FSA to fine journalists

JOURNALISTS AND public relations agencies could face unlimited fines for publishing misleading financial information under strict new rules proposed by the Financial Services Authority.

The FSA said it would be unacceptable for anyone to put out misleading information about shares in which they had a material interest. This would include media professionals.

The measure is part of an extension of regulators' powers that will allow them to police anyone at all involved in financial abuse under a new code of market conduct.

The code, issued in draft form yesterday, seeks to outlaw the abuse of privileged information. It states that no one must deal, or induce others to deal, in an investment when they have information which cannot be legitimately obtained by others.

The new measures,which are subject to consultation until November, will also crack down on artificial transactions designed to manipulate prices. Squeezes, such as the attempt to "corner the market" by Yasuo Hamanaka, the copper trader employed by Sumitomo bank, would be unacceptable. The code is also meant to help victims of financial abuse get compensation.

The reforms are unprecednted in the West in that anyone, whether regulated or not, can be fined. Until now, regulators have only been able to fine registered investment professionals.

Michael Foot of the FSA said: "We will revise and develop the code up to the passage of the bill and beyond. It is important for the London markets that we get this right."

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