William Kay: FSA chief scores an own goal with soccer clubs

Sir Howard Davies, the soon-to-quit chairman of the Financial Services Authority, has had to play King Canute a few times during his reign but probably none match his latest effort. This week he wrote to all football clubs with a full Stock Exchange listing to remind them that they have to comply with the same rules as every other quoted company when it comes to what is known as price-sensitive information, the sort that can move a share price.

The clubs, which include Manchester United, Leeds United, Aston Villa, Tottenham Hotspur and Celtic, must release such information immediately and must "prepare for the leak" of such information by drawing up a holding statement, presumably saying "no comment" or "mind your own business".

This could be a blow to fans of such clubs who, at times such as the current close season, have no meaningful matches to watch and therefore must exist on a diet of rumour, speculation, innuendo, hints and outright newspaper guesswork about which players are going to be bought or sold.

The trouble is that, if the player in question is valuable enough, tales about his coming or going could constitute price-sensitive information because, as the FSA puts it, such a move could be "material to the club's prospects".

But what about this week's sale by Manchester United of Juan Sebastian Veron to Chelsea? On the face of it, that should not have been deemed price-sensitive, for Mr Veron was sold for £15m, or only 4 per cent of the club's £366m stock market worth.

Man Utd announced the deal to the Stock Exchange, and that day the shares fell 2p to 161p. Because shareholders were disappointed that Chelsea did not pay more? Who can tell?

When the rumours about David Beckham's departure began in March, the shares fell 10p over three weeks to 125p. That seems a price-sensitive reaction. As the Beckham deal was being rumoured to be worth £25m to £30m, or about a tenth of the club's then value, should the board have put out a holding statement?

The president of Real Madrid, Mr Beckham's eventual new employer, issued a denial in the strongest possible terms but that didn't do much good: too many people were in the know.

The problem for the regulators is that they are faced with a two-tier market. Arsenal was omitted from the FSA's edict on the curious grounds that its shares are not traded on an official exchange but the unofficial Ofex which matches buyers and sellers.

But it has shareholders, and the share price can be just as affected by rumours that, say, Patrick Viera might be leaving.

Apart from Arsenal, unlisted clubs, as Chelsea has become since it was bought by Roman Abramovitch, have no obligations to the FSA. They can fuel or dampen speculation as they like, and if the story in question happens to involve a listed club, too bad.

Sir Howard's letter has all the marks of a box-ticking exercise: it makes it look as if the FSA is doing something, but I think soccer club shareholders and fans can look forward to an undiluted diet of gossip.

* The Association of Investment Trusts has tested the temperature of the investing public and has, not surprisingly, found that it is somewhat cooler than the record-breaking outdoor temperatures these days.

More than eight in 10 of those surveyed said they planned no action on their decision to increase or decrease their stock market holdings, and nearly a third believe the market is still too volatile.

That will disappoint many investment professionals, given that the FTSE 100 index has been so steady for the past four months.

But this shows confidence has been so badly battered it will take time to revive. This is confirmed by the headline result of the AITC survey, showing that 57 per cent of investors prefer low mortgage interest rates to high savings rates.

The young are the least adventurous at present, mainly because they are the ones with the mortgages but without the spare cash to invest. Only one in four people would prefer high savings and mortgage rates.

Ignorance is also playing a part, according to the AITC, because half those surveyed said either that they did not think there were better returns to be had elsewhere, or they did not know how to move into such havens.

But of the canny one in seven who have switched out of bank and building society accounts, three-quarters have moved into equities while the rest have take the sensible first option, to pay off existing debt.

Although a few investors have been moving money out of deposit accounts into shares, the stock market's recovery will be restrained by the majority's reluctance to return to the scene of their wealth's recent destruction.

I believe the FTSE 100's quiet behaviour is the best thing that could happen. The longer it goes on, the less likely it will be that we shall see a sudden plunge, threatening the March low of 3287, and the more likely investors will be encouraged back in. So don't look for fireworks: just enjoy the calm.

w.kay@independent.co.uk

William Kay is Personal Finance Editor of 'The Independent'