Putting It About: Information in the Market

Date01 February 1995
Published date01 February 1995
AuthorRichard Lines
Journal of Financial Crime Vol. 3 No. 1 —Financial Fraud
Putting It About: Information in the Market
Richard Lines
If regulation of the financial services industry has a
principal purpose, then it should be the protection
of the investor. There are many elements to this
and foremost among them is the requirement that
information about investments should be made
widely available in an orderly manner.
The way in which companies disseminate infor-
mation became a hot topic in 1994. LIG plc was
publicly censured by the London Stock Exchange
for mishandling it. The Criminal Justice Act 1993
came into force with the new insider dealing pro-
visions and the London Stock Exchange published
its 'Guidelines on the dissemination of price sensi-
tive information'. These three events were,
incorrectly, perceived by many as being linked.
Cumulatively they caused a considerable stir.
Many companies and, it must be said, their pro-
fessional advisers took a view that they could no
longer speak safely to analysts. One-to-one meet-
ings ceased to be common practice. Directors
simply prepared cautious, anodyne press releases
and refused to elaborate.
If companies over-reacted, analysts became
incandescent. At least a certain type did. 'The end
is nigh', they wailed. The end of their special rela-
tionship marked the end of their ability to obtain
guidance from companies' directors that they
could use to put their research into context.
Others took a more pragmatic view. The former
head of research for a major provincial banker
observed the collapse in the relationship between
companies and analysts with some comfort.
Expressing a view shared by many she felt that if
companies would not speak to analysts then opin-
ions would have to be based on genuine research
and if the companies disliked the conclusions
drawn then they would have to live with them.
Analysts' reputations would be founded solely
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