This story is from September 30, 2005

Govt gags PSUs to curb market volatility

Navika Kumar / TNN / Sep 30, 2005, 00:02 IST

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PSUs and govt-controlled bodies" have been instructed not to make announcements that could influence share prices.

Govt gags PSUs to curb market volatility

NEW DELHI: Gag orders appear to be the order of the day. This one comes from the Centre. Officials of "PSUs and government-controlled bodies" have been instructed by Cabinet secretariat not to make announcements that could influence share prices.
Whether it's a fallout of the public spat between the director general of hydrocarbons and ONGC chairman Subir Raha earlier this month, or the fear of further spooking the markets, government is taking no chances.
On September 20, the cabinet secretariat issued instructions to secretaries of all government departments to ensure that no such statements are made "which could have the effect of influencing the movement of share prices of the respective PSUs."
The letter adds, "It is observed that forward-looking statements are being made by CEOs of some PSUs...You would agree that such statements are not only undesirable but also unethical."

Government could claim that these are routine instructions, but here are some noteworthy points. The cabinet secretariat's letter, a copy of which is available with TIMES NOW, was...
... written on September 17, but issued on September 20, a day after the stock market touched the 8500-mark.
The last time such a letter was written by the cabinet secretariat was in July, 2003.
The letter instructs all ministries that all "statements or announcements to the media are made only by the authorised personnel and after ensuring stock exchanges are fully informed regarding all price sensitive information well in advance."

It reminds: "the listing agreements require that companies must inform stock exchange of all price sensitive information and about any events that are likely to have a bearing on the performance of the firm, prior to any announcement to the media".
A few weeks ago, DGHC VK Sibal accused ONGC's Raha of jumping the gun on making stock market-influencing statements on new gas-finds before notifying appropriate authorities.
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