Rose defends M&S share dealings ahead of FSA questioning

Investors back embattled chief executive * Goldman's refuses to retract claims
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Stuart Rose will today face questioning from the Financial Services Authority over his decision to purchase a block of shares in Marks & Spencer last month.

Stuart Rose will today face questioning from the Financial Services Authority over his decision to purchase a block of shares in Marks & Spencer last month. Mr Rose launched a vigorous defence of his conduct ahead of his appointment as chief executive in May, but promised to step down if the FSA investigation concludes he acted wrongly. He is due to meet the FSA late this morning.

The former Arcadia boss bought 100,000 shares in M&S on 7 May, within 90 minutes of receiving a telephone summons from Philip Green, who is in the throes of trying to buy the retailer. Mr Green asked Mr Rose, an old acquaintance, to meet him on 12 May for a "chitty-chat". Both men assert that no mention of M&S was made during the three-minute phone call.

Meanwhile, a row between Mr Rose and Goldman Sachs, the investment bank advising Mr Green, threatened to escalate. Mr Rose wrote to the US bank on Sunday night, hitting out at a report in The Sunday Telegraph that a Goldman's banker had claimed to have overhead the M&S boss telling Rosemary Thorne, Bradford & Bingley's finance director, that he would chair Mr Green's bid company. Mr Rose accused the bank of "promoting an untruth, to damage my reputation and in so doing to further your proposed offer for Marks and Spencer".

Although Mr Rose demanded a retraction from the US bank by 5pm yesterday, sources said Goldman's did not intend to back down. The bank did not meet Mr Rose's deadline. Goldman Sachs refused to comment.

Investors in M&S threw their weight behind Mr Rose. David Cumming, the head of UK equities at Standard Life Investments, said: "Stuart Rose has got retail experience to turn M&S round. His share trading activities don't change that so we are still supportive." Another shareholder said: "We would give him the benefit of the doubt on the evidence we have today." But the shareholder called for the FSA to crack on with its inquiry. "We would like any investigation that takes place to take place as quickly as possible so we can decide whether there is any substance in it [suggestions of impropriety]," he said.

The FSA's decision late on Friday to hand its initial investigation of all "suspicious price movements" in M&S stock to its enforcement arm suggests it has already found some evidence to merit summoning up powers that in some cases top those of the police. Its enforcement division can question witnesses under caution and force them to hand over documents.

Mr Rose said he would co-operate fully with the FSA. "If I had done something wrong I would step down," he added.

Paul Myners, M&S's acting chairman, issued a robust defence of Mr Rose's actions as he hit out at what he called "material factual inaccuracies and innuendo" in weekend reports that suggested Mr Rose discussed the forthcoming M&S bid with a number of people. "The facts are clear. When Stuart acquired shares in M&S on 7 May, he did not know either that Philip Green would make a bid for M&S or that he would be asked by the company to become its chief executive," Mr Myners said.

M&S said its board was "totally supportive" of Mr Rose and laid out for shareholders the "key facts" over his decision to buy its shares. It confirmed Mr Green broke the news about his planned bid to Mr Rose on 12 May. "Stuart Rose did not improperly inform anyone about what was disclosed at this meeting," it said. In response to claims from Goldman's that Mr Rose was overheard telling Ms Thorne he had been offered the job of chairing Mr Green's bid vehicle, it said: "Stuart Rose was not offered the job of chairman of Philip Green's bid vehicle and has never claimed that he was."

Lastly, the company said Mr Rose had informed it about his share ownership "prior" to his appointment as chief executive: "The board has satisfied itself that Stuart has acted properly."

Yesterday, Michael Spencer, the Icap boss caught up in the M&S shares investigationfollowing his decision to trade its stock after a meeting with Mr Rose, said the FSA already knew about his share purchase. Mr Spencer said he instructed his private investment company, Intercapital Private Group, to take out a contract for difference through City Index for 2 million shares in M&S on 11 May at 274p. "As with all such transactions at City Index [which he controls], this deal was automatically reported to the FSA within 24 hours," he said. Mr Spencer defended Mr Rose's conduct during their 10 May meeting. "At no point did Stuart say, or give any impression, that he knew of any forthcoming bid for M&S or that he had been approached by Philip Green or anybody else with a view to a role in a bid for M&S," he said.