Weekly Wrap Up: The £5bn tweet

Twitter got a taste of its own medicine this week when its first quarter earnings were leaked… via a tweet. Irony aside, this was no joke: it only took four tweets of 140 characters or less to wipe more than £5bn off of Twitter’s stock in the final hours of trading on Tuesday.

So how did Twitter become the victim of its own viral reach?

Twitter was supposed to announce its first quarter earnings after close of trading on the New York Stock Exchange (where the company is listed). Unfortunately for Twitter, somebody at NASDAQ, which runs Twitter’s investor relations site, decided it would be a good idea to post the results early.

Posting the results two hours early on the investor relations website might not have been such a catastrophe if no one had noticed. But a financial data platform called Selerity uses automated technology to go through the various sources and detect important events for the markets. It’s known as data scraping and it has become a powerful tool for banks, hedge funds and proprietary trading firms – in other words, those trying to get an edge over the markets.

It wasn’t the first time Selerity struck – Microsoft is among their other victims – and it probably won’t be the last. And it isn’t just Selerity that leaks earnings – according to the Wall Street Journal, Bloomberg journalists are known for trying to find corporate news releases early. All it takes is typing in the web address for a company’s earnings release and then adjusting the URL to change the number of the quarter. So it seems that this problem is quite preventable with a password, firewall, or even waiting to post the results.

What the leak meant for Twitter was that the Company didn't have the chance to present the results in a formal statement, which would have undoubtedly positioned them more favourably. There was certainly some positive news in the report: Twitter surpassed the 300 million active users mark for the first time. Instead, the bad news got out while markets were still trading and Twitter completely lost control of the narrative.

The Twitter debacle demonstrates the power and influence of social media in Financial PR and investor relations. It’s an excellent way to get good news out fast, but also difficult to control. After all, apparently not even Twitter itself can prevent damaging tweets.



As well as multiple sets of client results this week, Abchaps hosted a Technology themed Market Lunch this week where the discussion included cyber securtiy, and a sector generalist one.



Edison announced three UK equity analyst appointments: Neil Basten joins its industrials team from USS Investment Management; Lucy Codrington joins the healthcare team from SC Strategy, and Eric Opara joins the technology team from M&G Investment. Meanwhile Fidelity Worldwide Investment appointed Sajiv Vaid to its fixed income investment team as co-manager of the Fidelity MoneyBuilder Income and Fidelity Extra Income funds.



"Viral Reach" – The measurement of the number of people who saw or shared a tweet or social media post. A Tweet can now potentially reach over 300 million people - which Twitter learned the hard way is not always a good thing.



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Weekly Wrap Up: Flash Crash brings Fast Cash?

The City has been in the PR mire for some time. Since the financial crash, institutions and individuals have been scrambling to save face, only to be undermined by a stream of negative press.

This week, that negative press has been provided with the flash crash case of Navinder Singh Sarao. A self-employed day trader, he faces extradition charges to the US, where he is accused of playing a significant role in, momentarily, taking up to $1 trillion off Wall Street. In a 45 minute period, almost 1000 points were knocked from the Dow Jones Industrial Average, the US’s premier exchange. The premise was simple, Sarao added sell orders which could be seen around the world, and caused others to add sell orders, panicking about a potential fall in their market. Following the cancellation of his orders, Sarao would then track the market down, and buy for supposed huge personal profits. This crime carries the potential for 380 years in prison, not something to be sniffed at.

In addition, Deutsche Bank, one of the largest financial institutions in the world, accepted a record libor fine of £1.6 billion for its role in fixing international interest rates during 2005-2010. These two crimes accurately portray the various flaws in City institutions. Firstly, the ability to undermine and subvert the system, and secondly the damage that can be done to its image.

Having been caught on the back foot when the markets fell, the financial regulators have now taken the fight to the institutions, inflicting more stringent fines. However, more needs to be done. Whilst America can be seen setting a hardline with its sentencing, 150 years for Bernie Madoff springs to mind, the UK needs to work harder at finding those who have abused the system criminally guilty.

The banks themselves, seemingly reticent to move on from their glory years, need to be seen doing more in the public eye to clear up their act. Possibly fearful of their pariah status, heads of UK banks have been notable in their absence from British screens in the last seven years. It will take strong character, but to move past the current public perception, banks need to work as never before to root out those who are abusing the system, and prove to the country and the world that this vital part of our economy is worth sustaining.



This week, Abchaps hosted multiple events including two Market Lunches, one focused on Mining and the other focused on the Environment, whilst also entertaining Northland Capital, after successfully working on TechFinancials IPO together. We also met with Richard Dunnett of Director Magazine, in order to learn more about how the magazine operates; and attended the Entrepreneurs Breakfast, a joint initiative between Smith & Williamson and freshbusinessthinking.com, which brought together multiple entrepreneurs at breakfast with keynote speaker Christopher Baker-Brian.



N+1 Singer appointed Nic Hellyer as Director in its Corporate Finance team from HSBC, whilst Nicole Martin was hired as Audit Partner in BDO’s Technology and Media practice. Meanwhile, Standard Chartered appointed Sir Iain Lobban to the bank’s board Financial Crime Risk Committee.



“Flash Crash” – A word which has entered the lexicon as quickly as the crime was purported to take. Having taken five years to work out a potential culprit, one feels that we will be reminded of the flash crash for some time to come.



If you’re an athlete you might be heading to the London Marathon this weekend. But for the less active among us, you will probably want to avoid Central London.

For those not running, there’s still a chance to celebrate England’s Patron Saint this weekend: The Mayor of London's throwing a party in his honour at Trafalgar Square on both Saturday and Sunday, where Robbie Boyd is headlining from 4pm-5pm on Saturday.

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Weekly Wrap Up: Man Utd, Moyes & Market Movements

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”

Answer:

Nothing.

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.

Weekly Wrap Up: FCA rules on Crowdfunding

This week The Financial Conduct Authority did a lot to help consumers. This was, however, at the expense of businesses. In short, it set out new rules on payday lenders that would shut-down about half of the industry. Similarly, it has imposed rules on the nascent crowdfunding industry that could severely hinder its growth.

The concept of crowdfunding - by Rocio Lara

The FCA has always had a tough balance to strike when dealing with alternative funding; on one hand it has to encourage the industry to grow in order to open up an important access route to capital for SMEs struggling to obtain credit. At the same time it has to ensure that it is adequately protecting investors from risky start-ups. The result of this balancing act is that whilst the FCA seems to have struck a fair deal for peer-to-peer lenders (whose business models work around debt based finance), its equity-based finance counterparts in the crowdfunding sector have been hit punitively. These news rules may stop this form of finance in its tracks.

Under the new rules, equity-based crowdfunding will be subject to the “10 per cent” rule whereby investors must certify that they are not committing more than 10% of their net investible assets, excluding their home, pensions and life insurance. This rule will only be waived for those deemed to be “sophisticated investors”, and will not apply to peer-to-peer loans. This arbitrary limit on the amount of money that an individual can invest into crowdfunding ventures will, therefore, inevitability exclude small investors.

It would be a great shame for the crowdfunding industry, a great source of innovation that has opened up a new pool of capital to small businesses, to be quashed at such an early stage in its development. SMEs are driving the British economy and, therefore, the recovery of it. With lending levels by Banks at historic lows, putting these draconian rules in place will only reverse some of the great progress that has been made to kick-start lending and the economy.



This week, Abchaps attended the Global Mining Finance Spring Conference at the London Chamber of Commerce and Industry, which brought together miners and financiers looking at the most favourable regions for mining, as well as the hottest commodities for investments.

Who can resist a fun quiz? Abchaps enjoyed Farrer & Co's fab Quiz Evening, as well as hosting an environmental-themed market lunch. In view of the need to have effective Non-Executive Directors to support the reputation of a company, we attended the Peel Hunt NED Awards - a great opportunity to recognise the contribution that London’s NEDs make to the City.


To end the week on a high, we will be sipping cocktails tonight at the Association of Chinese Financial Professionals’ UK networking drinks.



This week saw Brewin Dolphin appoint Guy Foster as Head of Research having made a considerable impact at the firm over the last eight years. Panmure Gordon also appointed a new Head of Equity Research, Jeremy Grime. Over at Field Fisher Waterhouse Owen Talfan Davies joined as a Real Estate litigation partner. Charles Stanley Group also announced that Anthony Scott will take on the role as Head of Investment Management.



“Crowdfunding”: the collection of finance to sustain an initiative from a large pool of backers. Companies who have recently turned to crowdfunding to source capital have also used the opportunity to market the business as well as fund it; Naked Wines is one such example.



In the mood for some contemporary art? Sunday 6th April is the last day of the Institute of Contemporary Arts’ display of Richard Hamilton’s famous ‘Man, Machine and Motion’ and ‘An Exhibit’ exhibitions. Composed of thirty steel frames and installed photographs, this re-showing of his mid-1950s work will certainly distract even the busiest of minds.

Another event not to be missed, and which is fast on its way out, is the London Coffee Festival, being held at 15 Hanbury Street until 6th April. This is the UK’s largest coffee and artisan food event, celebrating London’s vibrant culture and love of this favourite type of “brain fuel”. Tickets for this event can be bought for different sessions; bunch, lunch or tea-time.

Finally, an event for the contemporary Londoner: The Ceramic Art London show being held at the Royal College of Arts. This show will display the work of over 75 ceramic artists, with collections up for sale as well as for display. This three-day event, which ends on 6th April, includes talks, discussion and demonstrations.

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Weekly Wrap Up: The Royal Charter won’t silence the whispers

The British media were in uproar this week after Wednesday’s announcement that an independent cross-party Royal Charter for press regulation had been approved.

British press publishers had been pushing for High Court judges to place an injunction that would have stopped ministers seeking approval for this new charter. The injunction was refused, the charter approved, and the path paved for the soon to be formed Independent Press Standards Organisation (IPSO).

Editors have made their feelings clearly known; The Times Editor Roger Alton was quoted as being “extraordinarily depressed” and The Spectator Editor Fraser Nelson considers it to be an “illiberal proposal”.

And perhaps it is. One of the arguments sitting at the core of this debate is one of democracy. The British media has always prided itself on maintaining democracy through freedom of speech and subsequent heightened Government accountability. Will the introduction of IPSO threaten said accountability?

In theory, yes; an independent monitoring body would undoubtedly threaten democracy by blunting the point of the media’s knife-edge against totalitarianism.

In practice, however, how effective will this new IPSO body really be in controlling what is and is not published in our red-tops, broadsheets and nowadays apps?

Running simultaneously to the British publishers waving their publications at Lord Dyson, former News of the World Editor Rebekah Brooks and former director of communications at Downing Street Andy Coulson were appearing at the Old Bailey to answer to the charges from the phone-hacking scandal.

What came to light in this shadowy house of justice is that not only were the pair responsible for the sourcing of incredibly private information, but that they were also linked in a highly charged love affair. In a letter written in 2004, Rebekah Brooks wrote that Mr Coulson was: “my very best friend. I tell you everything, I confide in you, I seek your advice, I love you, care about you, worry about you”.

As Andrew Edis, QC, for the prosecution pointed out: “Mrs Brooks and Mr Coulson are charged with conspiracy and, when people are charged with conspiracy, the first question a jury has to answer is how well did they know each other?” Mrs Brooks’s letter to Mr Coulson certainly answers the question.

A number of the stories at the heart of the “Hacked Off” campaign, such as those regarding Sir Paul McCartney and David Blunkett, involved information that had been shared through lovers’ whispers and coffee-house gossip. The fact that the pair confided a great deal in each other demonstrates the amount of whispered information that must get blown down the Street of Fleet and through the alleyways of the City.

Indeed, Andy Coulson was once quoted as saying: “people talk, it’s known”. This comment suggests that even with an independent body regulating journalism techniques and output, it can be safely said that people will continue to talk and share news as they have always done, whispers will still be spread, and journalism; both political, financial and celebrity, will still rely to a certain extent upon information that press regulators will never be able to control.

In reference to par. 17 of Section 3 of the newly formed Royal Charter (as recommended by financial journalist Paul Lewis: “The Board should not have the power to prevent publication of any material, by anyone, at any time although (in its discretion) it should be able to offer a service of advice to editors of subscribing publications relating to code compliance.”

If this week has highlighted anything of interest to the City it is that having total control over what is being communicated and shared both inside and outside of board meetings is still absolutely essential. Whilst the Royal Charter will ensure that rogue journalism is caught up and monitored, press freedom still exists and will continue to exist (even if only in whispers).



A very busy week for Abchaps with a lot of movement around the City. The resources team attended the Baker Tilly Natural Resources reception at the Park Lane Hilton earlier in the week. One Abchap joined the President of the Shanghai Pudong Develop Bank (SPD) in the launch of their London Office, whilst another went Green at the Envirotech and Clean Energy Investor Summit, as well as a United Nations special on “Is a 'Green Industry' approach the key to competitive edge?”



The UK government makes a bit of history this week as it not only appoints its first woman, but also its first black person, as a permanent secretary at the Treasury. Sharon White becomes second permanent secretary and will be responsible for overseeing the fiscal squeeze whilst she manages Britain’s public finances.

Winn Faria has migrated from his role as COO at management consultancy firm ASource Global to become the director of Baker Tilly’s Financial services risk department.

PwC has strengthened its energy and low carbon team with two new appointments Ronan O’Regan and Steve Mullins. O’Regan shifts his PwC role from the energy financing team to head its UK renewables practice, whilst Mullins is welcomed as the new smart grid leader.



'Super-Injunction' - A legal gagging order which not only prohibits the media from reporting the details of a story, but also prevents mention of the existence of the injunction itself.


Remember remember the fifth of November, gunpowder, treason and plot! Celebrate Bonfire Night at one of the many London events being put on this weekend. Check out LBC Radio’s in depth analysis of this year’s spectacular pyrotechnics happening across the capital!

For those scared of things that go bang in the night and those beginning to get those festive feelings, its time to rejoice as the Natural History Museum enchanting Ice Rink makes its debut opening this weekend. So don your skates and ear muffs, get down to Gloucester Road and get gliding!

Finally, for those that missed out on Halloween shenanigans this week with it being a ‘school night’, fear not as The Halloween Playground takes over the deep, dark tunnels underneath Waterloo Station. Fancy dress is compulsory as The Vaults hosts chilling cabaret, musical voodoo and “devilishly good DJs”.

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FSA fines UBS: Who's banking on wholesale change?

This week the FSA issued one of the largest fines in its history, following the conviction and sentencing of rogue trader Kweku Adoboli for two counts of fraud by abuse of his position. In addition to Adoboli’s seven year prison sentence, UBS has been fined £29.7 million for system and control failing that allowed Adoboli to lose the bank £1.4 billion. The FSA’s view that UBS’s controls were “seriously defective” is an understatement.

This equates to the third largest fine the FSA has ever issued, beaten only by Barclays, which was fined £59.5m over the Libor scandal in June 2012 and JP Morgan which was hit for £33.3m in June 2010 for failing to protect client money.

In court, the jury was told the way in which Adoboli lost the money was “unprotected, unhedged, incautious and reckless”. In Adoboli’s defence argument, his lawyers made the point that the Swiss bank’s attitude to risk depended largely on how profitable it was and the culture was to ignore risk so long as it paid. But Perry Stokes the Deputy Chief Inspector outlined how this has become the “UK’s biggest fraud, committed by one of the most sophisticated fraudsters the City of London Police have ever come across.”

Adoboli’s actions cost fellow traders their jobs, prompted the resignation of the Chief Executive Oswald Gruebel and wiped £2.7bn from the UBS share price.

The lack of awareness Adoboli had for risk highlights major flaws in the banking sector, in terms of rogue traders themselves and the negative public image of banking as a whole. There is clearly a fixation on profits at any cost in the actions of Adoboli and an encouragement on behalf of the management for him to take greater risks – just until the house of cards came tumbling down.

These issues need to be addressed if the sector is going to be considered credible and trust worthy. The threat of an imposing prison sentence and fines for potential rule breakers will help develop this. Unless the current underlying culture within banking is addressed, nothing will change. In order to reduce the risk of future rogue trading, there needs to be a change in values, where risk management is prioritised over a yearning for profits at any cost. As well as this, a personal approach where individuals take more responsibility for their actions is required. Additionally the FSA should continue to issue fines and sanctions in the event of future misconduct.

Senior managers of such institutions must review the pressure they put on junior members to succeed, seemingly at any cost.


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FSA rules strain relations between City and press

As the Financial Services Authority (FSA) continues to clamp down on strategic leaks to the media, and journalists lash back at the new proposals, new debates are sparked over the impact these transaction reporting plans could have on market integrity and the overall flow of accurate business information.

A dramatic increase in FSA activity to clamp down on controlling leaks follows recent findings which showed suspicious trades before takeover announcements were not only up on the previous year, but now account for nearly a third of all deals. The FSA’s Market Division has recently issued its “best practice” recommendations, which aim to prevent improper disclosures of inside information contrary to the market abuse regime. Yet, the second recommendation, stating all media enquiries are to be directed to the firm’s media relations team, who will be fully responsible for monitoring all media enquiries, has been met with strong criticism from UK journalists.

This week, editors of four leading national papers wrote a letter of complaint to the FSA to publicly expose their concerns over the potential damage such restrictions could bring to current media handling practices between City firms and journalists.

For the FSA, “Strategic leaks – designed to be advantageous to a party to a transaction – are particularly damaging to market confidence and do not serve shareholders’ or investors’ wider interests.” However, while accepting the need act strongly to deter market abuse, the editors claim “a wilful misunderstanding” in the relationship between the City and the press will be brought about as firms hide behind their media relations personnel, thereby making it easier to distort the flow of reliable information.

Unfortunately, rumours and speculation will invariably affect share prices and damage company profiles. Yet, the online media and the fast pace of our digital environment have changed how information is now conveyed and received. Today, journalists have an extended role to ensure they convey their messages not only to national readers but more increasingly to global audiences in an increasingly timely fashion.

In essence, corporate communication relies on a strong relationship between journalists and the finance market and the recent stir serves to highlight how more constructive engagement and close collaboration between the press and financial regulators will be important to counter future cases of market abuse. We will watch this space!

Click here to read the letter sent by Lionel Barber, Editor, The Financial Times; Alan Rusbridger, Editor-in-Chief, Guardian News & Media; David Schlesinger, Editor-in-Chief, Thomson Reuters and James Harding, Editor, The Times.

Claire

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