European companies could find it harder to deflect media reports and market rumors with a blanket “no comment” under new guidance from securities regulators.
If a publication or rumor is so specific that it looks like inside information has leaked, “a policy of staying silent or of ‘no comment’ by the issuer would not be acceptable,” says the Committee of European Securities Regulators (CESR), a group that advises the European Commission.
The guidance covers any form of publication, including internet postings, that a company “is aware of or ought reasonably to be aware of.”
Normally European law does not oblige companies to comment on speculation or rumors, says CESR, but they are required to disclose inside information as soon as possible. The law says companies can delay disclosure until it suits them, as long as doing so does not mislead the public.
But the new guidance says a company can’t keep information secret if a story or rumor is “sufficiently accurate to indicate that a leak of information has occurred.” If that happens, the company should make an announcement “without undue delay.”
CESR said its guidance has no formal legal status and is aimed at clarifying the application of provisions in the Market Abuse Directive, which the Commission agreed to in 2002 in an effort to crack down on insider dealing. The directive aims to create a common European approach to market abuse. The Commission last month announced a review of how well the regime was working.
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