Complaints regarding misleading statements to investors

The request was partially successful.

Dear The Financial Conduct Authority,

This request concerns statements made by publicly listed companies which have been reported to the FCA for being misleading or potentially misleading.

Q1: In the period 1st January 2016 to 15th March 2017, how many reports did the FCA receive complaining that a publicly listed company had made misleading statements? Where more than one complaint was received about the same company and the same potentially misleading statement, please count this as one report
Q2: For these reported incidents, what were the outcomes? (For example, x received a penalty, y were found not to be in breach, z are still under investigation, etc)

Yours faithfully,

Helen Bradshaw

The Financial Conduct Authority

Thank you for e-mailing the Financial Conduct Authority's Information Access Team. This is an automatic acknowledgement to tell you we have received your email safely. Please do not reply to this email. We will be in touch in due course.

This communication and any attachments contain information which is confidential and may be subject to legal privilege. It is for intended recipients only. If you are not the intended recipient you must not copy, distribute, publish, rely on or otherwise use it without our consent. Some of our communications may contain confidential information which it could be a criminal offence for you to disclose or use without authority. If you have received this email in error please notify [email address] immediately and delete the email from your computer. Further information on the classification and handling of FCA information can be found on the FCA website (http://www.fca.org.uk/site-info/legal/fc...).

The FCA (or, if this email originates from the Payment Systems Regulator Limited, the FCA on behalf of the Payment Systems Regulator Limited / the Payment Systems Regulator Limited) reserves the right to monitor all email communications for compliance with legal, regulatory and professional standards.

This email is not intended to nor should it be taken to create any legal relations or contractual relationships. This email has originated from the Financial Conduct Authority (FCA), or the Payment Systems Regulator Limited.

The Financial Conduct Authority (FCA) is registered as a limited company in England and Wales No. 1920623. Registered office: 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom

The Payment Systems Regulator Limited is registered as a limited company in England and Wales No. 8970864. Registered office: 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom

Switchboard 020 7066 1000

Web Site http://www.fca.org.uk (FCA); http://www.psr.org.uk (the Payment Systems Regulator Limited)

Freedom of Information, The Financial Conduct Authority

Our Ref: FOI5060

 

 

Dear Ms Bradshaw

 

Freedom of Information: Right to know request

 

We refer to your request under the Freedom of Information Act 2000 (the
Act), dated 15 March 2016, concerning "statements made by publicly listed
companies which have been reported to the FCA for being misleading or
potentially misleading".

 

Your request is currently being considered and, in doing so, we are of the
view that some or all of the information you have requested may be exempt
under the following qualified exemptions:

 

·         Section 31 (Law Enforcement)

·         Section 43 (Commercial Interests)

 

As these are qualified exemptions, the FCA is required to weigh the public
interest in maintaining the exemptions against the public interest in
disclosing any information.

 

By virtue of section 10(3), where public authorities have to consider the
balance of the public interest in relation to a request, they do not have
to comply with the request until such time as is reasonable in the
circumstances.  The FCA has not yet reached a decision on the balance of
the public interest.  Due to the need to consider, in all the
circumstances of the case, where the balance of the public interest lies
in relation to the information that you have requested, the FCA will not
be able to respond to your request in full within 20 working days.  In
these circumstances, we hope to be in a position to respond to you by 28
April 2017, although should we be in a position to contact you sooner we
will do so.

 

 

Yours sincerely

 

 

Information Access Team

Financial Conduct Authority

This communication and any attachments contain information which is
confidential and may be subject to legal privilege. It is for intended
recipients only. If you are not the intended recipient you must not copy,
distribute, publish, rely on or otherwise use it without our consent. Some
of our communications may contain confidential information which it could
be a criminal offence for you to disclose or use without authority. If you
have received this email in error please notify [email address]
immediately and delete the email from your computer. Further information
on the classification and handling of FCA information can be found on the
FCA website
(http://www.fca.org.uk/site-info/legal/fc...).

The FCA (or, if this email originates from the Payment Systems Regulator
Limited, the FCA on behalf of the Payment Systems Regulator Limited / the
Payment Systems Regulator Limited) reserves the right to monitor all email
communications for compliance with legal, regulatory and professional
standards.

This email is not intended to nor should it be taken to create any legal
relations or contractual relationships. This email has originated from the
Financial Conduct Authority (FCA), or the Payment Systems Regulator
Limited.

The Financial Conduct Authority (FCA) is registered as a limited company
in England and Wales No. 1920623. Registered office: 25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom

The Payment Systems Regulator Limited is registered as a limited company
in England and Wales No. 8970864. Registered office: 25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom

Switchboard 020 7066 1000

Web Site http://www.fca.org.uk (FCA); http://www.psr.org.uk (the Payment
Systems Regulator Limited)

Freedom of Information, The Financial Conduct Authority

1 Attachment

 

Our Ref: FOI5060

 

 

Dear Ms Bradshaw

 

Freedom of Information: Right to know request

 

Thank you for your request under the Freedom of Information Act 2000 (the
Act) dated 15 March 2017, for the following information:

 

“Q1: In the period 1st January 2016 to 15th March 2017, how many reports
did the FCA receive complaining that a publicly listed company had made
misleading statements? Where more than one complaint was received about
the same company and the same potentially misleading statement, please
count this as one report

 

Q2: For these reported incidents, what were the outcomes? (For example, x
received a penalty, y were found not to be in breach, z are still under
investigation, etc)”

 

On 12 April 2017 you were advised that we considered some of the
information we hold to be exempt under section 43 and section 31 of the
Act and that more time was needed for us to balance the various public
interest arguments, as required for the exercise of this exemption. We
have now completed this exercise, and our response is as follows:

 

Question 1: Before responding to this point of your request, I would like
to clarify that we have interpreted your definition of “misleading
statements” as any statements that would be considered misleading under
the Listing Rules, Prospectus and Transparency Rules, and the Disclosure
Guidance (together the “Listing Regime”), and/or the disclosure-related
parts of Regulation (EU) No 596/2014 of the European Parliament and of the
Council of 16 April 2014 on Market Abuse Regulation (MAR). In retrieving
the information you are seeking we have therefore limited our searches to
the data held by our UK Listing Authority Department (UKLA) of our
Enforcement and Market Oversight Division, who monitor compliance with the
above regulations.

 

I can confirm that that there were ten occasions between 1 January 2016
and 15 March 2017 where the UKLA Department received reports which in our
judgment amounted to a complaint that a listed company had made misleading
statements.

 

As suggested, we have counted incidences where more than one complaint was
received about the same potentially misleading statement as a single item
when preparing this figure.

 

Please note, however, that if we were to interpret your request in a
broader sense, to include information on reports received about potential
market manipulation, then we estimate that to determine whether we hold
any relevant data on this point would substantially exceed the cost limit
provided for in the Freedom of Information and Data Protection
(Appropriate Limit and Fees) Regulations 2004, and therefore section 12
(Cost of compliance exceeds appropriate limit) of the Act would apply.

 

This is because our Secondary Market Oversight department, which oversee
the transaction reporting, suspicious transaction and order reporting and
market abuse regimes, receive and review large numbers of “suspicious
transaction and order reports” (STORs). STORs are classified as “insider
dealing” or “market manipulation”, misleading statements being a possible
type of market manipulation. However, since the data held is not further
broken down into the different sub-categories of market manipulation, we
would need to review manually each market manipulation STOR received
during the relevant period to determine whether it refers to a complaint
about ‘misleading statements’.

 

Information on the number of STORs received is publicly available from the
following link:
[1]https://www.fca.org.uk/markets/market-ab...

 

In addition to STORs, we also receive information flagging instances of
potential market abuse from other sources which would also have to be
reviewed. This would increase the amount of time which would need to be
spent determining whether we hold any information relevant to your
request.

 

Question 2: This aspect of your request has been considered and I can
confirm that we hold the information required. However, we are unable to
disclose any details relating to the outcomes of the ten reported cases,
as we are of the view that, given the relatively small number of cases
involved, such disclosure may result in the identification of the firms
referred to. Should this happen, this would necessarily involve the
disclosure of confidential information as defined in section 348 of FSMA. 
Therefore, we consider that this information is exempt from disclosure
under section 44 (Prohibitions on disclosure) of the Act. For a detailed
explanation as to why this exemption applies please refer to Annex A
below.

Furthermore, we consider that the potential identification of any of the
ten firms involved would, or would be likely to, prejudice the commercial
interests of the firms concerned, and therefore the exemption set out at
section 43 (Commercial Interests) of the Act applies for the reasons set
out in Annex A below.

Finally, we are of the view that this information is also exempt from
disclosure under section 31 (Law enforcement) because the accidental
identification of any of the ten firms involved would, or would be likely
to, prejudice the exercise by the FCA of its regulatory functions under
FSMA. For a detailed explanation as to why this exemption applies, please
refer again to Annex A.

It may be helpful for you to know that, in the event that the FCA is
investigating or has investigated a particular individual/entity and
formal enforcement action is subsequently taken, details of the action
will generally be published on the FCA’s website in the form of a Final
Notice and associated press announcement.  This serves to inform the
public of the action taken and the reasons for that action.

 

You can obtain further information regarding enforcement action from the
following places:

 

·         Information about those cases where we have taken disciplinary
action against individuals or firms since April 2013 may be found on the
FCA’s website via the following link:

[2]http://www.fca.org.uk/your-fca/list?ttyp...

 

·         The website of the Upper Tribunal provides information about
cases in which our decision to take enforcement action has been referred
to the Tribunal.  See:

[3]http://www.tribunals.gov.uk/financeandta...

 

Our policy of publicly commenting on whether an investigation has or has
not been carried out is set out in the FCA’s Enforcement Guide (EG); see
in particular EG 6 on Publicity.  This may be found on the FCA website
through the following link:

[4]https://www.handbook.fca.org.uk/handbook...

 

Further information on the enforcement process, including case selection,
can be found at [5]https://www.handbook.fca.org.uk/handbook...

 

Yours sincerely

 

 

Information Disclosure Team

 

 

[6]Description: cid:image002.png@01D2C036.E2AD2250

 

 

Your right to complain under the FoI Act

If you are unhappy with the decision made in relation to your request, you
have the right to request an internal review.  If you wish to exercise
this right you should contact us within three months of the date of this
response.

If you are not content with the outcome of the internal review, you also
have a right of appeal to the Information Commissioner at Information
Commissioner's Office, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9
5AF. Telephone: 01625 545 700. Website: [7]www.ico.org.uk

 

Annex A

 

·                    General right of access to information held by public
authorities

 

Under section 1(1)(a) of the Act, any person making a request for
information to a public authority is entitled to be informed in writing by
the public authority whether it holds information of the description
specified in the request. If the public authority holds information of the
type specified in the request, the person requesting the information is
entitled under section 1(1)(b) of the Act to have the information
communicated to them. The rights in section 1(1)(a) and (b) are subject to
a number of exclusions and exemptions.

 

•        Section 44 (Prohibitions on disclosure)

 

Section 44 of the Act provides that information is absolutely exempt if
its disclosure (otherwise than under the Act) is prohibited by or under
any enactment.  Section 348 of FSMA restricts the FCA from disclosing
“confidential information” it has received except in certain limited
circumstances.

 

Confidential information for these purposes is non-anonymised information
which relates to the business or other affairs of any person and which was
received by the FCA for the purposes of, or in the discharge of, any of
its functions under FSMA and which is not in the public domain.

 

Disclosure of any such confidential information in breach of section 348
of FSMA is a criminal offence. The information requested would be
confidential information, and as none of the limited circumstances in
which s348 of FSMA does permit disclosure applies here, the FCA is
prohibited from disclosing this information to you and the exemption
conferred by section 44 of the Act applies.

 

Section 44 confers an absolute exemption which means that, if it is
engaged, the Act does not require us to consider whether the public
interest in disclosing the information outweighs the public interest in
maintaining the exemption.

 

Section 31 (Law enforcement)

 

The qualified exemption in section 31(1)(g) of the Act applies (for the
purpose set out in 31(2)(c)) because, disclosure of the information
requested would, or would be likely to, prejudice the exercise by the FCA
of its functions for the purposes of ascertaining whether circumstances
which would justify regulatory action in pursuance of any enactment exist
or may arise.

 

This exemption is qualified and we have balanced the public interest for
and against disclosure as required by the Act.

 

  For disclosure:

 

•      There is a strong public interest in favour of transparency and in
the public being reassured about the effectiveness of the regulatory
approach taken by the FCA and disclosure of the information would
demonstrate how the FCA responds to matters arising within the sector it
regulates. There is a strong public interest in the public being aware of
any enquiries, considerations or actions the FCA may be taking in relation
to the markets, firms or individuals who are, or may be, operating in the
financial services industry.

 

•      Disclosure of the information would increase public awareness and
understanding of decisions taken by the FCA.

 

  Against disclosure

 

•      Disclosure of the information could also affect the way that we
interact with firms /stakeholders and risk the need for the FCA to use its
statutory information-gathering powers, which may lead to delays and
disputes with when gathering information.

 

•      Disclosure of the information could also lead to widespread
speculation which could hinder and prejudice the progress of any current
and/or future FCA enquiries, considerations and/or action that may be
taken.

 

•      Disclosure could also affect the brand and reputation of the
relevant markets and/or entity in the absence of due process having been
followed – i.e. in the absence of any formal public announcement and
without the relevant markets and/or entity having had the opportunity to
comment.

 

•      Disclosure of the information could also lead to speculation which,
in the absence of any background information, could be taken out of
context and could lead to the wrong conclusions being drawn on the FCA’s
decision-making process.

 

On this occasion we have concluded that the balance of the public interest
is in favour of not disclosing the information, for the reasons set out
above.

 

 

•             Section 43 (Commercial interests)

 

Section 43(2) of the Act provides that information is exempt information
if its disclosure would, or would be likely to, prejudice the commercial
interests of any person (including the public authority holding it).

 

As mentioned, the identification of any of the ten firms referred to could
prejudice their commercial interests, as this could lead to unfair or
unjustified adverse comment and speculation about the firms concerned.
Such adverse comment and speculation would occur in the absence of due
process and this could unduly and unreasonably affect the brand and
reputation of the firms.

 

There is a strong public interest in legitimate commercial interests of
firms and individuals not being undermined. This is unless and until such
time as there has been any formal finding of misconduct, following a full
investigation and details of any such investigation are permitted to be
made public under FSMA.

 

This exemption is qualified and we have balanced the public interest for
and against disclosure as required by the Act.

 

For disclosure:

 

•      There is a strong public interest in favour of transparency and in
the public being reassured about the effectiveness of our regulatory
approach.

 

•      Disclosure of the information would demonstrate how we respond to
matters arising within the sector we regulate and would enable regulated
firms and their senior management to better understand why and how we make
decisions.

 

•      This, in turn, would facilitate comments on the FCA’s regulatory
and supervisory approach.

 

Against disclosure:

 

•      It is strongly in the public interest that the FCA has open and
candid exchanges of information with the firms it regulates, regardless of
the commercial sensitivity of the information.

 

•      There are various provisions in the Financial Services and Markets
Act 2000 that govern the disclosure of details of action taken by the FCA
(for example s391 on publication of notices). Disclosure of firm names
outside these statutory provisions could adversely affect our interaction
with firms who could lose confidence in the regulator and the regulatory
regime if the provisions of that regime are not followed. This could also
prejudice the effective carrying out of future Thematic Review work.

 

•      There is a strong public interest that statutory procedures setting
out due process are followed. Firm and public confidence in the regulator
could be prejudiced as disclosure outside the regulatory regime could
affect the brand and reputation of firms or individuals involved in the
absence of due process having been followed – i.e. in the absence of any
formal public announcement and without the relevant markets and/or entity
having had the opportunity to comment.

 

•      As there is no routine public disclosure of a firm or individual's
dealings with the FCA, ad hoc public disclosure under the Act would be
likely to attract a disproportionate amount of attention to those
concerned.

 

We have balanced the public interest for and against disclosure for these
exemptions. In this particular case, for the reasons described above, we
have determined that the public interest in maintaining the exemptions
outweighs the public interest in disclosure of the information falling
within these exemptions.

 

 

 

This communication and any attachments contain information which is
confidential and may be subject to legal privilege. It is for intended
recipients only. If you are not the intended recipient you must not copy,
distribute, publish, rely on or otherwise use it without our consent. Some
of our communications may contain confidential information which it could
be a criminal offence for you to disclose or use without authority. If you
have received this email in error please notify [email address]
immediately and delete the email from your computer. Further information
on the classification and handling of FCA information can be found on the
FCA website
(http://www.fca.org.uk/site-info/legal/fc...).

The FCA (or, if this email originates from the Payment Systems Regulator
Limited, the FCA on behalf of the Payment Systems Regulator Limited / the
Payment Systems Regulator Limited) reserves the right to monitor all email
communications for compliance with legal, regulatory and professional
standards.

This email is not intended to nor should it be taken to create any legal
relations or contractual relationships. This email has originated from the
Financial Conduct Authority (FCA), or the Payment Systems Regulator
Limited.

The Financial Conduct Authority (FCA) is registered as a limited company
in England and Wales No. 1920623. Registered office: 25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom

The Payment Systems Regulator Limited is registered as a limited company
in England and Wales No. 8970864. Registered office: 25 The North
Colonnade, Canary Wharf, London E14 5HS, United Kingdom

Switchboard 020 7066 1000

Web Site http://www.fca.org.uk (FCA); http://www.psr.org.uk (the Payment
Systems Regulator Limited)

References

Visible links
1. https://www.fca.org.uk/markets/market-ab...
2. http://www.fca.org.uk/your-fca/list?ttyp...
3. http://www.tribunals.gov.uk/financeandta...
4. https://www.handbook.fca.org.uk/handbook...
5. https://www.handbook.fca.org.uk/handbook...
7. http://www.ico.org.uk/