§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what steps the Government propose to take to stop insider trading; and if he will introduce legislation(a) requiring public companies to notify their shareholders of significant changes in their circumstances to reach them not later than the information is released to the stock exchange and (b) prohibiting meetings with representatives of such companies by investment analysts able to acquire information about a company which is not made available earlier or at exactly the same time to all the company's private shareholders.
§ Mr. NelsonInsider dealing has been illegal since 1980. The Criminal Justice Bill which is currently before Parliament will replace the existing legislation and bring our law on insider dealing into line with the EC directive on the subject.
Requirements already exist to ensure that information relating to significant changes in the circumstances of a company which is listed on the stock exchange is made available to the company's actual and potential shareholders: a company must make available to the public any information necessary to enable shareholders and the public to appraise the position of the company and 113W to avoid the establishment of a false market. By virtue of part IV of the Financial Services Act, this requirement has statutory effect.
Such information is notified by companies to the stock exchange which has arrangements for disseminating it through news vendors and press agencies. Information may also be given directly by a company to news vendors, press agencies and others at the same time as it is given to the stock exchange.
The Government believe that contact between a company and investment analysts and institutional investors can play a useful and valuable role in improving their understanding of its businesses and strategies. Information which should be the subject of a public announcement should not be disclosed at such meetings.