Give us back our shares!

Yesterday Robin Ashby spoke to BBC Radio Scotland about the outcome of the shareholders' appeal to the Court of Appeal. He stressed that the Northern Rock Small Shareholders Group is not a party to the court proceedings, although in sympathy with the claims of other shareholders and of course very interested in the outcome.

In his view, this was by no means the end of the line. He would expect the case to go next to the new Supreme Court (which is the Judicial Committee of the House of Lords until 31 July) and if the shareholders lose there, perhaps even to the European Court of Human Rights.

(The parties to the case are the two biggest shareholders, RAB and SRM Global, and a few selected small shareholders working with the UK Shareholders Association.)

Once the legal challenge is resolved, the valuer can get on with his wrok. But it is part of the contention that the rules have been so rigged by the Government that they are wqasting money to employ him and might just as well be honest and say “we've taken your shares and we're going to give you nowt”

The view that he expressed was that the small shareholders for whom NRSSG speaks don't want derisory compensation, they want fairness. The big banks weren't nationalised. The Government stood behind them while they tried to launch rights issues which the Government underwrote. So it ended up with a dominant shareholding. In the case of Northern Rock, it could easily have done the same thing. Indeed, it has injected £3 billion as shares.

We might have been diluted to a very large extent, but we'd still have been shareholders in our company and could share in any upside – which obviously the Government expects, because it's planning to sell Northern Rock back to the private sector as soon as it can.

Clearly all this will be going on until the General Election next year, when I expect former shareholders will be reminded about the theft of their shares, and will hold politicians seeking their vote to account.

There's an easy way for them to get out of this situation – give us back our shares!

Court of Appeal defeat but fight goes on

Appeal defeat for Rock investors

Former Northern Rock shareholders have lost their appeal in the latest stage of their challenge to the government's compensation plan.

The shareholders had appealed against a High Court decision to refuse a judicial review of the fairness of the government's scheme to compensate them.

They argued the government had deliberately undervalued the bank in the run up to its nationalisation.

But they said that they would now try to take the case to the House of Lords.

"We embarked upon this legal challenge in the full expectation that it would be a lengthy process. We are determined to see it through to its conclusion," said Jon Wood, of SRM - which was involved in bringing the appeal.

Crunch

Northern Rock came close to collapse at the start of the credit crisis in 2007 after savers staged a run on the bank after it had sought financial aid from the government.

Subsequently it had to be bailed out by the government, which then went on to nationalise the bank in February 2008.

At the time of nationalisation the government said that any subsequent valuation for compensation purposes should be based on the assumption that Northern Rock had not been a going concern.

The appeal was brought by hedge funds and other Northern Rock shareholders.

They argued in the original High Court case that the government's assessment of the bank's true worth was false and almost guaranteed that they would end up with nothing.

Government barristers pointed out that the lender had been lent or guaranteed £54bn of taxpayers money to keep the bank going, and that without this support the bank would have gone bust, leaving the shares totally worthless.

The High Court judges ruled that shareholders had taken a commercial risk with their investment.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8172169.stm

Published: 2009/07/28 09:41:54 GMT

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