The Press Complaints Commission (PCC) investigated allegations that The Mirror newspaper had committed numerous breaches of Clause 14 of the Code of Practice in connection with its “City Slickers” column between May 1998 and January 2000.

The purpose of the Code’s provisions on financial journalism

The Code of Practice, drafted by a Code Committee consisting of national, regional and periodical editors and ratified by the full PCC, is the cornerstone of the system of self-regulation of the British press. It sets out a framework for professional and ethical standards for those working within the industry which goes beyond the constraints of legal or other regulation. In deciding complaints under the Code the Commission is not concerned with breaches of the civil or criminal law as such. These are matters for the appropriate authorities or tribunals.

The particular provisions of the Code apply to publication or to matters connected to potential publication. Any complaints investigated or adjudications made are in respect of the particular newspaper or periodical concerned, although it is the editor who is responsible for the Code’s application.

Clause 14 of the Code deals with financial journalism. Its aim is to ensure that readers receive disinterested advice and information and that journalists and those connected with them do not profit as a result of publication. So, although it may not be illegal for journalists to buy shares about which they have recently written or are about to write, such purchases are forbidden by the Code. This is an example of where the provisions of a tough industry Code are more onerous than the law and an example of the strength of effective self-regulation.

Clause 14 states: -

i) Even where the law does not prohibit it, journalists must not use for their own profit financial information they receive in advance of its general publication, nor should they pass such information to others.

ii) They must not write about shares or securities in whose performance they know that they or their close families have a significant financial interest, without disclosing the interest to the editor or the financial editor.

iii) They must not buy or sell, either directly or through nominees or agents, shares or securities about which they have written recently or about which they intend to write in the near future.

The Code also states that “it is essential to the workings of an agreed Code that it be honoured not only to the letter but in the full spirit.”

It was argued by the newspaper that three matters relating to Clause 14 were less than clear. The words “significant” in 14(ii) and “recent” in 14(iii) were, it said, imprecise and could be interpreted in widely differing ways. Further, it pointed out, Clause 14 does not include any direct guidance on the conduct of editors in relation to their own holdings. While accepting that the sequence of an editor buying a significant stake in a company and then encouraging favourable reporting of its securities would be a breach of the Code, the newspaper suggested that the words of Clause 14 would be stretched to impute a breach through executive responsibility by an editor who purchases shares which are favourably commented upon within his newspaper without his knowledge. It was for this reason that Mirror Group Newspaper editors were now to be made subject to the “anti-embarrassment” provisions of a new Trinity Mirror dealing Code.

The Commission accepts that until now it has had to deal with few matters in relation to Clause 14. However, both the substance and spirit of the Clause are clear. The words to which the newspaper refers have to be interpreted in the light of all the surrounding circumstances. The Commission deals below with the issues as they arose in this case, including the special position of the editor in both his personal and executive capacity.

In view of the importance of these matters, the Commission has referred this adjudication to the industry’s Code Committee, for them to consider in due course whether any changes should be made to the Code.

The Commission’s approach

This matter has already led to a very large amount of comment in the media and a number of allegations have been made, some of which appeared to have no foundation. The Commission investigated a number of the more serious complaints concerning possible breaches of Clause 14 by the newspaper – and each of them is dealt with in turn below.

The Commission acknowledges the full and swift co-operation that it has received from the newspaper and its management in making available the results of its own investigation and those of its solicitors, as well as responding to a substantial number of enquiries.

The Commission approached the journalists responsible for the City Slickers column, Anil Bhoyrul and James Hipwell, through their respective solicitors, to see whether they were prepared to assist in its investigation. Mr Hipwell’s solicitors indicated that their client was not prepared to comment at this point of the Commission’s work. Mr Bhoyrul wrote at a late stage to the Commission commenting on the various matters under inquiry and followed this up with an affidavit delivered the day before the Commission was due to adjudicate. He accepted that he had given somewhat differing statements to The Mirror’s internal inquiry.

The newspaper commented that as Mr Bhoyrul’s letter was radically different from the account made to its own internal inquiry his new version of events could not be relied upon. In view of these matters and for the reasons set out below, the Commission has not found it necessary or right to rely on what Mr Bhoyrul says about others or to choose between conflicting acounts beyond noting where they differ in substance. In any event, unless otherwise stated, the Commission has treated any material as evidence in relation to the alleged breaches of the Code by the newspaper, rather than the specific individuals involved.

In arriving at its conclusions the Commission considered the following six matters, namely Messrs Bhoyrul and Hipwell and the City Slickers column; Tina Weaver and the Booth Industry shares; Piers Morgan and the purchases of shares in Wiggins Group, Corporate Executive Search and Viglen Technology plc; Mr Morgan’s position as editor; and the possible role of the newspaper industry’s Code of Practice Committee in re-examining the terms of Clause 14.

Messr Bhoyrul and Hipwell and the City Slickers column

The widening of share ownership amongst the population has inevitably led newspapers to increase their coverage of financial matters and to advise on investments generally. The City Slickers column, written by Anil Bhoyrul and James Hipwell, first appeared in The Mirror in May 1998 written, according to the newspaper, in a “cheeky irreverent style of journalism”, not simply telling readers to buy, sell or hold, but to “pile em high” or “let the lion roar, baby.” In very broad terms, stories which appeared in the column came from one of four main sources: the companies concerned (or at least individuals close to those companies); financial public relations agencies retained by companies to place media stories; brokers (either the brokers to the companies concerned or, more usually, brokers who had picked up market rumours relating to companies which they did not represent); and City analysts employed elsewhere in the financial press.

According to Mr Morgan – editor of the Mirror since 1995 – the column was initially not taken seriously in the City or by investors. But gradually its influence in persuading readers to invest in large numbers in shares which it tipped became very considerable. In a recent article on 17 March 2000, Mr Bhoyrul described this development. “We had created a monster that was out of control. Every time I tipped a share the price shot up between 30 per cent and 100 per cent the next morning. Suddenly, The Mirror was engulfed in the Slickers craze – and it was getting scary.” Much of what was written about tended to move share prices. Its Top Ten Tips for 1999 produced a return of 142% in terms of performance over the year.

It was in these circumstances that Mr Bhoyrul and Mr Hipwell began to purchase shares which were featured in the column. The Commission was told that on a number of occasions they identified a share that would become the next day’s “tip of the day”; then purchased a number of those shares; published the “tip of the day”; and then sold the shares on the day of the tip. The Commission was told that Hipwell had supplied details which indicated that he had followed such a procedure on at least 25 occasions and Bhoyrul had specifically detailed doing so on at least 6. The newspaper also stated that there were other occasions on which shares, which the two journalists owned, were featured in the City Slickers column. After an investigation by the newspaper’s management both journalists were summarily dismissed in February 2000 for gross misconduct, including serious violations of the Code.

In view of the above, the Commission – following its own assessment of the evidence – finds that there were repeated and flagrant breaches of the Code.

Tina Weaver and the Booth Industry shares

Tina Weaver is the deputy editor of The Mirror, a post she held in July 1998. The Commission was told that she had little to do with the City Slickers column after it began in May 1998. It was however her job to get to know regular columnists and in that context she had a friendly and ‘gossipy’ conversation with Messrs Bhoyrul and Hipwell a few days before 23 July 1998. During that conversation she asked if they had any good advice on shares to back. She said that this was a passing query and was not a request for serious investment advice or for prior knowledge of what the column was going to tip. Mr Bhoyrul suggested that Booth Industries might be worth investigating. Based on that comment Ms Weaver, who has had a number of modest shareholdings from time to time, invested £1,500 in Booth on 23 July 1998.

Booth Industries was made the “tip of the day” on 24 July 1998 and featured in City Slickers on 28 July 1998. Ms Weaver said that she did not know at the time of her purchase that the shares were going to be tipped, nor did she play any part in the decision to tip or feature Booth. Moreover, she was not aware until the recent publicity that the share had in fact been mentioned in the pages of The Mirror.

Mr Bhoyrul now alleges that he told Ms Weaver that he was tipping the shares the following day. The Commission does not find it necessary to resolve this conflict. The passing of the information by Mr Bhoyrul to Ms Weaver in advance of publication was a breach of the Code. The Commission did not, however, make any finding against Ms Weaver herself.

Piers Morgan and Wiggins Group shares

Piers Morgan has been the editor of The Mirror since 1995. On 7 October 1998 he bought £5,600 worth of shares in Wiggins Group. The shares had been the “tip of the day” in that day’s City Slicker’s column. On 27 October 1998 the Group was again mentioned in the column:-

“Wiggins Group is ..in our view undervalued. Slicker hears that another property company is eyeing Wiggins with takeover plans. The share rose again yesterday by 7% to 11.5p – so get in quick!”

On 3 November 1998 Mr Morgan sold his shares in Wiggins Group for a total consideration of £5,825.

The newspaper accepted that the purchase by Mr Morgan of the shares on 7 October 1998 was technically a breach of Clause 14 (iii) of the Code. However, it argued that the purchase was not “a significant financial interest” within Clause 14(ii). Nor did not believe that the sale of the shares eight days after the second mention was a breach of Clause 14(iii) of the Code.

While Mr Morgan accepted that he did not pay proper attention to Clause 14(iii) when he purchased the Wiggins Group shares he believed that it was entirely proper for him to buy shares that had been tipped in the paper as he was, in effect, doing no more than the paper was suggesting its readers did. “It was a case of putting his money where the paper’s mouth was.”

Under the terms of Clause 14 (iii) of the Code, journalists must not buy or sell shares or securities about which they have written recently or about which they intend to write in the near future. There was no evidence that Mr Morgan himself was intending to write about the shares or was himself involved in the decision to tip them in the Slickers column. However, as editor he was responsible for the content of the column and he had purchased the shares after they had been written about in his own newspaper and sold them after they had been mentioned again. Although there did not appear to be any intention on the part of the editor to influence what was written about the shares in the column the Commission agreed with the newspaper that technically his actions were a breach of the Code in this instance. He was responsible in an executive capacity for the column and had traded ‘recently’ in shares which were featured in it. A significant financial interest is not a necessary element for the purposes of Clause 14 (iii).

Although the Commission found no evidence of any intention on the part of the editor to influence what was written about the shares the Commission found that, technically, there was still a breach of the Code.

Piers Morgan and Corporate Executive Search

Mr Morgan purchased £9,600 worth of shares in Corporate Executive Search on 13 December 1999. He made this purchase having heard rumours from friends, his broker and Messrs Bhoyrul and Hipwell of a general buzz about the stock. There appear to have been 11 million shares traded in the company on 13 December 1999 before its shares were suspended on 14 December 1999.

On 14 January 2000, the City Slickers column said, “if you missed your chance, it will come again next month when Corporate Executive Search returns to the market – yes, you guessed it – as an internet company.”

The column again mentioned the company on 25 January 2000 when it said that, “Shares in Corporate Executive Search remain suspended after hitting 5p in December. At yesterday’s interim results, the firm announced it would be re-listed by late February, having brought e-commerce payment company Datacash.” The newspaper said that this was a legitimate reference to a news story.

Mr Bhoyrul told the Commission that he and Mr Hipwell had suggested to Mr Morgan in December 1999 that he should invest in the company as they were confident that the shares would be suspended following widespread rumours in the City. There was no column on the subject at the time.

The Commission is not satisfied that the purchase of shares in the company by Mr Morgan was a breach of the Clause 14. There is no evidence that Mr Morgan knew, or was involved with, the decision to tip the company a month later.

The Commission found no breach of the Code in this instance.

Piers Morgan and the Viglen plc shares

Mr Morgan had a particular interest in Viglen plc, a successful personal computer manufacturer. The Chairman of the parent company is a very well known businessman, Sir Alan Sugar. Sir Alan had contributed an occasional column to The Mirror, which led to Mr Morgan offering him a weekly column from the second half of 1999.

City Slickers first tipped Viglen in July 1999 and continued to tip the company throughout the year. Mr Morgan had a number of conversations with the journalists on the column over a period of time that Viglen were a share to watch for long term growth. Viglen Technologies plc was one of the City Slickers Top Ten tips for 2000.

On 12 December 1999 Viglen placed a job advertisement in The Sunday Times, repeated in the Financial Times and the Investors Chronicle, which was the first indication that it intended to expand into e-commerce. It appears to have aroused little public attention

On 14 January 2000 Mr Bhoyrul and Mr Hipwell had lunch with the Chief Executive of Viglen, Mr Tkachuck, who confirmed to them that Viglen intended to launch an Internet division. The next scheduled column in which the story could appear was Tuesday 18 January. Mr Bhoyrul wrote the column on 17 January including an attributed quote to Mr Tkachuck. The story described as an “exclusive” appeared in the City Slickers column of The Mirror on 18 January 2000. Viglen was also “the tip of the day” for that day.

During the afternoon on Monday 17 January 2000, Mr Morgan telephoned his broker and placed an order for £20,000 of Viglen shares.

Mr Morgan has explained his motivation for buying so many Viglen shares on that day. He said that he knew from a relative that Viglen was advertising for the job vacancy; City Slickers had been consistently tipping Viglen and had made it one of the Top Ten shares for 2000; a relative – a wealthy and apparently successful private investor – had been following Viglen and thought that it was a good company; and, additionally, there was a “general buzz” about Viglen. He did not tell the City Slickers journalists of his Viglen purchase.

Mr Morgan said that, at the time he bought Viglen shares on 17 January he had no idea that City Slickers were intending to write their piece on Viglen. Nor did he know of the lunch with Mr Tkachuck on 14 January 2000.

He said that on 17 January he was heavily engaged in a series of telephone calls with his political team and the Prime Minister’s press secretary about the results of a poll which The Mirror had undertaken about the performance of the Government. In the event he did not read the City Slickers piece before leaving the office in the evening. He first saw it when he received the first edition of the newspaper at home by special delivery at around 11.30 p.m. His initial reaction, on reading the article, was one of amusement that the story was labelled as “exclusive” when it had emanated from a job advertisement published a month previously. It did not occur to him that the piece would have the effect on the Viglen share price which it did.

Mr Morgan said that, if he had known about the story before its publication, he would have sought the advice of the Trinity Mirror’s legal director as to whether to pull it. He thought that it would have been quite improper to pull the story after he saw it at 11.30 p.m., particularly as hundreds of thousands of copies had gone out. Mr Morgan did not take any immediate action regarding his own shareholding, but after the facts relating to his purchase were widely publicised he announced on 4 February 2000 that he was selling the shares concerned and donating any profits to charity.

Mr Bhoyrul now alleges that he discussed the purchase of the Viglen shares with Mr Morgan on the morning of Monday 17 January 2000, after he told Mr Morgan that he was preparing a story stating that Viglen was to launch an internet division. Mr Bhoyrul also alleges that later on the same day Mr Morgan told him that he had bought £20,000 worth of shares in the company. This account is different from the one which exonerated Mr Morgan that he gave to the internal inquiry.

The Commission does not find it necessary to choose between the conflicting versions as to whether Mr Morgan knew anything about the decision to tip Viglen on 18 January. However, it appears, according to Mr Bhoyrul’s affidavit, that both Mr Bhoyrul and Mr Hipwell bought in total a large amount of Viglen shares on 17 January 2000 the day before publication in the Slickers column. If correct, this would represent another flagrant breach of the Code.

The newspaper accepted that in a clear case, such as where an editor bought a significant stake in a company and then encouraged favourable reporting of its securities, a breach of the Code would be committed. However, Mr Morgan was making a significant share purchase in the amount of £20,000 in the knowledge that the City Slicker column had tipped Viglen as recently as 5 January and 11 January 2000 and would probably do so again. He did not appreciate the need to act decisively once the details of the column was drawn to his attention and did not seek to dispose of his shares at no profit for several weeks. The Commission was pleased that he had donated his profit to charity but the purchase had taken place shortly after Viglen had been tipped in the newspaper and in the context of frequent tipping of Viglen by the column. Given Mr Morgan’s position as editor this was a breach of the Code as he was responsible for what had been written in the column ‘recently’.

Mr Morgan’s position as editor

Mr Piers Morgan is an experienced journalist who has been the editor of The Mirror since 1995. The provisions of the PCC’s Code of Practice are incorporated into his contract of employment.

Mr Morgan accepted that, as editor, he has executive responsibility for everything which appears in The Mirror and for the conduct of the journalists on the newspaper. Whilst normally he would have read about 75% of the newspaper before it goes to press he is heavily reliant on senior production executives and lawyers to draw to his attention anything which worries them. In the case of the City Slickers columns there were concerns about potential libel claims which had led to special procedures being put in place in December 1999 under which The Mirror’s legal adviser took over personal responsibility for checking the column.

The Commission was informed that Mr Morgan had told the internal inquiry team that about June 1999 he had been tipped off that Mr Hipwell was being “investigated in respect of share dealings.” He spoke to Mr Bhoyrul who said that he thought that Mr Hipwell might be buying shares which were being tipped in the City Slickers column. Mr Morgan told Mr Hipwell that it was unacceptable to be buying shares that the column was tipping and that he must stop the practice immediately.

With the benefit of hindsight Mr Morgan said that he regretted that this warning was purely verbal and that he did not raise the matter with anyone else. He also thought that it would have been better to say that Mr Hipwell should not deal in shares at all, given his position.

Messrs Bhoyrul and Hipwell were engaged in flagrant, multiple breaches of the Code over a sustained period of time. Mr Morgan, on his own admission, was aware of the position as early as mid-1999, yet he took no firm action beyond the verbal discussion mentioned above. The Code requires that editors must ensure that the Code is observed rigorously by their staff and others who contribute to their newspapers. In this case, it was clear to the Commission that the editor had not taken sufficient care to ensure that his staff were acting in accordance with the Code, even though by his own admission he had been aware of the possibility of the Slickers’ trading in shares that they featured in their column. The oral warning was not adequate to prevent the repeated breaches of the Code as subsequent events have shown. The editor’s conduct in this case – including the breach of the Code in relation to Viglen – had therefore fallen short of the high professional standards demanded by the Code.

Conclusions

It is most important that the public should have confidence in the independence of financial journalists and newspaper editors when they give advice, which means that any financial interest should always be fully disclosed.

If Clause 14 had been scrupulously observed, then none of the difficulties which arise in this case would have occurred.

The Commission would expect newspapers and periodicals which engage in financial advice to draft their own guidelines, to prevent the substance and spirit of Clause 14 being breached, and to make those guidelines an integral part of the contracts of employment of the journalists concerned.

The Commission welcomes the way that Trinity Mirror have dealt with the issue, by the promulgation of strict and clear guidelines barring shareholdings by employees in such circumstances. However, in view of the unsatisfactory state of affairs revealed by this episode, the Commission has decided to refer the terms of this adjudication to the Chief Executive of Trinity Mirror.


To read a 2006 update on this matter click here