Sir, You criticise the rules that protect ordinary investors from making decisions based on incomplete information (Business, February 9).
Your correspondent was rightly refused a copy of a draft prospectus for a listing of a specialist security which would not ordinarily be suitable as an investment for retail investors. The rules preventing the distribution of draft (ie, incomplete and unapproved) prospectuses provide a fundamental protection for retail investors who might otherwise decide to buy on the strength of a document, or reporting of a document, that had no official standing. They would have no recourse should the content of the final document be significantly different: caveat emptor in an extreme form.
We accept that there is a demand for pathfinder prospectuses to be seen by the general public and have introduced changes which enable prospectuses approved by the Financial Services Authority to be distributed prior to an issue, even though they will not contain the price or number of shares.
We believe these changes will address any greater public desire for information on floats. But we do not accept that investors should be expected to make their decisions based on unfinished, incomplete and potentially inaccurate documents.
Yours faithfully,
SALLY DEWAR,
(Head of Listing Transactions, Markets Division),
The Financial Services Authority,
25 The North Colonnade,
Canary Wharf, E14 5HS.
February 14.