Insider guidelines get cool response: Exchange will need strong evidence for public censure

THE London Stock Exchange's guidelines aimed at curbing insider dealing received a reluctant welcome from the City yesterday, as sceptics acknowledged that a move towards more formal relations between investors and companies was inevitable.

The 15-page document, 'Guidance on the Dissemination of Price Sensitive Information', is a voluntary code for companies and stock market participants. It will not have legal standing, and the Stock Exchange will only publicly censure parties that blatantly go against the code if it has overwhelming evidence of misbehaviour. The Exchange will, however, privately censure companies in less clear-cut cases.

The code was published ahead of the Government's new insider dealing laws, which come into effect next week.

The Exchange issued a draft on the guidelines last November, and after hearing from more than 70 organisations it incorporated the following points:

Companies will not have incessantly to issue rebuttals of press reports if these are inaccurate because of a mistake by a third party.

Companies need not divulge commercially sensitive information.

Companies should brief employees on what to say to analysts during factory visits and the like.

Companies will be encouraged to talk to their own industry regulators about what might be price-sensitive information.

The guidance does not affect a company's duty to observe the Exchange's Listing Rules. If, however, the Exchange has reason to consider whether or not those rules have been followed, it will take account of judgements honestly made in accordance with the guidelines.

The Exchange has made guidance on sensitive information a top priority. This follows well-known cases such as its public censure of LIG last year and the prosecution for insider dealing of the Scottish analyst Thorold Mackie, whose conviction was quashed on appeal last week.

Sir Andrew Hugh Smith, chairman of the Exchange, said that the guidelines might well contribute to a change in the culture of the marketplace, both in the way that companies make announcements and in the way the market reacts to them.

'It is not revolutionary - many companies have operated in this way for years. But companies lost confidence in their procedures after recent legal changes and disciplinary cases,' he said.

'Without guidance, communication between companies and the market was being substantially reduced. If this guidance can help restore confidence, and encourage a planned approach to communicating, it will have served its purpose.'

The Exchange stopped short of compulsory quarterly reports by companies, in favour of recommending that they should keep in touch with investors as often as possible.

Martin Hall, who chaired the guidance working party, said they did not intend to push towards compulsory quarterly reporting. 'But the more often a company communicates with the market, the less chances there are of shocks.'

Chris Parsons, a partner with solicitors Herbert Smith, who has been advising companies on implementing the new guidelines, later echoed this view.

'Companies are relieved that the Exchange has not introduced formal rules on quarterly reporting,' he said. 'This would be OK for ICI but it would be unfair on smaller companies, which just do not have the resources (to produce the extra reports).

'Companies should rethink their approach (to sensitive information), otherwise there will be more public and private censures by the Exchange.'

Critics of the guidelines think they lack teeth. Mr Hall admitted the Exchange could make public censures of companies only when it had very strong evidence to back up its case.

The Exchange will review the working of the code in a year's time, and Mr Hall said it should evolve with experience.

View From City Road, page 32

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on