Lex – once rumoured to be authoritative

Alexander Justham of the FSA’s markets division has  said: “Spreading false or misleading rumours about companies, particularly in volatile or fragile market conditions, can be a very damaging form of market abuse. While we pursue individual cases of rumour-mongering, it is of equal concern to us that market practitioners handle rumours properly and avoid giving credibility to false stories.”

 There are a deluge of rumours in the financial press recently concerning the actual size, or existence of a potential Lloyds Group “arrangement fee” to exit from participation in the government’s Asset Protection Scheme. Lloyds Group have made no statement about the possible amout of an arrangement fee, so all comment must surely be rumour?

The FT’s report in today’s main paper states that

 ‘one person familiar with the government’s stance on the issue said a £1bn fee, which would be in lieu of the support that has already been provided to Lloyds was “definitely the floor”

and later in the same report:

“one person close to the government” described reports that the fee could be as high as £2bn as “understandable”

For some reason though, Lex in the same FT edition, quotes Bloomberg as the source of the rumour that “the Treasury may be eying as much as £2bn”.

As so often, I have been unable to find any substance in the Lex commentary. But since the actual amount, if any, of the ‘arrangement fee’, if there is one,  for Lloyds exiting, if it does,  the ASP,  is acutely material to the market value of Lloyds shares, this is one area where facts, not more speculation by once respected commentators are required.

Bun rating:  One person close to the kitchen is reported to have suggested that the bun, if there is one,  may contain 1% meat.