HL Deb 09 March 2000 vol 610 cc159-60WA
The Earl of Northesk

asked Her Majesty's Government:

Whether, in the context of Internet and technology stocks, adequate procedures are in place to protect investors from "scalping" and "pumping and dumping". [HL1273]

Lord McIntosh of Haringey

There are already provisions in place to combat mischiefs of this sort. Rules governing the conduct of advisers currently prohibit "scalping", where an investment advisor holding shares does not disclose this fact to clients when advising them to buy the shares. These rules require advisers to treat investors fairly in their dealings with them. People engaged in "pumping and dumping", by issuing misleading information about a security in order to inflate the price and taking advantage of this by selling shares previously bought at a lower price, may be guilty of a criminal offence under Section 47 of the Financial Services Act 1986. This offence is carried forward in the Financial Services and Markets Bill. However, to complement the criminal powers, the Bill also contains a civil market abuse regime which will cover giving a false or misleading impression of supply of or demand for shares or of the price of investments.

The Earl of Northesk

asked Her Majesty's Government:

Whether they are concerned at the proliferation of websites, particularly those beyond the scope of United Kingdom regulatory bodies, offering often unsubstantiated and inaccurate share tips; and, if so, what action they propose to take to protect investors from them. [HL1274]

Lord McIntosh of Haringey

The authorities are concerned that investors should be aware of the risks of trading solely on the information obtained from such sites. Education of investors so that they can determine the merits of information, from whatever source, is the best general defence against people seeking to mislead them. Earlier this month, the Financial Services Authority issued an investor alert about bulletin boards and chat rooms. In addition, making misleading statements can be a criminal offence under the Financial Services Act 1986. The new civil market abuse regime in the Financial Services and Markets Bill will also cover giving a false or misleading impression of supply of or demand for shares or of the price of investments.