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Memo: to the members of the Investor Relations Working Group.

You are charged with drawing up new guidelines on how directors should communicate with the City, a subject clouded by confusion, frustration and distrust. You have my sympathy.

The muddle you are meant to sort out was exposed in May when the Stock Exchange publicly reprimanded London International, the Durex condom maker, for telling 13 analysts that its results would be lower than they had been expecting. It said the company should have put out a warning on the exchange's news service first.

The effect was dramatic. Directors in lots of companies suddenly clammed up.

They were frightened of talking to anyone on a selective basis. Lucas even put out a three-page press release saying what it was going to tell 26 stockbroking analysts due to visit one of its factories that afternoon.

But the risks of interpreting the rules so narrowly are huge. Look at what happened to Sage.

Its shares have yet to recover from the beating they got when the computer company said its profits would be lower than expected. It added that they would still be higher than last year. But no one took any notice and investors sold the shares as if they had lost all confidence in the company.

A greater difficulty for the Stock Exchange in its attempt to ban selective briefings is that the whispers have started again. Just four weeks after the LIG bombshell, most of the Sunday papers carried stories forecasting that Tomkins would announce profits of more than pounds 170m the following week. Lo and behold, it made pounds 171m.

How did they all get the (correct) story? I do not know but I can tell you how similar cases have come about in the past.

Towards the end of the week we get a call from someone in a public relations firm saying we might like to know that, although the market is expecting XYZ company to make pounds 20m profits, it should report nearer pounds 30m. It is as simple as that.

Sometimes the stories vary slightly. One paper predicts pounds 28m, another pounds 32m. It is possible that this is because one firm gives different figures to different papers.

If so it would not only be breaching your existing guidelines but attempting to hide its tracks.

So far, much of the debate has concentrated on how companies should communicate with stockbrokers' analysts, many of whom find it enormously frustrating that they can no longer ring up finance directors for guidance about figures. They have to rely far more on their own judgement.

But you have a bigger problem with journalists than with analysts, if you try to control them as well. You might be tempted to ignore this argument as a piece of special pleading, but I make no apologies for it.

The existing guidelines on investor relations say: 'Companies should release information only through agreed channels by authorised spokesmen. On no account should briefings be given to selected journalists in advance.'

As you know, this guidance has been regularly ignored, to the benefit - I admit - of our business pages and those of other papers.

You are now under pressure to impose that guidance for real, putting journalists under the same restrictions as analysts. But they form two distinct groups and should be regulated accordingly.

Analysts talk to companies in the hope of finding out something that will gain them commission: that is, prompt their clients to buy or sell shares. This contact is rightly a matter of concern for the exchange, which is responsible for ensuring the integrity of the stock market and for investigating insider dealing.

But the situation is quite different for journalists. They talk to companies in the hope of writing stories in a paper - informing the public - rather than stimulating share deals.

The exchange has traditionally argued that news on Topic is available to all segments of the market at the same time, which is nonsense.

While the news is available to all those with Topic sets, it is not available to Aunt Agatha, Sid or Jeremy Spiv, who do not have a stockbroker happy to ring them up each day with titbits as soon as they appear on the screen.

They have to wait until the next day - when they can read the news in the papers.

The exchange may be acting in the City's interest in insisting that all news goes out on its news service but it is not necessarily acting in the public interest.

Newspapers are available to fund managers and private investors at the same time. They inform a far broader group of investors than Topic. And newspaper circulations makes the Topic coverage - 10,000 screens - look puny.

Assuming journalists do not themselves deal on their news before their story is published, their work should not raise questions about insider dealing. The legislation covers dealing on unpublished information.

Your working group is made up of professional investors as well as company directors. Are private investors represented on it? Do they think newspapers should be subject to the same restrictions as analysts?

I am not arguing that companies should release all their news through the pages of the Independent or any other newspaper. But I see no reason for clamping down on journalists as you are doing on analysts.

They have a broader public function than serving the City's needs.

As for the special pleading - I am guilty as charged.