Feeds

FSA acts as rumours send bank shares crashing

Dealers dealing, traders trading

Build a business case: developing custom apps

The Financial Services Authority is combing through share transactions today as it investigates whether anyone was manipulating the market on Wednesday when rumours about Halifax Bank of Scotland sent its shares crashing down.

HBOS shares fell more than 17 per cent in early trading yesterday and took other bank shares down with them. The FSA put out a statement condemning the rumour-mongering and associated short selling - betting on share prices falling.

There is nothing wrong with selling shares you believe will fall, as long as you are not spreading false rumours to drive the price down. Share transactions leave an obvious paper trail and banks routinely record staff phone calls but finding the provenance of rumours is harder to do.

Sally Dewar, managing director of the FSA, said: "There has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days, sometimes accompanied by short-selling. We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them."

The Bank of England also got involved - it put out a statement denying that HBOS has asked for funding help. But given recent failures like Bear Sterns and the paranoid nature of the markets right now almost no rumour seems too extreme.

Meanwhile on Wall Street US regulators are taking similar action.

The Securities and Exchange Commission is investigating suspected short selling and market manipulation surrounding Lehman Brothers - its shares fell 40 per cent on Monday. The SEC has also launched a formal investigation into trading in Bear Sterns shares prior to its purchase by JP Morgan.

In related news UK High Street banks are meeting the Bank of England to ask for more help in persuading their creditors that all is well. They will ask Mervyn King to reassure customers that the Bank of England would step in if any UK bank suffered a cash shortage.

The FTSE 100 is trading slightly down this morning.®

The essential guide to IT transformation

More from The Register

next story
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?