Brussels, 29/10/2003 (Agence Europe) - The European Securities Committee on Wednesday approved three Directive proposals by the Commission, specifying which information journalists and financial analysts will have to provide on their sources when they publish recommendations to investors. These three texts constitute the secondary legislation of the "Market abuse" Directive of December 2002, to fight insider trading and other market manipulation. They will be sent to the European Parliament and the Council for opinion, as part of the "Lamfalussy procedure". The Commission indicated that it hoped they would be adopted in December.
The most controversial text bears on the "fair presentation of investment recommendations and disclosure of conflicts of interest". It stipulates that Member States must make sure that "facts are clearly distinguished from interpretations, estimates, opinions, and other types of non-factual information". Anybody publishing financial recommendations must, furthermore, clearly indicate the "important sources" of the information and tell "those receiving the information where they can find the identity of the person who produced the recommendation" when the initial recommendation has been modified.
The draft text states that this rule "does not apply to press information" if the substance of these recommendations has not been modified. It does, however, state that those publishing a summary of a recommendation produced by a third party "must ensure that it is clear and not misleading, mentioning the source document and where the disclosures related to the source can be directly and easily accessed by the public, provided that they are publicly available".
These principles have been challenged by the European Publishers Council, which notably includes the Financial Times, and which brought pressure to bear on the Parliament and the Council to avoid any threats to press freedom once the "market abuse" Directive has been adopted. In a letter sent last week to Commissioner Frits Bolkestein, the EPC voiced its doubts that "the European Union has the legal powers to intervene directly in the content of mainstream news reporting in this way", contradicting the protection of sources constitutionally guaranteed to the media. The EPC also believes that these provisions are unrealistic given the realities of journalism, in terms of time and space devoted to news articles.