Disseminating false or misleading information about companies, particularly in volatile or fragile market conditions, can be a very damaging form of market abuse which affects both the firm concerned as well as general market confidence. This has been the case in recent months, where unfounded rumours contributed to substantial share price movements in a number of financial institutions. While the most publicised cases pertained to falls in share prices resulting from the spread of unsubstantiated stories, all price movements triggered by unfounded rumours have the potential to distort markets and undermine market confidence.

This article sets out the FSA’s findings around three main areas:

- Firms’ policies on rumours
- Training and communication of policies
- Monitoring of firms’ communications and trading

The FSA has also sought to provide examples of good and bad practice in handling rumours that have been discovered during the review and has concluded with a case study and a summary of industry best practices.

To view the report in full, please click here (236KB)