Hunt and News International: a market abuse angle

Was there a wrongful disclosure of price sensitive information?

One potential issue for Culture Secretary Jeremy Hunt and his former special adviser Adam Smith in the developing scandal of how the News International bid for the remaining shares of BSkyB was handled is the possible application of the law relating to the unauthorised disclosure of market sensitive information.

As the BBC’s Business Editor Robert Peston blogged this morning
 
Many of the emails by News Corp's director of public affairs, Fred Michel - which were published yesterday - speak to this point. But I will simply look at the one sent to James Murdoch on 24 January which contains the resonant phrase (in bold), "managed to get some infos on the plans for tomorrow (although absolutely illegal..>!)."
 
This discloses to James Murdoch that Mr Hunt would make a press statement at 7.30am and a statement to parliament at 9.30am.
 
This statement would confirm that Ofcom felt the BSkyB takeover would harm plurality and should be passed to the Competition Commission - but would also say that News Corp would be given an opportunity to come up with remedies (or undertakings in lieu, to use the jargon), to prevent the Commission investigation.
 
Now Mr Hunt's planned statements to the press and parliament were confidential and price sensitive (with a bearing on the share prices of BSkyB and of News Corp). I know this because the DCMS said this to me, explicitly, at the time.
 
But Mr Michel had learned what Mr Hunt would say, from Mr Smith (or so Mr Michel says). And Mr Michel was discussing Mr Hunt's planned statement with Mr Murdoch at 3.21pm, the time of the email, or while markets were still open. 
 
So, on the face of it, Mr Michel and Mr Murdoch should not have been given this information, or at least not without signing a formal confidentiality agreement.
 
Mr Michel implied, with his "absolutely illegal" comment, that no confidentiality agreement had been signed.
 
Now it may be that the transmission of this information was covered by some general duty of confidentiality. But it does all look a bit odd.
 
The wrongful disclosure of market sensitive information can come under the prohibition on various market abuses in the Financial Services and Markets Act 2000 (FSMA), which in turn can lead to rigorous enforcement action by the Financial Services Authority (FSA).
 
The FSA refused to comment on any particular case, and it also would not confirm whether any complaint about Hunt or Smith has been made.
 
Today Hunt told parliament that he is looking forward to giving his side of what happened to the Leveson Inquiry.  It may well be that concerns of an unauthorised disclosure are baseless. 
 
But given the robust policy of the FSA in respect of possible market abuses, Hunt may need to explain exactly how the information Michel was providing to James Murdoch  was not gained through an unauthorised disclosure contrary to the FSMA.
 
David Allen Green is legal correspondent of the New Statesman
 
Many thanks to Patrick Osgood.
Is the sun still shining for Jeremy Hunt? Photograph: Getty Images

David Allen Green is legal correspondent of the New Statesman and author of the Jack of Kent blog.

His legal journalism has included popularising the Simon Singh libel case and discrediting the Julian Assange myths about his extradition case.  His uncovering of the Nightjack email hack by the Times was described as "masterly analysis" by Lord Justice Leveson.

David is also a solicitor and was successful in the "Twitterjoketrial" appeal at the High Court.

(Nothing on this blog constitutes legal advice.)

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John Prescott on Labour: “This must be the worst operation I’ve ever seen”

The Labour peer and former deputy prime minister laments his party’s “civil war status”, saying “I wish Momentum would go away”.

I’ve attended a thousand PLP meetings. This must be the worst operation I’ve ever seen. It is more about personality politics than in the past.

The [last] Labour government was successful in most of the issues that we always thought was important to Labour: in the growth of the hospitals, the education system, the economy, people at work. All that was a successful record.

Not that it’s ever mentioned now. It was soured largely by Iraq. That period is almost obliterated by that. So you find present government, or even present leadership, in no way refers to that period of the Labour government. So the real problem is, if you’re disowning the most successful three periods of a Labour government, then you’re in some difficulty as to what you’re replacing it with.

It’s never happened before – it’s open war, civil war, inside the PLP. Some members in the PLP sit there with their social media, already typing out the fight going on to the mass of reporters who are amassed outside and told to come along and report because there’s going to be a big row. All that means we can’t really have unity. The division now is the attack on the leadership. A core who sit in the same places, make the same accusations against the leadership, right or wrong, every bloody week. They do it by a death of a thousand cuts – keep on making the same complaints.

I just think that the PLP is in civil war status. It’s not carrying out what it should do – that is, project Labour’s policies and be supportive of our people in the field.

All this criticism is about removing him. And then what adds to that is when Tom Watson comes along and joins in with this criticism. He’s entitled to do so, but he is the Deputy Leader, for God’s sake – quite different from the way I saw the role as defined; to support the party in a positive way, right. Get out and increase his membership, etc.

And the Leader, he's faced with a really difficult position, because he was elected and had never been a minister before. My heart went out to him when he had to deal with PMQs. Even with my 50 years, I found it impossible and fell on my face a few times.

We have a shadow cabinet now – cor blimey, you can be in the shadow cabinet in 12 months! You do need to have a bit of experience. So that does affect it, without a doubt. Then you get people on one side who refuse to serve in the shadow cabinet criticising the shadow cabinet. If you join the shadow cabinet, you’re a traitor to one cause or the other.

It's how you manage that division. The leadership is critical – for Jeremy to go out and do all of these things when he’s not been a minister is difficult. I think he’s been improving in doing the job. But frankly, it gets into people’s minds in a very short period of time, whether they think you’re the leader or not. And we do have a dilemma. It’s difficult for him – he’s reaching out a bit now, but almost the list has been drawn. I can’t see these people coming across now and uniting in the name of the party, supporting our people out in the elections. If you can’t unite the party, how the hell can you carry the country?

There are problems on the left and problems on the right, but we’ve always managed them – especially in the PLP. Robust arguments. But now it’s the battlefield, and all that comes out is a divided party.

I’m an old Labour man, right, I’m Labour to the core. To sit and watch it waste away its great reputation, what it’s done for our people in the country, and then when our people start stopping to vote for us, you’ve got to ask what’s bloody going wrong.

What Jeremy does is his decision. But he’s made clear he wants to stay. Now, if that stays the same, and the others stay the same, we’re going to have a stalemate divided Labour party – it’s disastrous.

So on the one hand, the PLP could try to be a little bit more supportive, and to recognise the party’s elected a leader, or they can go through the same process come June and call for another election, put it to the vote. They’re the options given to us by our party.

Our bloody country is decimated and we’re talking about the fucking sponsorship rules for the election of leader! I wish Momentum would go away, they’ve given us the same problems we had with Militant. I don’t think they’re as powerful as Militant, but they’re dedicated to the same cause. Their debate is how you change the Labour party.

By Christ, we can't win like this! I’m an old-fashioned type, and I’m proud to have belonged to a team that did win three elections. There was no other leader who did that before. But I don’t put it down to leaders, I put it down to the nature of the party. We’re responsible, not the leaders.

John Prescott is a Labour peer and former deputy leader of the Labour Party.

As told to Anoosh Chakelian.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition