Here comes the cavalry

The Financial Services Authority’s decision to introduce new rules requiring disclosure of large short positions during UK rights issues is a gift to Morgan Stanley and Dresdner Kleinwort, underwriters of HBOS’s troubled capital raising. Earlier this week, the UK mortgage lender’s share price sank below the rights price, raising the spectre that the £4bn deal would fail, leaving the underwriters to pick up the pieces. The FSA’s lifeline quickly had the desired effect: HBOS shares soared 13%. On...