(PRU) Prudential

Good broker report yesterday??
Other than that agree with you Wow!

A big hike today. I know the rest of the market is up but this is remarkable.

Is it not fascinating that it is suggested that Credit Suisse were at the meeting when doubts were expressed about the ability of the FSA to contain information. If true, do they also face enormous shareholder sapping fines?

It is all terribly sad. The Prudential was let down by its shareholders, and would be an even stronger company than it is today had the remarkably able management been backed in its takeover proposals.

This is a great company under competent management, and who could possibly blame them should they decide to relocate abroad.

Is the FSA (still) a leaky ship?
Paul Murphy | Mar 27 16:46 | 4 comments | Share

It may seem fanciful that Tidjane Thiam and other directors at Prudential believed that a leak of their planned $35bn takeover of AIA three years ago might come from the FSA. But they did. Here’s paragraph 4.6 from the final notice censuring Mr Thiam and fining the Pru $30m…

4.6. The directors of Prudential, including Mr Thiam, met on 31 January 2010 to be briefed on the proposed transaction by Credit Suisse. There was a consensus between the directors of Prudential at this meeting that:

(1) a leak was the key risk to the transaction;

(2) the FSA was one of a number of parties which might be the cause of a leak; and

(3) Prudential wished to fulfil their obligations to inform the FSA in such a way that leak risk was kept to a minimum.

The Pru’s chief executive was clearly paranoid about leaks, having watched a possible takeover of AIA by the British insurer crumble a year earlier when the news got out and the Pru’s share price tumbled.

Yet the FSA handles all manner of price-sensitive information — and it also prosecutes insider dealing and market abuse. If the financial regulator itself was leaking bid news, surely there’d be hell to pay?

Well, there’s actually some history here, although it is not widely known.

For a period in the second half of the 1990s, a band of speculative equity traders in London had access to a source known simply as “The List Man”.

He was so-called because, once a fortnight, he would supply a list of all substantial price-sensitive announcements scheduled for release over the coming two weeks.

Yes, ALL substantial price-sensitive announcements. The List Man was working in what was then called the Listings Department. It was housed in the London Stock Exchange, but transferred to the FSA towards the end of the 1990s as Sir Howard Davies launched his financial regulatory land grab. It’s now called the UK Listing Authority and, as the name suggests, it handles all share issue related applications, reviews prospectuses and generally makes sure the listing rules are adhered to.

The List Man had access to the most sensitive feed of financial information in London, and he was selling it for cash.

In time, the actual list started to get wider distribution, even finding its way into the hands of one or two financial journalists. Some big stories began to leak this way, such as the £10bn spin-off of BAT’s financial services division, which was merged with Zurich Insurance in late 1997.

As the leaks of takeovers, rights issues and other nuggets of price-sensitive news began to rise the LSE — which still handled insider dealing investigations at the time — doubled its efforts to find the culprits In July 1998, the LSE fired two employees from its Company Announcements Office: one for dealing on soon-to-be-published news and the other for not blowing the whistle on his colleague. Prosecutions followed.

But what is not widely known is that at the time there was a full-blown Department of Trade and Industry insider dealing inquiry into the LSE itself, which was forced to bring in accounting consultants to carry out a full security audit.

The junior guy in the company announcements case was declared to be the source of wider leaks and the whole affair was generally played down for fear that the publicity might damage the integrity of the London market.

But the real List Man was never fingered, although the distribution of his fortnightly list stopped for good. He moved, with his department, to Canary Wharf and was never heard of again.

Ancient history? Perhaps. But Mr Thiam’s instinctive distrust was maybe not completely without merit.