Anthony Hilton: How to spot the source of a leak

In financial journalism, the easiest way to find out who leaked something is to work out who benefits from the story being in the public domain.

Anthony Hilton
Anthony Hilton

This is more reliable than focusing on the usual suspect - the person in the piece who obviously knows what is going on because of the position he or she holds, but who is specifically identified as refusing to comment.

This assumes, of course, that the leak is intentional - but these days, when there is such a panoply of law and regulation designed to restrict the free flow of information to curb illegal dealing and market abuse, that is a fair assumption. Unintentional disclosures are rare. People in the financial markets are now so used to being guarded that if you ask a chief executive or an investment banker the time, you should expect to get the reply that the analysts' consensus is that it is between 10.30am and 11am. These days, if an exclusive story appears, particularly in the Sunday papers, one has to assume it is a PR plant.

But last Sunday the system failed when a story appeared that train and bus operator Stagecoach was once again interested in bidding for National Express. Under Takeover Panel rules designed to limit the continuous harassment of companies, Stagecoach can only currently bid if invited to do so by the National Express board. The immediate assumption, therefore, was that Stagecoach was behind the leak.

But this time the source could also have been acting for the other side. National Express is strapped for cash and wants to raise capital by selling more shares to its existing investors. The danger is that this sign of financial weakness puts the skids under the share price.

With a collapsing share price a company can get to the point where fundraising becomes impossible - and then it really is in trouble. The trick, therefore, is to try to keep the share price as high as possible - and there is nothing that does this more effectively than a rumour or a report of a possible bid. Who knows which is correct, but how lucky both sides are to have such a pliable press.

- Anthony Hilton is City commentator on the London Evening Standard

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