Results announcement not justification on its own for inside info delay, says FCA

The Financial Conduct Authority (FCA) has published guidance (2-page / 125KB PDF) on inside information and the publishing of results that says that there are no special rules for results announcements, and that the conditions for any delay in announcing inside information are narrow.

Article 17(4) of the Market Abuse Regulation says that delay is possible if immediate disclosure is likely to prejudice the company's legitimate interests; if delay is not likely to mislead the public, and if the company is able to ensure the information remains confidential. 

The FCA's guidance says that when preparing results a company should start with the assumption that there could be inside information coming out of that process and continue to assess the position. That assessment process should be recorded and be available as evidence if requested by the FCA, it said.

If inside information is identified, it should be announced unless all three of the conditions for delay are satisfied, it said.

The FCA accepts that a company's legitimate interests could be prejudiced where results are being prepared and "immediate public disclosure of information to be included in the report would impact on the orderly production and release of the report and could result in the incorrect assessment of the information by the public".

Despite that, the FCA said that in many but not all cases it should be possible "to carefully and appropriately draft an announcement that will enable the correct assessment of the inside information by the public". 

If an announcement is delayed under Article 17(4), the FCA must be informed when the information is finally announced.

The Upper Tribunal had previously ruled in a 2014 case involving Ian Charles Hannam and the FCA (130-page / 750KB PDF) that a company "has a legitimate interest in the orderly disclosure of its financial results in accordance with statutory and regulatory reporting requirements….Unless there is some exceptional event or fact which requires immediate disclosure" the company can reasonably justify delaying an announcement of its results until the due reporting date.

In a separate development, the FCA has published its priorities for the year ahead and one of them is the extension of the Senior Managers and Certification Regime (SMCR) beyond banks and insurers to all firms solo-regulated by the FCA and authorised under the Financial Services and Markets Act 2000. This will happen on 9 December 2019

The SMCR increases individual accountability for conduct within financial services firms, so where a compliance issue arises, the FCA will be likely to look into relevant governance and oversight failures and will want to know which senior managers are responsible.