Investors can work toward ousting a CEO or change corporate strategy without violating European Union and U.K. regulations against market abust and acting in concern, reports The Financial Times. Any alliances between investors must be based on specific corporate issues, rather than a long-term agreement to vote together. Investors cannot trade on the information they acquire while working together, the Financial Services Authority noted. The FSA said it was spelling out what hedge funds and other activist investors can do because it strongly supported recent proposals from Sir David Walker to promote shareholder communication. The FSA wrote in a letter to the Institutional Shareholders Committee: “we do not believe that our regulatory requirements prevent collective engagement by institutional shareholders designed to raise legitimate concerns on particular corporate issues, events or matters of governance with the management of investee companies.”
E.U. and U.K.’s FSA Gives Rules to Activist Investors
Activist investors are encouraged to join together to voice discontent with issues, as long as they abide by certain guidelines.
August 19, 2009