On 14 March 2025, the FCA published a new market bulletin No. 54 which focuses on reminding the market about the UK Market Abuse Regulation (UK MAR) regime and the serious repercussions of contravening that regime in the context of companies publicly listed on London Stock Exchange.
The background to publishing this market bulletin is that the FCA is seeing an increase in the market of instances where material information appears to have been leaked to the press. This has specifically arisen in the context of M&A transactions where for example details in relation to potential takeover/acquisitions are leaked to strategically improve a subsequent or counter offer. Any transactions involving publicly listed companies in the UK, and their advisers are subject to UK MAR. Any leak is of concern to the FCA particularly if done for strategic reasons, as leaks can cause significant movement in share prices of publicly listed companies. It could lead to further leaks and/or distribution of information which damage and affect the operation and integrity of the capital markets in London.
To this end, the FCA reminds market participants that unlawful disclosure of ‘inside information’ is a contravention of UK MAR which strictly prohibits this.
But what is ‘unlawful disclosure’?:
Various types of information can constitute inside information and Article 7 of UK MAR sets this out noting that inside information is: “...information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers [publicly listed companies] or to one or more financial instruments [such as shares], and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments”
Article 14 of UK MAR then states the broad prohibition that “A person shall not…unlawfully disclose inside information”. This prohibition applies to all individuals whether they work for the publicly listed company or a regulated firm.
Finally, Article 10 of UK MAR defines ‘unlawful disclosure’ as “…where a person possesses inside information and discloses that information to any other person, except where the disclosure is made in the normal exercise of an employment, a profession or duties”
Therefore, it is imperative that publicly listed companies in the UK, their employees and their advisers must be careful when dealing with inside information and how instances of inadvertent unlawful disclosure could arise. In the latest market bulletin, the FCA focuses on the deliberate leaking of inside information and notes that, whether inadvertent or strategic, it will result in serious repercussions for individuals including:
unlimited fines imposed by the FCA;
Order injunctions; and/or
the prohibition of regulated firms or approved persons from operating in the market.
Personal responsibility under UK MAR
The FCA has published various bulletins reminding market participants on the best practice and guidance for mitigating potential unlawful disclosure and limiting any risk of market abuse (see bulletins No. 42 and No.52). In this latest bulletin, the FCA is again reiterating that it appears individuals involved in transactions seem to be handling inside information poorly and not taking adequate steps to prevent leaks. Furthermore, the FCA is concerned about a potential culture developing in the market where participants may consider strategic leaks to the press as being acceptable.
The FCA reminds readers in bulletin No 54 that anyone unlawfully disclosing inside information, deliberately or otherwise, risks being investigated and held personally responsible.
Takeover Code confidentiality
The FCA also reminds market participants that separate from UK MAR, under Rule 2.1(a) of the Takeover Code applies. Prior to any announcement of an offer or possible offer, all persons who are privy to confidential information (particularly price-sensitive information) must treat that information as secret and only pass on information to another person if is necessary to do so and that person is made aware of the secrecy – to mitigate and prevent leaks.
How can Laytons help?
The Laytons’ Equity Capital Markets team is experienced in advising and assisting companies and management in relation to UK MAR and other related regulatory issues that arise in the course of public company life. If you have any questions on the matters discussed in this article or if you need further guidance on the manner in which you should be disclosing information in compliance with UK MAR, then please get in touch with us to discuss things further.
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Disclaimer: This publication is provided by Laytons LLP for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to your regular contact at Laytons LLP or Laytons’ Equity Capital Markets team.