RAB Capital hits out at Stock Exchange

RAB Capital, the quoted hedge fund manager, has become involved in a dispute with the London Stock Exchange Regulatory News Service (RNS) following an after-hours announcement that caused some in the City to believe it was trying to sneak out bad news.

The company claimed yesterday that Thursday evening's current trading announcement should have been made yesterday morning. "We did not try to sneak this one out, the LSE broke our embargo," it said.

When an RNS announcement is submitted to the LSE, companies can choose to delay the release by requesting an embargo with a specific release time and date.

Some followers of the stock had their suspicions aroused by the timing of the announcement, made at 6.30pm and long after most traders and observers had left. It is not unusual for companies wanting to hide bad news to make announcements after the market has shut or during what they know will be quiet trading periods.

The statement, in which RAB said it expected to beat last year's pre-tax profits, made no mention of market consensus forecasts nor of funds under management. The company, like many hedge funds, will not know management performance-related fees until the final day of trading when year-on-year fund performance is calculated. Should the market drop significantly on the last trading day of the calendar year, performance fees would be severely impacted.

The LSE said RAB's announcement was marked "for immediate release" and the procedure for embargoing announcements was straightforward.

On the back of the announcement,KBC Peel Hunt, the house broker, upgraded forecasts by about 25 per cent, having previously expected pre-tax profit of £9.6m. RAB, which floated in March, made a pre-tax profit of £10.6m in 2003. Consensus forecasts predict £12.5m of pre-tax profits in the current year.

Andrew Shepherd-Barron, an analyst at KBC Peel Hunt, said that although RABhad a "superb time in September", the lack of any news on funds under management and redemptions was cause for concern. "The company probably doesn't want to turn itself into a hostage of fortune," he said.