Gower, a former senior research analyst employed by MF Global Securities Limited and MF Global UK Limited, attended a meeting with the Chief Executive Officer of Punch Taverns plc on 7 May 2008. In the course of the meeting they discussed an application made by Enterprise Inns plc to Her Majesty’s Revenue and Customs (HMRC) for approval to convert to a Real Estate Investment Trust (REIT). This discussion concerned solely information which was in the public domain.
Following the meeting, Gower sent a Bloomberg instant message to 14 clients of MF Global, a Bloomberg reporter and MF Global equity salesmen in the following terms:
“*** HOT OFF PRESS*** Just had meeting with CEO of PUNCH TAVERNS. They have heard from HM Revenue & Customs that it is highly likely Enterprise Inns has been granted REIT status and ETI are due to announce this on 13th May at interims. Expect ETI to bounce (was up 10% on previous HMRC news) BUT then fall back as mkt realises it will take time to implement.... MORE on my meeting to follow.... Chris”
This instant message did not accurately reflect the conversation Gower had had. It gave the impression of containing inside information although, in fact, Gower had no such information. The message was misleading and inaccurate. It was rapidly circulated widely in the market and contributed to a substantial increase in the volume of ETI shares traded.
Gower gave no apparent consideration to the consequences to the market of his message. His conduct was careless and fell below proper standards of conduct in the circumstances.
Margaret Cole, the FSA’s managing director of enforcement and financial crime, said:
“There is no excuse for a senior retail analyst to be so careless with messages that could have such an impact on the market. Gower's dissemination of inaccurate information contributed to a large increase in the volume of shares traded and a disorderly market in ETI shares.
“Maintaining market confidence is one of our key objectives and we hope that the fine imposed in this case will act as a reminder to approved persons of their obligations to ensure markets are not provided with careless misinformation.”
The FSA accepts that Gower did not intend to give the impression that this was inside information but concludes that Gower failed to observe proper standards of market conduct in this matter and has imposed a fine of £50,000.