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UK to close stock market loopholes

  • Britain's financial watchdog is to close loopholes that enable companies to list shares on the London Stock Exchange without being fully vetted.

    The move comes in a bid to boost investor protection.

    On Tuesday, the Financial Services Authority (FSA) announced it would prevent reverse takeovers that allow privately owned companies to sell their shares to the public without going through the exchange's strict listing process.

    The use of reverse takeovers, where a private firm buys one that is already listed, has attracted criticism in the past.

    Experts also warn the practice could undermine the integrity of the London stock market.

    The FSA's announcement comes just days after Bumi, an Indonesian venture that was listed on the London Stock Exchange through a reverse takeover, launched a probe into $500 million of alleged irregularities.