Swiss Bank dealt blow over Trafalgar bid
Tuesday 14 February 1995
The SIB said that the use of such "contracts for differences" could result in a breach of its principles and may result in regulatory action under the Financial Services Act.
The SIB does not name Swiss Bank Corporation or any specific bid. However is comes as the Securities and Futures Authority continues an inquiry into the use of contracts for differences in the Northern bid.
The contracts, between SBC and Trafalgar, allowed Trafalgar to benefit from the movements of the share price of Northern and some other electricity companies.
Separately, SBC's market-making arm took stakes in Northern and Yorkshire Electricity. There is no suggestion that the Swiss Bank market makers were told about the impending bid.
The SIB said: "Irrespective of the position under the criminal law, authorised firms must observe SIB's principles in their securities businesses, in particular those obliging firms to observe high standards of fair dealing and of market conduct." The SIB's concern is where parties to contracts for differences possess unpublished price sensitive information and where one party - or an associate in its group - might deal in securities affected by that information in order to hedge exposure under the contract.
The SIB said that the advice "is general and not intended as any criticism of any party in respect of any past transaction".
It also said that the board did not wish to discourage innovation but that firms should consult the regulatory authorities in any situation where there is a risk of breaching the principles.
Swiss Bank said: "We have noted the SIB guidance and we will be complying with it at all times seeking guidance on all those leading edge transactions which warrant it."
The bank has repeatedly stressed that it was cleared by the Takeover Panel and the Stock Exchange prior to the use of the contracts.
The Stock Exchange has subsequently exonerated Swiss Bank but said that the rules regarding contracts for difference may need to be changed.
Jack Cunningham, shadow trade and industry secretary, called on the Government to make its position on Swiss Bank clear. No decision has been taken by the Department of Trade and Industry on whether a formal investigation should be launched.
Northern is being forced to write to shareholders to retract statements made in a defence document last week which raised questions concerning the financial viability of the Trafalgar House group.
The circular is to be sent following a threat of legal action from Trafalgar for defamation. It marks the latest round in the increasingly bitter bid battle.
Nigel Rich, chief executive of Trafalgar, said: "During the course of our offer Northern Electric have made misleading statements about our financial condition. This time they really went too far."
The war of words raged as the companies await the publication of a decision by Michael Heseltine, President of the Board of Trade, on whether the bid should be referred to the Monopolies and Mergers Commission.
- 2 Joan Rivers: 'Palestinians deserve to be dead'
- 3 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 It's not just the savagery of Isis that is shocking – its weaponry is too
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Joan Rivers: 'Palestinians deserve to be dead'
Sir Paul McCartney makes his stance on Scottish independence known
PM sets out tough new anti-terror measures in response to heightened threat
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...