Well after Shabbat ends tomorrow night, we Ashkenazim will begin what Sephardim have been doing since August 29 (Elul 2 on our calendar)—reciting Selichot, that series of penitential prayers and liturgical poems designed to prepare us for “The Ten Days of Repentance,” the Aseret Yemei Teshuvah, that begin with Rosh Hashanah and end with the conclusion of Yom Kippur.
Four verses in the Torah reading last Shabbat (Ki Tetzei) and a ruling issued two days earlier, on September 8, by a U.S. district court judge for the Southern District of New York, brought to mind a topic rarely discussed in this space but very much a part of what we need to be concerned with during this period—namely, Jewish business ethics.
As the oft-quoted 4th century Babylonian sage Rava (Abba ben Joseph bar Chama by name) said, the first question we will be asked in facing judgment in the Heavenly Court is, “Did you conduct business faithfully?” (See the Babylonian Talmud tractate Shabbat 31a.) Not just honestly, mind you, but faithfully, meaning did you conduct business in a way that is faithful to the laws God gave us. Clearly, then, it is a highly relevant question we need to answer as we enter 5783.
Normally, I would not be alerted to anything related to (or even interested in) the Securities and Exchange Commission’s efforts to enforce its rules. My attention was caught this time because of who the U.S. district court judge was: Judge Paul A. Engelmayer, a distant relation.
The case in question is SEC v AT&T Inc. et al, and it involves Regulation FD (it stands for Fair Disclosure), a rule the SEC imposed just under 22 years ago that prohibits publicly held companies from selectively disclosing “material” information to market professionals, preferred shareholders, and others, but not to the investing public at large.
AT&T asked Judge Engelmayer to throw out the case on several grounds, but in a 129-page decision, he ruled that there was “formidable” evidence supporting the SEC’s allegations and ordered the case to proceed to trial.
Judaism banned such practices nearly 2,000 years ago. In fact, it has an advanced code of business ethics that makes anything the SEC comes up with pale by comparison.
Those four verses in Ki Tetzei, Deuteronomy 25:13-16, define the direction halachah takes regarding how we are to approach our day-to-day business dealings: “You shall not have…different weights, a large and a small. You shall not have…different measures, a large and a small. But you shall have a full and honest weight [eh-ven sh’lemah va-tzedek], a full and honest measure shall you have [eifah sh’lemah va-tzedek]….For all who do such things, and all who deal dishonestly, are an abomination to the Lord your God.”
The use of the word “tzedek” for “honest” is very telling. Other Hebrew words more directly make the point — “yashar,” especially, because it means honest. Tzedek, however, has multiple meanings, including righteousness, justice, truth, purity, honesty, equity, sincerity, kindness, virtue, and piety. As I have argued in previous columns, use of that word in halachic contexts demands that all of its various meanings apply to the law. In this case, the weights and measures must go beyond strict honesty; they must also be just, equitable, righteous, kind, and even “liberal,” in the sense of adding a little extra to a poor person’s purchase — without his or her knowledge, of course, to avoid embarrassing him or her, another aspect of tzedek. (See, for example, Maimonides, Mishneh Torah, The Laws of Theft 8:12.)
Among other things, what this means, in practical terms, can best be explained through a cup of flour. A cup is a cup, but the way it is measured may not be. In some places, the standard practice may be to level it off, providing exactly a cup. In other places, the practice is not to level it off, but to allow a little extra. Leveling it off, then, violates the “equal measure” requirement even though the result is a true cup.
The prophets took this principle very seriously. Thus, Amos says (8:4-10): “Hear this, O you who swallow up the needy, so as to destroy the poor of the land, saying: ‘When will the new moon be over, so that we may sell grain? And Shabbat, so that we may…make the ephah measure small and make the shekel great, and deal with deceitful scales; that we may buy the poor for silver, and the needy for a pair of shoes, and sell the refuse of the wheat?’ The Lord has sworn by the pride of Jacob, ‘Surely I will never forget any of their doings….I will turn your feasts into mourning and all your songs into lamentation….’”
Our Sages of Blessed Memory also took this very seriously. Thus, we are told in BT Bava Batra 88b: “The punishment for [false] measures is more rigorous than that for [incestual relationships with] forbidden relatives….[For the latter,] repentance is possible, but [in the case of dishonest weights], repentance is not possible.”
This statement is right on point halachically. Using a dishonest weight to defraud someone is an outright case of theft, which can be atoned for only after restitution has been made. That is rarely possible, though, because someone who uses a dishonest weight is unlikely to be able to name all of those customers who were defrauded.
In BT Bava Batra 90b, the Sages say that the business activities Amos was quoting God about include a middleman buying produce when the prices are depressed and hoarding it until the prices rise, lending money at usurious rates, reducing the communally set standards of weights and measures, and greedily raising prices on essential goods. (Items classified as “life’s essentials” are subject to price controls in a halachic economic system.)
There are other rules that begin in the Torah. Thus, Deuteronomy 19:14 tells us, “You shall not remove your neighbor’s landmark.” This, for example, prohibits planting a crop so close to the edge of your neighbor’s land that the roots of your plants could draw away nourishment from your neighbor’s crops. (See BT Shabbat 85a.)
In contemporary terms, this means that before a community can allow four similar businesses to operate within its domain, it first must determine whether there is enough business for all four to succeed. That is because the prohibition against removing a landmark is actually a ban on unfair competitive practices—and is one of the foundations for Judaism’s extensive business code.
A great many of our business laws are derived from a statement in Leviticus 19:14: “You shall not…put a stumbling block before the blind.”
Two principles — “lifnei iver,” or the placing of a stumbling block before the blind, and “geneivat da’at,” the theft of knowledge — derive from that verse. To them must be added the principle of ona’ah, which prohibits selling something for more than it is really worth, allowing of course for a reasonable profit for the seller.
A spate of economic crimes derives from these three principles. There are the obvious ones, such as false advertising, misleading sales pitches, and schemes to artificially inflate prices. Then there are those that are not so obvious—such as failure to publicly disclose information that could hurt a company financially. Consider the facts in the AT&T case before Judge Engelmayer:
In March 2016, AT&T realized that a much larger-than-expected decline in its first quarter smartphone sales would cause its revenue to fall far short of what analysts had predicted, or so the SEC alleges, and this would mark the third consecutive quarter that had happened. This could have resulted in driving down AT&T’s share price. To avoid that, the SEC claims, three AT&T executives “made private, one-on-one phone calls to analysts at approximately 20 separate firms,” making them privy to information the executives hoped would get the analysts to lower their revenue forecasts. They did. Their revised forecasts fell “to just below the level that AT&T ultimately reported to the public on April 26, 2016,” the SEC alleged.
Passing on “insider” information is an instance of geneivat da’at. As the SEC argues, investors may have reacted in the way AT&T feared if they had the same information the selected group of analysts were given.
Why are Jewish business ethics often far more stringent than anything governments can propose? Because Judaism maintains that everything comes from God, even wealth. To acquire wealth in unjust, dishonorable, and unethical ways is to dishonor God.
As complicated as the halachic business code is, it really is as simple as that. And how we do business is very much a part of the High Holy Days atonement equation.
As Rabbi J. David Bleich put it, “A pious Jew must be no less scrupulous with regard to the money which he deposits in his pocket than with regard to the food which he places in his mouth.” (See his Contemporary Halakhic Problems, Vol II, Part I, Chapter VI Business and Commerce, Page 121.)
Shammai Engelmayer is a rabbi-emeritus of Congregation Beth Israel of the Palisades and an adult education teacher in Bergen County. He is the author of eight books and the winner of 10 awards for his commentaries. His website is www.shammai.org.