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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