New Star's extraordinary statement to the stock market first thing yesterday marked an unprecedented break with convention. At 7am, New Star published a statement detailing its request for its shares to be suspended. The fund manager said that it had gone into advanced talks with its banks, asking the UK Listing Authority (UKLA), which operates rules for quoted companies, for a temporary suspension during the talks.

This was the first time that a listed company had told its investors in advance that it had asked for a suspension, and it confounded the Financial Services Authority, which operates the UKLA. It quickly emerged that New Star was preparing to offer its lenders a controlling amount of its equity in exchange for their taking on its £240million debt mountain.

The signals from the fund manager were that it was keen to avoid an artificial market developing in its shares while it was in crunch talks with its lenders. Any issue of new shares to the banks would be bad news for existing shareholders and could be seen as price-sensitive.

Sceptics noted that suspending the shares would have put a floor under the share price, which would have been a platform for negotiations about any proposed deal.

If New Star had intended to win friends and influence people with a come-clean approach, the move backfired. At 8.59am, after heated behind-the-scenes talks, the embattled asset manager put out a second statement saying that the regulator had denied its request. The FSA previously had turned down requests by companies for their shares to be suspended, but never had this become public knowledge. The regulator judged that nothing was preventing a fair and orderly market from operating and that investors were not being put at undue risk.

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