Nokia’s rap on the knuckles

BBC News: Phone maker Nokia has been reprimanded by Finland’s financial market watchdog and stock exchange for not releasing positive earnings news quickly enough. Listed in New York and Helsinki, Nokia followed US rules but did not abide by Finland’s, the regulators said. Nokia should have told investors about the improved fourth-quarter earnings and sales on 14 January, and not have waited until 27 January as it did. Nokia shares jumped more than 6% when the good news came out on 27 January.

From reading this concise BBC News story today, plus other news reports on the net, it’s hard to see how Nokia could have made such a high-profile error like this, given their knowledge and significant experience under the regulatory frameworks of multiple jurisdictions.

It looks like Nokia got off lightly, a rap on the knuckles, with the Finnish regulators giving them the benefit of the doubt (read the statement from the Helsinki stock exchange). A one-time benefit, no doubt.

Now this from Nokia’s spokesperson quoted in the BBC report:

“We are a multi-listed company and we are obliged to follow the laws of all countries,” spokeswoman Arja Suominen said. “According to our understanding, rules gave us time to communicate. Of course in the future we will take the decision into consideration.”

I’d say the communicators need to be 100% familiar with the exact disclosure requirements in each jurisdiction, even if no one else in the company appears to be.

Yet having said that, I know from my own experience that it can sometimes not be an easy task to correctly interpret the sometimes vaguely-worded disclosure requirements of stock exchanges.

In The Netherlands, for instance, the Euronext exchange in Amsterdam had a helpful and useful booklet at one time that sets out the matter of disclosure by listed companies – when, how and under what circumstances. (That booklet doesn’t seem to exist any more as I can’t locate it on the Euronext website.)

But the over-riding factor on disclosure and when to disclose relied on what to many people was too vague a criterion – in essence, you had to make a public announcement on anything that might affect the share price, up or down. As to what ‘anything’ might be, that was left to corporate common sense – if you have reason to believe that a given event or circumstance could affect your share price, then you disclose. You err on the side of disclosure, not the other way around.

While I can imagine that narrowing such a seemingly-vague condition isn’t easy, with so many variables, it would lessen anyone’s misunderstanding – and, hence, aid their understanding – if it were a lot clearer.

So to help communicators get fully in the picture on disclosure requirements, whatever the stock exchange, regulators need to ensure their requirements are clear so that the communicators get a chance to actually understand them.