City & Business: Insider phobia

Companies, stockbrokers and institutional investors are all running scared, worried they may be accused of disseminating, receiving or using inside information. Going, if not completely gone, are the days when analysts could be 'steered' in the direction of the likely results.

The rules on insider trading are complicated. Companies have to be au fait with the Stock Exchange rulebook, its recently published Price Sensitivity Guide, the Takeover Code, the Financial Services Act, the Companies Act 1985 and the Criminal Justice Act. Advice is desperately needed and, as we report on page 1, it will shortly be forthcoming in the shape of guidance notes from the Financial Communications Committee.

Already companies are making more announcements - many of them trivial - through the Stock Exchange. The problem is that these are costly in terms of advice and management time. Every word has to be scoured carefully by directors, bankers, brokers and PR advisers. There will often be as many as half a dozen drafts. Companies, who used to be able to get meanings across with a nod and a wink, are getting bogged down in semantics.

The great danger is that companies will end up by saying less than they used to. That is when false markets arise. And false markets are precisely the climate where insider traders prosper.

The banker Sir Martin Jacomb was wrong when he famously referred to insider trading as a victimless crime. He's doubly wrong now. Every company in the land is now a victim, saddled with the increasing burden of keeping the market informed while staying on the right side of the insider dealing rules.