What's the difference between the four pieces of news that the City’s advisers, investors and market makers awoke to during the course of this week?
1. “Glencore Xstrata PLC (GLEN) has signed an agreement for the sale of its entire interest in the Las Bambas copper mine”
2. “French Connection Group PLC (FCCN), in the 11 weeks to 12 April 2014, have seen UK/Europe LFL’s up 11%”
3. “AstraZeneca PLC (AZN) report that Profit Before Tax falls by 50% Q1 of 2014 to £380m”
4. “Manchester United Plc (MANU) sack Manager, Moyes, after just 10 months”
Or at least that is the view taken by the regulators of our capital markets.
Whilst all four announcements were of interest to advisers and investors alike and significantly affected the share price of the publically listed companies they related to, only three were announced to the market before the media were approached.
Following the football club Manchester United Plc’s announcement that it was to part ways with Mr Moyes on Tuesday, their share price jumped 7%. As a result, the New York Stock Exchange was considering launching a formal investigation into the sacking of Moyes and the way that it was communicated to the market.
It has since been reported that no formal action will be taken by the NYSE, and the club firmly deny that they breached regulations in any way. But what lesson can be learnt here?
Rules dictate that regulators must be notified and the market informed of any major changes or news that could affect a company’s share price before the media is informed. Clearly, Manchester United Plc didn't do this. The rules have been set in place to ensure that all audiences and investors are treated fairly. No advantage should be given to the lucky few who pick up a particular newspaper or tweet over breakfast, enabling them to act upon the news earlier than those who, for example, prefer to listen to Chris Evans and his golden oldies on BBC Radio 2 in the morning.
Manchester United is, in most people’s eyes, a football club first and foremost (rather than simply an investment opportunity). Perhaps the decision of how to release the news about Mr Moyes reflects the tendency of companies to value their traditional audiences over their investor audiences.
As the number of consumer-facing companies coming to market continues to increase, careful attention will need to be paid as to how they communicate corporate news, especially if said news could affect the share price and the shareholders.
It is essential that CEOs and companies operating in public markets continue to seek the advice of those who have often made the tight and often tricky call about news releases before letting the cat slip out of the proverbial bag.
This week's Market Lunch discussed the recent flurry of Technology movements across the globe. Abchaps also learnt a great deal about the future of Energy Saving Companies at EcoConnect’s Green in the City Event, hosted by Squire Sanders. We also enjoyed a very cultural evening at EY's lecture series on Sikh Art with Jasleen Kandhari.
“RNS” – The London Stock Exchange’s Regulatory News Service: Any piece of Company news that could affect the share price (such as a Board Appointment or acquisition) should be released on this service before being released to the media.
Reminiscent for a time when British music was “swinging”? The Blitz Party, an event to celebrate the World War II-era hits of Glenn Miller and Dame Vera Lynne, is being held this Saturday evening down in Shoreditch. Head along to this event where ration-book menus, wartime films and uniform costumes will transport you back in time.
In a sophisticated celebration of St George’s day, on Sunday the Royal Albert Hall will be hosting an afternoon of classics performed by the Royal Choral Society and Royal Philharmonic Concert Orchestra. Head on down to this famous London landmark to enjoy patriotic music, readings and a selection of poems.