FSA announces breach of listing rules by Marconi

Carol Sergeant, Managing Director of the FSA, said:

In this case a major listed company failed to provide important information to investors on a timely basis. We require companies to keep the market informed of price sensitive information without delay so that investors can be sure they are making financial decisions based on the most up to date information.

This is a fundamental protection for investors and is vital for the smooth operation of efficient, orderly and competitive markets.

The FSA has concluded that Marconi breached paragraph 9.2(c) of the Listing Rules when it failed to notify the Company Announcements Office without delay of a change in its expected performance for the half year ending September 2001 and full year ending March 2002.

Marconi changed its expectation as to its performance in the afternoon of 2 July 2001 but did not make an announcement until after the market had closed on 4 July 2001, after its stock had been suspended for a full day. On 5 July 2001, there was a twenty five-fold increase in the volume of securities and a 54% fall in the share price.

The FSA is of the view that from the afternoon of 2 July 2001 Marconi could have taken steps which would have enabled it to release the announcement by, at the latest, the evening of 3 July 2001.

Notes for editors

1. The full text of the Decision from the Regulatory Decisions Committee of the FSA is available on the FSAs website (www.fsa.gov.uk).
2. The FSA concluded that Marconi contravened paragraph 9.2(c) of the Listing Rules. This paragraph states that:
   A company must notify the Regulatory Information Service without delay of all relevant information which is not public knowledge concerning a change:
   (a) in the companys financial condition;
   (b) in the performance of its business; or
   (c) in the companys expectation as to its performance; which, if made public, would be likely to lead to substantial movement in the price of its listed securities.
3. The FSA took on new powers under the Financial Services and Markets Act 2000, on 1 December 2001. The disciplinary sanctions available to the FSA for breaches of the Listing Rules that take place on or after 1 December 2001 include a fine or a public statement, but for those which took place prior to 1 December 2001 the only sanction is the making of a public statement.
4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
5. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.