Misleading Advice in Judaism
Non-disclosure, conflict of interest, easy credit all violate the biblical injunction not to
An expert in Jewish business ethics explores the ramifications of the "stumbling block" (lifnei ivver) ban as applied to the contemporary financial world. Here Dr. Tamari addresses issues that have arisen in prominent scandals in multinational corporations whose accountants acted both as auditors, responsible to the public, and as business consultants, responsible to the corporate client. (This is the second of two articles on applying this principle. The first is "Assisting the Perpetrator of an Evil Deed.") Reprinted with permission from The Challenge of Wealth: A Jewish Perspective on Earning and Spending Money (Jason Aronson).
[One] view of the lifnei ivver concept refers to the injunction of giving misleading advice. This is not the same as providing business consultancy that results in a loss, but refers to the kind of information in which the recipient is blind either to the final effects of the advice or to the special interest that the consultant has in such advice. Consultants and advisers such as accountants, lawyers, insurance agents, investment advisers, and stockbrokers would seem to be obligated to review the advice given to their clients in order to obviate the possibility of putting a stumbling block in the path of the blind.
The Midrash relates to lifnei ivver by enjoining us, "Do not offer another advice that is detrimental to him. Do not tell him to leave a town early in the morning, knowing full well that there is a danger of him being attacked by robbers, nor [tell him] to leave in the afternoon, knowing that this will cause him to lose his way. Do not tell him, 'Sell your field and buy a donkey' when you intend to buy a field [and Rashi adds: to sell a donkey]." (Sifra to Leviticus 19:4)
Underlying the simple example provided by the Midrash and the commentators is an important and primary injunction, relevant to the whole gamut of financial and advisory services. In view of the modem explosion of these industries, lifnei ivver becomes more important perhaps than ever before in economic history. A number of examples of its present-day relevance should be considered here.
In many countries, commercial bankers serve as investment advisers to their depositors, yet at the same time buy and sell stock on their own account, issue their own stock to be traded on the stock exchange, and underwrite the issue of corporate stock to the public. They are also related through various devices to insurance corporations, mortgage banks, and even industrial or commercial enterprises. It may very well be that a conflict of interest exists between those functions and the advice given to their depositors, which if not revealed, would seem to be a case of lifnei ivver. One of the reasons for the regulation of the financial institutions after the Depression in the United States was to prevent such conflict of interest by restricting the activities of the commercial banks.