FSA begins Michael Page investigation amid fears investors were misled

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The Independent Online

The recruitmentT company Michael Page International is braced for a showdown with the City when it reports its interim results next week after it emerged that the Financial Services Authority has began an investigation into the company.

It is understood the FSA is looking into whether investors were misled in the run-up to the company's £650m stock market flotation in March last year. The City watchdog is believed to be investigating statements made in the group's flotation prospectus to decide whether some of the information was misleading. It is also examining statements made by the company since then to establish whether the group has kept the markets properly informed of price sensitive information. The FSA has contacted the company about its concerns. It is understood the regulator will also be speaking to Credit Suisse First Boston, the company's broker.

If the FSA finds evidence of wrong-doing it can publicly censure the company. Under powers due to be granted under the Financial Services and Markets Act in November, the FSA can also fine publicly quoted companies. Michael Page shares were priced at 175p per share in the flotation after its investment bank Credit Suisse First Boston was forced to cut the price from an original range of 190p-250p. But the shares sank after a profits warning in June which came less than two months after the group assured markets that trading was "in line with expectations". Yesterday the shares fell 3p to 133p with the City now braced for a further profits warning when the half-year results are reported on Tuesday.

The FSA is believed to be concerned that the company failed to warn investors about the impact of the economic downturn on its business at the time of the flotation. Shares in recruitment companies have been sliding in recent months as the major companies, particularly the big banks, cut jobs or introduced hiring freezes. Yesterday, Ian Jermin, an analyst at Granville Baird, said: "There is every possibility it may come out with another profit warning. All the signs are that demand is still weakening."

The company declined to comment yesterday as did the FSA and Credit Suisse.

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