This week, I’m asking myself, are financial regulators out of touch with the real world? I say this with my experience in the process of writing a story about the intention of a Toronto-based company to float on the London Stock Exchange at a valuation of $4.5 billion. Despite being sent the publicly available information and being briefed by the company, I was told I couldn’t publish it on EE Times.
The short back story is that the press release with the company’s intention to float was sent to me in the morning by email from the financial PR agency. Having read it, I thought it was an interesting and significant piece of news to follow up and that I should interview the CEO. I called up the agency, left a message, and a senior partner called me back. She enthusiastically arranged a Zoom interview with the CEO, who was in Toronto, and the chairman, who was in London. The catch was that I only had 15 minutes for the interview, as they were very busy people.
Fine I thought, I was all ready for it, prepared as I usually do and fired as many questions as I could to the management duo in the 15-minute slot that I was allocated. All good I thought, I have my own angle on the story.
Then, a couple of hours later, the partner at the agency calls me with bad news. She said you can’t publish it in EE Times. Why? Because the financial regulations forbid the news to be circulated in the U.S. At the top of the press release it clearly says:
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT.
But wait, I told the PR. The Financial Times published the story, and that is read worldwide. Several other prominent news outlets published the story too, and these are all read by executives all over the world.
She was adamant though – these are the rules. But publishing it in EE Times sister publication, EE Times Europe, was allowed.
I can understand there are rules, but don’t the financial markets understand that news is global? We are far removed from the age when there was only print media which was printed and distributed only in their respective countries. In that era, you could control where the news was published. But not in today’s world.
Successful online media sites are global, and that means also potentially having a large audience in countries not originally intended. Based on what I know from the various online publications I personally have been involved with over the last 20 years, I can tell you that they often end up with a large audience in the U.S. And everyone else who covered the news of the Toronto-based tech company this week would certainly have had large coverage in the U.S.
The company was from North America but was establishing itself in the U.K. in order to list on the London Stock Exchange. It’s a kind of reversal of what many European companies do. They build their brand in North America because that is where the senior level decision-making is often done for design-ins but are often funded by European VCs or raise money on the LSE.
I recall when I was talking to mainstream media like the Financial Times and the Times in the U.K. back in 2000 when ARC International announced its intention to float, they questioned why an American company wanted to list in London. My response was that we’d made ourselves look like an American company, but we were actually headquartered in the U.K., and we were indeed a British company. So, it is really a matter of convenience and how you want to position yourself.
In the case of this Toronto based company, accessing capital in London meant they needed to observe the rules of the financial regulators here in the U.K.
But what exactly are those financial rules? The note in the press release says, “This announcement is not a prospectus (or prospectus equivalent) and not an offer of securities for sale nor a solicitation of an offer to acquire or a recommendation to sell or buy securities in any jurisdiction, including in or into the United States, Australia, Canada or Japan.”
So, I presume that simply means you can’t use the statement to solicit investors from those countries? OK, I understand that, but I had told the PR agency that all I was planning to do was to write the news about the company planning to float on a stock exchange, and do a regular EE Times style story about the business, the technology and the markets it served.
This was still not acceptable apparently. I’m quite sure the company would welcome the publicity. But in an IPO process, the company executives are often controlled by the lawyers, investment brokers and PR agency, all to ensure a smooth process and well coordinated float (and they are paid well to make sure everything goes well to raise the capital the company is seeking).
But I wonder if the financial regulators understand this aspect of how global companies operate? Maybe they need to move with the times. Many of us in this particular industry of ours operate globally and follow news around the world. So, excluding one title based on its place of ownership doesn’t mean others won’t publish it.
News is global, and people will find out some way or another. By the way, if you want to read the story, it’s over on EE Times Europe.
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