Exchange to get tough on share price massaging

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The Independent Online
NEW guidelines on the release of information to the stock market will take a tough line against selective release of information to massage share prices, Sir Andrew Hugh Smith, chairman of the Stock Exchange, said yesterday.

But he made it clear they will not require substantial changes to the exchange's rulebook or to the law.

Giving a preview of the guidelines, to be released later this month - after collaboration with finance directors, institutions and analysts - Sir Andrew said they were not a gloss on existing rules and still less on legislation. He doubted whether they would 'revolutionise the way in which most companies talk to the City'.

He said: 'Selective release of price-sensitive information can have no place in a capital market. I would anyway suggest that market expectations rapidly adjust and those who massage their share price do not change the end result.'

He made it clear companies must be prepared to make an announcement to the market when investors' and analysts' expectations were out of line with reality.

Companies must not allow news to 'seep out', which they do when they worry that a formal announcement will lead to over-reaction. He criticised the growing tendency to 'nudge and wink'.

The guidelines will say companies should use their judgement by not going to extremes and announcing everything, clogging the exchange with enormous amounts of information. Similarly, investors and analysts must use their judgement by not treating announcements in extreme ways. All this would require a change in culture in the market, Sir Andrew said.