Panel lays down law to PR firms


The chairman of the City's Takeover Panel, Sir David Calcutt, has issued a stern warning to the financial public relations industry about the improper leaking of price-sensitive information before and during takeover bids, it emerged last night.

The contents of Sir David's letter - which have been leaked to the Independent - caution senior figures in the industry and come in the wake of a stinging public rebuke by the panel of Financial Dynamics, one of the industry's leading firms. The panel, the self-regulatory body that sets the rules for takeovers, rebuked Financial Dynamics during the recent failed bid by Kvaerner for Amec, for the improper leaking of a profits forecast to an industry analyst.

Although Amec retained its independence, the panel's criticism pushed it to sack Financial Dynamics and appoint a rival firm in its place.

In his letter, Sir David says that at the panel's last meeting the view was expressed that there was an increasing level of concern about the number of unauthorised leaks. He warned that the panel's executive would deal "very firmly" with any further breaches of the panel's code, which insists that all information of a price-sensitive or material nature is released in an orderly way to all shareholders at the same time.

The letter comes at a time when Financial Dynamics is also being investigated by the Department of Trade and Industry over the alleged leaking of price- sensitive information ahead of financial results from Caradon, the building products group, last September.

The Department of Trade and Industry has taken the case on from the London Stock Exchange's surveillance team, which recently completed a report into the affair.

The exchange has listened to tape recordings of conversations between an employee of Financial Dynamics and an analyst from Robert Fleming, the investment bank, ahead of the public announcement of a profits warning from Caradon.

Three employees have left Robert Fleming as a consequence of the bank's own internal investigation into the affair. However, Financial Dynamics has maintained that the allegation that its chiarman, Tony Knox, provided analysts with inside information about the financial results of Caradon is "quite untrue".

The Takeover Panel has strict rules about the release of information and hopes that the financial public relations industry will adopt these rules voluntarily.

However, there are a growing number of people within the City, including Anthony Cardew of Cardew and Company, who believe that the public relations industry will be better off being properly regulated. Mr Cardew has said that he believes individuals and public relations companies should be awarded licences which can be withdrawn for breaches of conduct.

He is believed to be supported in this view by Simon Lewis of NatWest, who is the City's spokesperson for the financial public relations industry.

During the course of the recent pounds 3.8bn bid by Granada for Forte, the Takeover Panel was concerned by the level of confidential detail that appeared in newspapers. The director-general, Bill Staple, rang an Independent journalist pressing for the source of information on Granada's proposed cost savings if it won the bid. The Independent declined to co-operate, claiming the right to protect its sources.

The panel is believed to be getting increasingly concerned by stories which quote "sources close to the company," believing that in the main these involve quotes or information given to newspapers by public relations consultants.

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