Baltimore Technologies could be facing a formal reprimand from the British regulator, the Financial Services Authority, if the authority decides that last Friday's warning about current trading breaches regulations on disclosure of market-sensitive information.

A spokesman for the authority declined to state whether it was conducting an investigation into last Friday's events. But it is understood that given the circumstances which led to the selling of Baltimore shares and the fall in the share price, an investigation is a formality.

Under its current powers, all the FSA can do is issue a public or private reprimand if it believes disclosure regulations have been breached.

Last Friday, Baltimore invited more than 30 Internet security analysts from both Ireland and the UK to a "teach-in" at Chief O'Neill's Hotel at Smithfield in Dublin.

This was aimed at introducing the analysts to Baltimore's product range and also to introduce them to some of the senior executives that have joined the company after a series of acquisitions over the past year.

Given that Baltimore is currently in a "closed period", this sort of briefing does not involve any financial details on current trading or other market-sensitive information.

But an opening address by chief executive Mr Fran Rooney was interpreted by an analyst from Credit Suisse First Boston as signalling a slowdown in sales and weak trading.

"Our analyst came out of the meeting in Dublin saying that the company sounded cautious, that market conditions are difficult. The only thing that surprises me is that people would be surprised by that," said a CSFB spokesman.

Baltimore has declined to comment on last Friday's events but it is understood that the company believes it did not divulge any market-sensitive information to the "teach-in" for the Dublin and London analysts.

But references to challenging trading conditions were enough for CSFB to tell their clients to dump Baltimore.

The collapse in the Baltimore share price led the other analysts to leave the teach-in to contact their dealing desks, with the result that Baltimore was forced to abandon the remainder of the event which was to highlight "product, technology and market developments".

That all happened mid-morning last Friday, but it generated a flood of selling of Baltimore shares. By early afternoon, the 30 per cent fall in the share price forced the company into a formal trading statement where it said that first quarter sales would be no more than £25 million sterling (€39.9 million), £5 million short of consensus forecasts for first quarter sales.

This statement came hours after Baltimore's shares had collapsed to a new low. Price-sensitive announcements are supposed to be made through the Stock Exchange RNS news service to ensure they reach the widest audience as quickly as possible.

The statement said that Mr Rooney, in his opening remarks to the teach-in, had commented "on the challenging trading conditions that the software industry in general is currently experiencing in the United States". It also said: "This afternoon the company would announce to analysts that in common with other companies Baltimore had experienced some sales being delayed due to the prevailing economic climate."

But the statement merely served to reinforce the belief in the market that Baltimore was facing a severe sales shortfall in the current quarter, and that its negotiating position on sales contract had been seriously damaged by last Friday's events.

The Financial Services Authority now has to decide whether Baltimore breached stock exchange disclosure rules which prohibit selective disclosure of information at analysts' presentations.

Under stock market rules, price-sensitive information is supposed to be released generally so all investors have the same information.

If the FSA does decide to investigate last Friday's events, that could take months rather than weeks with company executives and the analysts who attended last Friday's teach-in being interviewed by FSA investigators.

Irish market sources believe that, at worst, Baltimore is guilty of naivety in the way it approached a presentation attended by some analysts who were on record as being negative towards the shares.