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Last September 21, NYSE Euronext invited a panel of speakers from the legal, audit, consulting and business sectors to discuss a sensitive topic: preventing and managing financial communication risks. Excerpts below.
Didier Martin, Partner, Bredin Prat law firm
"Financial information can be regulatory, periodic or ongoing. It is clearly this latter category that can cause problems. Information must be correct, precise and honest. It has to be true, clear, understandable, published at the right time, and unambiguous. Its sincerity is assessed with regard to the communication as a whole, and implies that it be both homogeneous and exhaustive. If financial information doesn't meet one or more of these requirements, the issuer can be held accountable. In case of a breach of administrative requirements, the French market authority (AMF) can initiate proceedings, with fines capped at €100 million."
Elodie Fornas, Senior Manager, PriceWaterhouse Coopers
"The risks related to financial communication are both regulatory and operational. In both cases, a strong impact on the company's reputation, responsibility and stock price can result. It is therefore necessary to implement procedures for identifying, preventing and managing potential risks. First, the publication's compliance must be assessed. Rules and procedures should then be analyzed to streamline coordination between the company's financial communication agents, and acquire the tools for secure distribution of information. "
Pascal Bantegnie, Director of Financial Communication, Safran
"In 2010 we carried out an audit of our financial communication with the help of a specialized firm. We thought it made sense to be audited, given that the information we distribute is itself audited. This process took three months and allowed us to identify our strengths and potential risk areas, and to implement a concrete action plan. We drafted an Internal financial communication charter defining the Group's objectives in this area, and the rules that apply. We also drafted a Procedural guide, and updated our procedures for preventing insider trading."
Didier Guigou, Consultant
"In France, executives are rarely punished for misdemeanors relating to financial information. It's not a priority here, unlike what we see happening in the US and England. But it seems things are changing, and our commitment today must focus on five main areas: the company's financial communication strategy; attentiveness to the markets based on surveys, reports and summaries; reporting with regular indicators; processes to ensure proper implementation of procedures; and forecasts."
Alain Mourot, General Secretary, Chartis
"Financial communication accounts for 75% of risks of conflict for listed companies, so it's crucial for these risks to be prevented and properly managed. An insurer's expertise is a significant asset in this situation. Today in France, 95% of executives of listed companies carry personal insurance.
Managing risks well requires excellent knowledge of your shareholders' profile. It also means that information published is understandable to non-professionals, can be tracked from one year to another, and doesn't exclude sensitive topics."