PowerGen calls for tight lips: Regulators' private policy briefings should be banned, director says

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The Independent Online
THE pressure to control price-sensitive City company information was increased yesterday by PowerGen, the electricity generator, which said private briefings on regulatory policy should be banned.

The share prices of organisations such as the electricity companies, British Gas and BT often react sharply to changes of view by the regulators, revealed in analysts' recommendations or newspaper reports.

Michael Reidy, a director of PowerGen, told a conference that both regulators and the companies they supervise 'have a responsibility to avoid informal briefings on regulatory issues which might impact the share price'. This applied to all regulators and companies, not just Offer, the electricity watchdog, he said.

This was all the more important in areas of 'judgemental regulation' where decisions depended on the discretion of both sides rather than hard and fast rules.

Mr Reidy said typical shareholders would not be able to factor regulatory issues into their decisions about buying and selling. They might be surprised, confused and disadvantaged by share price fluctuations they could not connect to company performance.

Mr Reidy said PowerGen did not want to suffer the wrath of the Stock Exchange for the informal briefing of a select few with price-sensitive regulatory information. In a reference to briefings by regulators, he said: 'We find it of particular concern when informal comment emerges elsewhere.'

Mr Reidy's comments followed Stock Exchange criticism of companies that give informal price-sensitive briefings to analysts. Paul Myners, head of Gartmore, the fund management group, who criticised the Stock Exchange recently for not being tough enough on insider trading, is a non-executive director of PowerGen.