Richard Burger reports on the FSA's efforts to stop the leak of inside information from the unregulated sector
Last summer the Financial Services Athority (FSA) reviewed the controls over inside information during public takeover and merger transactions (see “Plugging the leaks” 157 NLJ 7287, p 1,222). The review considered how inside information leaks from such transactions, identified good practices to combat these leaks and suggested the introduction of a voluntary code for non-FSA regulated firms who participate in mergers and acquisitions (M&A) work. A year later, the FSA has published a set of Principles of Good Practice (the principles) for the handling of inside information, aimed at the unregulated sector.
The Market Misconduct Problem
The FSA aims to reduce the number of abnormal or informed price movements (IPMs) in advance of significant regulatory and/or takeover announcements to the market by listed companies. According to ongoing FSA research, in 2007 some 28.7% of M&A announcements were preceded by IPMs. It is entirely possible to attribute such movements to accurate financial analysis or deliberate strategic leakage of information by a target company, but IPMs still suggest market
