MEDIA: `It's a MAD World If We Can't Report Financial Rumour and Hearsay' ; THE MEDIA COLUMN

Article excerpt

The European Union, which has taken several decades to sort out its own initials, has clearly still not got to grips with the dangerous world of acronyms. With the press hardly likely to approve of its draconian planned directive over financial journalism, it might have thought harder before naming it the Market Abuse Directive. But MAD it shall be called, and worse than mad in the view of editors it is likely to be.

MAD - and here it lives up to the acronym - could punish journalists for reporting in good faith financial information that later turns out to be inaccurate. Indeed, at its worst it would in effect stop the reporting of rumour and hearsay on the grounds that if it is false, the reporter becomes a conduit for market abuse.

Rarely can there ever have been such an insight into the rose- tinted world of the EU, where contacts always give a journalist accurate information. The real world of the markets, let alone financial journalism, is a mixture of fact, speculation, research, rumour, hearsay, informed betting and guessing.

At least the EU is beginning to see sense. An early draft of the directive threatened to jail journalists for reporting misleading financial information that resulted in moves in the money markets. Now reporters will only be liable if they make a profit as a result of movement in share prices. In addition, journalists now cannot be convicted unless they knew - or there was evidence to suggest they knew - that the information was misleading. In other words, the EU has agreed that a reporter cannot be punished for a simple transcription error. But it is alarming that originally it was prepared to do exactly that.

Another proposal is that financial journalists will have to declare their own financial interests. Here, MAD may not be quite so mad. While financial journalists take umbrage at this possibility, other reporters and, more importantly, readers might not think it too unreasonable. There is, let's face it, a history of city editors and the occasional newspaper editor publishing share tips that were advantageous to their own portfolios.

But it is hard to see how MAD's main proposal - of punishing financial journalists for reporting hearsay and rumour - can happen in practice without inviting ridicule. …