Media 'Tipsters' May Be Forced To Reveal Their Identities In Hong Kong

by Mary Swire, for LawAndTax-News.com, Hong Kong

01 April 2004

Under proposals due to be released for consultation by the Hong Kong Securities and Futures Commission (SFC), analysts who write stock tip columns under pseudonyms may be forced to reveal their true identity and personal shareholdings, in order to avoid conflicts of interest.

Although commonplace in the United States and Europe, the plans to oblige 'tipsters' to disclose their name, licence status, and personal shareholdings in the companies about which they write have drawn fire from the media, which argues that although such columns are open to market abuse, they are also a popular feature in many newspapers.

Speaking to the South China Morning Post, general manager at Apple Daily, Mark Simon observed that:

"A market works on free information, both good and bad."

He went on to argue that the SFC proposals would "turn the whole business section into an advertorial".

According to the SCMP, under the new rules the regulator will not be able to force a newspaper to reveal a colunmist's identity, but will be able to take action if it finds that he or she is the holder of an SFC licence.

This follows the recent release of a circular by the SFC which warned that analysts who receive non-public price sensitive information about a particular company, and then write reports recommending the purchase or sale of shares in the firm could face a $10 million fine and a 10 year jail term.

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