The Financial Services Authority (FSA) has fined an analyst for sending misleading and inaccurate information that influenced a company’s share price to clients via Bloomberg’s instant messaging service.
Christopher Gower, a former senior research analyst at MF Global Securities and MF Global UK, was fined £50,000 after he sent a message to 14 MF Global clients, a Bloomberg reporter and MF Global equity salesmen that gave the impression of containing inside information, when it did not.
At a meeting with the CEO of pub company Punch Taverns on 7 May 2008, Gower discussed an application made by another pub company, Enterprise Inns (ETI), to Her Majesty’s Revenue and Customs (HMRC) for approval to convert to a Real Estate Investment Trust (REIT). The discussion involved only information already in the public domain.
Yet after the meeting, Gower sent the following instant message via Bloomberg’s messenger.
““*** HOT OFF PRESS*** Just had meeting with CEO of PUNCH TAVERNS. They have heard from HM Revenue & Customs that it is highly likely Enterprise Inns has been granted REIT status and ETI are due to announce this on 13th May at interims. Expect ETI to bounce (was up 10% on previous HMRC news) BUT then fall back as mkt realises it will take time to implement.... MORE on my meeting to follow.... Chris”
The misleading and inaccurate message was rapidly circulated in the market and contributed to a substantial increase in the volume of ETI shares traded.
The FSA said that Gower’s conduct was careless, however, it accepted that Gower did not intend to imply that he had inside information, and ruled that he had failed to observe proper standards of market conduct.
“There is no excuse for a senior retail analyst to be so careless with messages that could have such an impact on the market,” said Margaret Cole, the FSA’s managing director of enforcement and financial crime.
“We hope that the fine imposed in this case will act as a reminder to approved persons of their obligations to ensure markets are not provided with careless misinformation.”
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