City watchdogs are expected to investigate how speculators made a £190million profit from HBoS shares in a frenzied two minutes of trading immediately before news of the bank’s rescue was made public.
Details of the takeover talks between the bank and Lloyds TSB were controversially announced by the BBC’s business editor Robert Peston on Wednesday morning.
Before his 9am broadcast, HBOS shares had dipped to a low of 88p. But his scoop sent the price rocketing to 215p in the space of an hour, giving the mystery buyers huge instant profits. In just two deals between 8.57pm and 8.58pm, buyers snapped up more than 20million HBoS shares at 96p each, netting millions of pounds in profit.
Examination of the frenetic trading has led to suspicions of a leak, causing widespread anger at the close of one of the most turbulent weeks the City has endured. Last night Mr Peston insisted his information on the talks was ‘tightly held’ and described the share-dealing frenzy as ’scary’.
It was a report by Mr Peston that also led to the run on the Northern Rock bank which caused its collapse.
There has also been criticism of the delay between the news breaking on the BBC News channel and official confirmation from HBoS four hours later. Keith Skeoch, chief executive of Standard Life Investments, said: ‘Someone was in possession of information and that information was leaked which caused a movement in HBoS’s share price.
Filed under: Abusing the System | Tagged: Abusing the System
