Compliance also gets wary about any trading activity in companies that are mentioned in interviews. Portfolio managers are discouraged from discussing any stock they’ve recently traded in or plan to trade. Similarly, portfolio managers may be restricted from trading in a stock they mentioned during an interview. The purpose of these restrictions is to avoid any appearance of trying to manipulate the price by, for example, talking positively about a company in order to drive up the price and sell it. In order to monitor this, some firms require PMs to email compliance to document any stocks or securities discussed during an interview. Some may limit trading in a stock for as much as 10-15 business days after mentioning it in an interview. And these limitations can apply across an investment team.
While some may place limitations on trading, most policies aren’t so strict as to prevent a portfolio manager from doing what they believe is in the best interest of clients. For example, if a material change in the environment occurs and a portfolio manager needs to buy or sell in response during a period when they may be restricted from trading due to an interview, most media policies will allow them to make a change, but to document the buy or sell decision and the reasoning behind the change. Compliance must then monitor exceptions and confirm details.
Performance: another hot button
Mutual fund or ETF performance discussions are also likely to raise concerns for compliance. As with written marketing materials, compliance also discourages discussion of performance during interviews. Here they are worried about “cherry picking,” anything that might position investment performance in a positive light without showing the full performance history or standardized returns. Compliance is also concerned about anything that may imply that past performance might repeat. Best practice for sources is to try to avoid discussions of performance or, if performance comes up, to share a link to the fund’s standardized performance information.
Good media policies are the backbone of financial PR
The heart of a good media policy is to make sure that interviews follow the same basic compliance rules marketing teams must follow to encourage transparency, accurately represent performance, and avoid any conflicts of interest. Well written media policies can help portfolio managers avoid these pitfalls. They provide useful guardrails on what can and cannot be discussed. And spelling out the process can help the media team eliminate confusion and manage expectations, as well.
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