Cleansing
Cleansing or a cleansing notice is the term applied to a public disclosure of information which is made so that parties that hitherto were in possession of some inside information are no longer constrained from dealing by applicable market abuse rules.
For example lenders to a specially arranged acquisition facility would become cleansed once the acquisition has been publicly announced.
Rather more difficult would be the situation where lenders are taken inside to put together such a facility and then the acquisition or facility does not proceed.
FSA clarifies its view on cleansing statements explains that you need to consider carefully whether the information about the loan is or is not inside information, and therefore whether cleansing is really necessary.
This area of market behaviour is now governed by the FCA (the Financial Conduct Authority, as successor to the FSA).
However, the views expressed in the former FSA’s letter remain fully valid and relevant under the FCA’s governance.
