hebrew Publishing Company in conjunction with the Board of Jewish Education of Greater New York, 1987...
...Even an innocent or frivolous act is prohibited, such as asking the price of an article without intent to buy...
...According to the press, the special attraction was the classes in Jewish values offered there...
...This message is having a revival today...
...Such transactions are not to be equated with demanding oppressive interest...
...Besides, those responsa that do touch on money matters focus on such peripheral and institutionally narrow questions as whether a gambler's winnings are a kosher source of temple funding...
...Responsa by Reform rabbis, notably Solomon B. Freehof and Walter Jacob, address money questions...
...our civic and commercial and cultural relationships are part of this society and subject to its legal and social sanctions...
...Stealing of the mind"—defrauding— is prohibited whether victim be Jew or non-Jew, even a heathen, Jung observes...
...1, p. 19...
...No © stamp verified ethical behavior, but communal ordinances and rabbinic courts built up case law that defined it...
...Of course, there How can we make religious business ethics work in a pluralist society with shifting moral standards...
...Levine recalls the reason for this prohibition given by Rabbi Menahem ben Solomon of Perpignan (1249-1316): Pricing an article creates anticipation on the part of the seller which is dashed when the putative buyer has no serious intention of purchasing...
...Even when Jewish communities were cohesive and the synods and rabbinic courts exercised authority, acceptance of the moral-ethical codes did not always mean that practice conformed to the code...
...This is evident in the numerous cases Tamari cites of religious leaders admonishing the people about slackness in business ethics, and of communal ordinances designed to discourage unethical practices...
...marshal, left, escorts Ivan Boesky, right, a central figure in the insider trading scandal that shook Wall Street, as he leaves a New York federal court after pleading guilty to conspiracy to violate securities law...
...On the contrary, the seller must meticulously avoid deception, such as putting better fruits on top of a display of fruits or failing to inform the buyer about flaws in an object offered for sale...
...More than 100 of the 613 mitzvot (halachic obligations from the Torah as set forth in Maimonides' Sefer haMitzvot) prescribe rules for ethical conduct in economic matters, as against just 24 that deal with kashrut...
...In talmudic and rabbinic writings the concept of ona'ah encompasses charging an unjust price—the main sense in which Tamari examines it—but it also includes overreaching, engaging in deceptive business practices, behaving in an overbearing manner to exploit status or public position for personal or commercial gain, all of which Jung explores...
...In the variant of ona'at devarim, wronging through use of wounding words, one is cautioned against causing needless mental anguish in personal or business relations...
...But these can hardly be considered a substitute for a systematic exposition of rules and guidelines of business ethics...
...It values material reward for enterprise...
...Giving bad advice transgresses the biblical injunction not to put a stumbling block before the blind...
...A plea for leniency was recently entered in a Manhattan court Opposite page: A U.S...
...Judaism is not ascetic...
...Something sticks, he insisted...
...Prohibition against taking interest required the lender to enter into an equity deal with the borrowing partner through the heter iska (business permit), his return being profit, not interest...
...While it is sometimes rough going for those without a basic grounding in Jewish texts, this book is accessible to the attentive reader who wants to "learn...
...Rabbi Yisroel Salanter, founder of the musar movement, rejected the wisdom of the popular maxim "in one ear and out the other...
...I would not be surprised if it becomes a sustained best-seller...
...If the late Jacob Agus was right in his judgment that ' 'the quality of ethics is found not in law and administration as such, but in the motives and attitudes of the men and women in the state,"* the logic of Jewish education is that motives and attitudes can be transmitted along with learning...
...Business operates on the principle of a free market, but the market is not allowed to run free...
...However, in their business dealings most of them get a taste of stealing [my emphasis] whenever they permit themselves to make an unfair profit at the expense of someone else, claiming that such profit has nothing to do with stealing...
...In a readable and skillful exposition, Tamari opens to the serious English-reading public a door to systematic understanding of how and why Jewish law and tradition put economic morality at the very core of religious values...
...What is noteworthy is that both are written from the vantage point of modern Orthodoxy, which teaches the relevance of halacha to modern living...
...Neither Conservative nor Reform have attempted a systematic exposition of rabbinic business ethics as applied to modern economic life...
...All * See "MOMENT Interviews Talmud Scholar Adin Steinsaltz," October 1988...
...The code of business ethics is linked to the code of personal behavior and the moral obligation to help the poor...
...Rabbis operate similarly in today's market...
...Tamari reminds us that being observant in money matters has always been as much a part of the definition of a "good Jew" as compliance with the laws and customs of the Sabbath or Passover or kashrut...
...Problems of competition and profits, of wages and labor, of taxation and welfare, of money and banking, of balancing public good against economic cost in environmental decisions—all these can be dealt with by Jewish law and rabbinic concepts...
...on behalf of an ailing rabbi convicted of masterminding a multi-million dollar fraudulent tax-deduction scheme...
...At best, social pressure may help marginally to support a specifically Jewish ethical code of a non-cohesive Jewish community...
...The Franco-German communities produced great medieval commentators, led by Rashi and the Tosafists (authors of "additions" to the Talmud...
...As a further sign of the times, Random House has announced that the first two tractates to be published in their forthcoming English translation of the Talmud with commentary by the Jerusalem scholar Adin Steinsaltz will deal with the law of claims (torts) and business ethics.* It is in this timely setting that Meir Tamari's With All Tour Possessions: Jewish Ethics and Economic Life** and the Leo Jung/Aaron Levine book on Business Ethics in Jewish Law*** were published...
...On the importance of moral conduct and business ethics to Judaism, a consensus exists among mainline Orthodox, Conservative and Reform movements...
...Closer to our own day, rabbinic figures saw the need to teach and preach against decaying ethical standards in personal and business relations...
...A more important hurdle is that as members of a pluralist and consumerist society, modern Jews—and mainline Orthodox are not exempt—have absorbed the appetites and moral values of the surrounding society...
...In the Jewish community, sermons, panels and articles proliferate, testifying to a growing unease about ethical standards...
...The musar movement, which arose in Lithuanian yeshivot a century ago, taught that personal decency and ethical business conduct are not merely an adjunct of Judaism but its very essence...
...Perhaps Boesky can be credited with the belated recognition that ignoring (or being ignorant of) Jewish traditional business ethics was part of the process that ultimately landed him in jail...
...Concern about ethical slackness in business is on the rise...
...Ethical standards became lax in the struggle to make a living...
...Is there a way out of the dilemma...
...Boesky was eager to continue the studies he had started at the Jewish Theological Seminary in New York while awaiting sentencing...
...but since the poor person could not hope for such a business arrangement, free loan societies were set up to help people down on their luck...
...but the wrong is aggravated by deception of the gentile since it involves "the supreme crime of chillul haShem," a desecration of God's name...
...340 pages, $22.50...
...We recoil from repeated displays of greed, shady dealing, tax fraud, and corruption and sleaze among public servants—antics in which Jewish behavior has more or less kept pace with the relaxed morality of society at large, although, as recent articles have pointed out, the proportion of Jews charged or indicted is no greater than the proportion of Jews in these professions...
...One is that we live in a pluralist society...
...What is the reason for this neglect by the religious modernists...
...The problem is how to translate religious norms into operational ethics in a pluralist society with shifting moral standards...
...Aaron Levine's concluding section on Jewish business ethics in contemporary society is better organized...
...and Rabbi Yisroel Salanter in Lithuania, founder of the musar movement...
...streams of Judaism place business and personal ethics high on the agenda of the community...
...from honest weights and measures (including periodic scrubbing of scales and weights) to avoidance of g'neivat da'at, misrepresentation in marketing and advertising...

Vol. 13 • November 1988 • No. 8


 
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