The FSA’s clampdown on listed companies talking to the media “will only injure the market integrity they purport to protect”, four media groups have warned the regulator.
In a joint letter, the editors of the Financial Times, Thomson Reuters, The Times and The Guardian have expressed “profound concerns” about recommendations in the FSA’s September Market Watch newsletter.
The newsletter recommended that all non-media staff at listed firms should be banned altogether from responding to media enquiries, in a bid to crack down on the leaking of insider information.
But the editors’ letter suggests this is a “misguided response” which would damage rather than protect the interests of investors.
It says: “Properly functioning financial markets rely on the flow of accurate and timely information, available to all participants simultaneously. in the world of instant media, the pressure on journalists is to publish information ahead of anyone else. This information, in turn, is swiftly picked up by others. So the media, contrary to the assumptions underlying the recommendations, actually play a key role in protecting investors and other markets’ participant by inhibiting the creation of an unlevel and unfair market place due to the limited circulation of insider information.
“These proposals reflect a wilful misunderstanding of the relationship between the City and the press and will ultimately do more harm than benefit to the flow of reliable information. Regulated firms will find it much easier to hide behind bland press releases that conceal inconvenient corporate realities and there is a heightened risk that journalists will feel compelled to publish unconfirmed reports and rumours, increasing the flow of misinformation.”