FSA to crack down on selective briefings

SIR HOWARD Davies, the chairman of the Financial Services Authority, the City watchdog, yesterday announced a crackdown on selective briefings by companies of price-sensitive information to analysts and the media. He warned that the FSA would pursue cases where companies had given out privileged information on a selective basis.

SIR HOWARD Davies, the chairman of the Financial Services Authority, the City watchdog, yesterday announced a crackdown on selective briefings by companies of price-sensitive information to analysts and the media. He warned that the FSA would pursue cases where companies had given out privileged information on a selective basis.

Under the new Financial Services and Markets Act, coming into force next July, the FSA will have power to impose unlimited fines on companies that breach the financial disclosure rules. "We are not prepared to see the integrity of London's markets compromised by this kind of behaviour. Companies, and analysts, should be in no doubt of that," Sir Howard said.

He added: "There is nothing more corrosive of market confidence than the feeling that some investors are deliberately excluded from an inner circle of privileged counterparties."

The FSA, which took over responsibility for policing stock exchange listings from the London Stock Exchange in May, will also be revising the disclosure requirements and will publish a new set of guidelines next year.

Yesterday's warning follows a spate of complaints about company news filtering out into the market before announcements, leading to sharp rises in share prices ahead of deals. It also follows the introduction in the US of new disclosure rules to stop selective analyst briefings.

UK listing rules state that any information that might be price sensitive must be announced to the market as a whole without delay and "must not be given to anyone else before it has been so notified".

Sir Howard said there had been a number of well publicised recent cases of apparently selective briefing of analysts, or in some cases the media. Although in some cases the FSA had concluded that the cause wascareless practice rather than deliberately selective briefings, Sir Howard said these could be just as damaging to market integrity as deliberate leaking.

He said companies needed clear policies on any briefings and who delivered them. Company representatives should refuse to answer questions that could elicit information which, alone or cumulatively, could be price sensitive.

The FSA chairman said companies did not have to correct analysts' own forecasts, but might choose to do so if errors relate to information already in the public domain. Where an analyst's forecast is so inaccurate as seriously to mislead the market, companies may consider releasing an announcement to correct this.