On August 1, the UK Financial Services Authority (FSA) announced the results of its investigations into trading in March in shares of HBOS plc (HBOS). FSA staff from its Enforcement, Markets, Supervision and Intelligence Departments analyzed trading in HBOS and contacted market participants and news organizations to determine whether misleading, false or deceptive information about HBOS had been spread by anyone in order to profit from a reduction in the company’s share price.

The FSA concluded that, despite the likelihood that certain rumors contributed to the fall in the company’s share price, there was insufficient evidence that these rumors were spread as part of any concerted attempt to profit by manipulating the market. Therefore, no action will be taken against any individuals or firms.

The FSA stated that it is following up various wider issues that this rumor case has highlighted through its ongoing thematic and supervisory work. The FSA’s Markets Division has launched a review of the systems and controls at regulated firms for dealing with rumors. There will be a particular focus on what policies are in place and how firms ensure compliance with them, whether and how rumors are verified, whether traders are permitted to pass on or trade on rumors, and how firms ensure staff do not initiate or spread false rumors.