Will Anyone Investigate The Stress Test Leaks?

The level of leaks coming out today about the stress test results that are scheduled to be official released tomorrow is simply outstanding. It’s all happened without much comment about the appropriateness of this kind of material information about public companies being leaked out through the press.

The leaks have clearly been moving markets today. Shouldn’t the banks involved be making clarifying statements to their shareholders about the accuracy of the leaks? That’s what would normally happen when unsourced news stories were having such dramatic market moving effects. It’s what happened back when the banks were complaining about ‘rumour mongers’ pushing down the prices of their shares.

It’s very likely that the banks have been told by regulators that they are not to make statements about the stress tests. But what authority do regulators have to issue this statement? Doesn’t it violate disclosure rules? Again, this looks like another case of government lawlessness, of authority exercised without legal warrant and in violation of existing standards.

Will anyone investigate these leaks? We’d guess they’re coming from the banks themselves. There’s at least the potential for serious harm to investors occurring as news spreads unevenly, first through proprietary news services such as Bloomberg and then across the wider media. It wouldn’t have been too hard for someone hooked up to a Bloomberg terminal to trade on the news before it was fully integrated into the market. Ordinary investors, of course, don’t stand a chance.


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