Media: Move to clean out the inside traders

The City is saying farewell to self-regulation - and journalists could be saying hello to unlimited fines.

AH, THE EIGHTIES! Decade of cocktails and contrasts. Merely thinking about those halcyon days still has the power to make the City's wallets bulge and it's noses ache. And even now, every once in a while, the urge to reminisce about this turbulent time still passes over many of today's financial journalists and PR operators like a pure nostalgic breath from a decadent, devious, and downright more interesting decade.

But never has this urge toward nostalgia been more powerful than now. Because now, finally, the City is promising to say goodbye to one of its last great Eighties legacies - the principle of self-regulation. Now, for the first time, financial journalists and public relations agencies could face unlimited fines for publishing misleading financial information, under new proposals being advanced by the Financial Services Authority.

Both classes have long been liable to prosecution, of course, in cases involving the most flagrant insider dealing, for instance. In practice, however, this meant that anything that didn't warrant a high-speed chase down Bishopsgate with a flak-jacketed fraud squad in close pursuit was likely to slip through the legislative net.

But no longer. Under the terms of new measures, no one at all must deal or induce others to deal in any investment when they have information which cannot be freely obtained by others. Previously only registered investment professionals were liable to financial penalty.

"Journalists and PR professionals will be in the same position as all other users of the markets," an FSA spokesman confirms. "Nothing in the draft Code is aimed at inhibiting investigative reporting; but equally there is no good reason for exempting from the Code journalists who manipulate markets."

They are words that would have sent a dread chill through the financial media of just a few years ago. It's little more than a couple of decades, after all, since at least one City editor drew no salary at all. This was because of the proprietor's admirable insistence that any City editor worth their salt should be in a position to make a decent enough living from the information that passed his way.

And what of the financial PR industry? The practice of the Friday night drop has a long and noble history. This is the procedure whereby sensitive financial information is carefully leaked to the Sunday newspaper of choice. It has been an especially useful device during some of the City's most bitter takeover battles.

It's hard for financial hacks not to feel a twinge of sadness at its passing. Many still talk fondly of the frightfully grand, old-school financial PR reduced to climbing through the window at the Telegraph's City offices in the early Eighties, it being considered too dangerous to be seen using the front door. More prosaic were all those "chance" Friday night meetings between the two camps in any of a number of strategic hostelries. Information in the Sea Horse, for example, in St Paul's, close to the then homes of the FT and Telegraph in Bracken House, tended to go a whole lot further than a press release would have dared - certainly further than the new legislation would condone.

But how much is the new legislation really likely to change things? For journalists the answer is probably not much. All the papers now have policies about financial staff dealing in shares, ranging from the official declaration of any and all share interests to the more practical admonition "not to do anything that will end up in Private Eye" that still serves as the official guideline on at least one paper.

For the financial PR industry the implications are more serious. It doesn't help that the industry has been rocked by scandal. Two years ago the takeover panel castigated Financial Dynamics for its actions on behalf of Amec in fighting off a hostile bid, and a year ago it was the turn of Citigate to fall foul of the takeover panel.

"Part of the problem is that financial PR companies are now trying to re-invent themselves as communications consultants, and trying to get more involved with the whole financial process, rather than just answering journalists' calls and passing on basic information about the company," points out Roger Parry, chief executive of More O'Ferrall the poster company that itself recently emerged from a protracted two-way bid.

The PR companies themselves, while largely welcoming the FSA proposals as evidence that their industry is maturing and becoming more professional, remain convinced that the bulk of their journey toward fiscal responsibility is already completed. "I don't think the legislation will have quite the same effect on the industry as it might have had in the past," says Richard Oldworth, chief executive of Buchanan Communications, "because nowadays PR companies are already regulated by the simple fact that all price sensitive information must go to the Stock Exchange first. And increasingly financial PR companies are comprised of former stockbrokers and financial journalists who understand how the regulatory framework operates.'

Which is all very well, but don't tell me that they are not all going to miss those window-clambering days - once, that is , they are finally gone.