British fiscal watchdog the Financial Services Authority is poised to introduce punitive new legislation affecting not only stockbrokers and investment bankers but also financial public relations agencies.

The latter, not previously subject to FSA scrutiny, will be bound by the same regulations as their clientele – and subject to the same penalties for misdemeanour.

One area on which the FSA intends to focus is the manner in which agencies brief the press on any issue that might affect a company’s share price.

Says head of regulatory enforcement at the FSA, Martin Hopper: “There is no question at all that PR companies are going to have to raise their standards.” He went on to express his concern that most PR shops have not yet begun to address the issue.

For the first time, the new legislation attaches equal weight to the effect of PR companies’ activity – as well as its intent [WAMN's italics]. When the new regulations come into force on November 30, it will no long be necessary for the FSA to prove intent to manipulate share prices before taking action. Instead, the effect will be weighed and those concerned held accountable on the basis that the greater the effect, the harsher the punishment.

The watchdog will be able to impose unlimited fines on transgressors and believes that many more prosecutions will be forthcoming for crimes such as insider trading and share price manipulation.

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