Deutsche Post under fire for massaging expectations

Deutsche Post, Europe’s largest postal service, has come under fire from lawyers and investors after the group prematurely issued analysts with operating figures ahead of its quarterly report next Monday.

A spokesperson for the German financial supervisory authority said that it would wait until the official figures are published on Monday, after reports in FT Deutschland, before they decided whether to take action against the company.

Lawyers told FT Deutschland, the Financial Times sister paper, that they believed the distribution of actual figures to analysts was a breach of German law.

“At a first glance what Deutsche Post has done is illegal. Market sensitive information has to be reported because it is information that can move the markets,” Klaus Rotter, an investment specialist said.

Under the German Securities Trade Act, any information that could affect a share price must immediately be released to the market. Failure to do so could trigger claims for damages from investors and fines from the German FSA, Mr Rotter added

Last year, Germany passed a new law designed to improve market transparency and clamp down on insider dealing.

Deutsche Post’s actions were not in accordance with the new regulations, according to Harald Rieger, who is a partner at Kaye Scholer, an international law firm.

“What they have done goes against the basic law of equality. Everyone must get the same information. The surveillance of sudden share price and turnover fluctuations will be watched officially,” Ruediger von Rosen, a member of the German Institute for Share Promotion’s executive board, said.

Analysts, who wished to remain anonymous, told FT Deutschland, that many companies listed in the Dax index reveal figures to analysts ahead of official publication.

“Some groups actively and aggressively seek out analysts,” one analyst said.

“There is a great deal of uncertainty about when to publish figures,” Ruediger Veil, Professor of economic law at the Hamburg Bucerius Law School, said. The new version of the Securities Trade Act, which should protect investors from insider dealing, was ambiguous, he said.

The German FSA is believed to be preparing to introduce specific guidelines for the implementation of the law.

“The stockmarket does not like surprises,” one spokesperson for a Dax company said.

But smaller investors and the analysts from smaller investment houses, who do not receive the information earlier, lose out.

“Industry and trade companies tend to look after the analysts from bigger investment houses. They are often invited to private events,” one representative from a smaller bank said.

Some companies denied that analysts and groups were in close contact with each other. “The actions of Deutsche Post are not the norm. We certainly would have also made an ad hoc announcement,” a spokesperson from an investor relations division in one company said.

BASF and Bayer, the two largest chemical groups say they inform all analysts at the same time. They use external companies who gather and evaluate analysts’ expectations.