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Northern Rock
Shareholder Action Group
Updated 8 May
2008 (Latest news is at the bottom of the page)
The
UK Shareholders Association has been running a Shareholders Action Group
to promote the interests of Northern Rock Shareholders since September
2007. We are
now primarily campaigning for fair compensation for the confiscation of
the shares (i.e. the shares you held in Northern Rock) and a summary of
our case is given below.
If
you wish to register your interest in our campaign and law suit please contact the
following:
Roger Lawson, Chairman, Northern Rock
Shareholders Action Group, UKSA, email:
uksa@uksa.org.uk, telephone:
020-8467-2686, PO Box 62, Chislehurst, BR7 5YB. Although none of the
following is essential (other than a name) it would help to provide the following
information: Name, Email address, Telephone number, Postal address and
Number of shares held. Any such information
will be held in confidence by UKSA and will be used to communicate with
you to provide further information as it becomes available.
The
Basis of Our Case.
In our view the UK Government have confiscated the shares even though
there was a good private sector solution on the table that would have
enabled the company to recover and to repay the debts it owed to the
Bank of England.
They
have promised to pay some compensation but have rigged the basis of the
valuation of the shares so that shareholders are likely to get very
little or nothing (newspapers have been suggesting it could be as little
as 5 pence per share and we also believe it will be a negligible
figure).
Why
have they done this and how? The reason they have done this is
apparently because they have deduced that it offers “better value” to
the Government to acquire the shares for a pittance, and then sell off
the company after a period of “temporary public ownership” to the
highest bidder. Note that there is no commitment to give back to former
shareholders any interest in the company when it is subsequently sold,
so you will not benefit from any recovery in the business.
Rigging the Independent Valuation. How
has the Government rigged the compensation terms? They have set the terms of
reference for the independent valuation by specifying that the following
assumptions (amongst others) should apply:
a) that the company is unable to continue as a going concern; and
b) that the company is in administration.
These
“assumptions” clearly did not apply when the nationalisation took place.
The company was not in administration, and was trading normally and as a
going concern (as Ministers have repeatedly said in Parliament and
elsewhere). Such terms of reference for the valuation of any company are
likely to result in a negligible valuation. In addition the selection of
the valuers is solely at the discretion of the Treasury and there is no
guarantee that they will be unbiased and impartial.
The
Government Benefiting from its Own Actions. It is
a general principle followed in commercial disputes that anyone who
damages the value of a business should not benefit as a result in any
subsequent valuation of that business. But here the Government and its
agencies caused many of the problems that Northern Rock faced.
A
Legal Challenge is Justifiable. We
consider the valuation approach to be unlawful, immoral and unethical
and we believe that the Government should not gain by being able to
purchase the company cheaply as a result of its own actions. We have
taken legal advice on these issues and we believe there are good grounds
to pursue legal action to challenge many aspects of this process and the
likely compensation that will be offered.
We
believe that shareholders have a prima facie case that their human
rights have been violated under the Human Rights Act 1998 and the
European Convention on Human Rights. In particular, the Act and the
Convention protect rights in property from the type of action which has
been taken by the Government here.
In
our view a proper, independent valuation of this business when it was
acquired by the Government might produce a figure of more like £5 than 5
pence per share, which gives you a measure of how much compensation we
believe shareholders should be asking for as opposed to what the
Government wishes to pay. However, please note that we do not wish to
prejudge any valuation as not all the necessary financial information is
available to us at this time – all we ask is that the valuation should
be done on a normal commercial basis with shareholders and the
Government being able to make submissions about the factors that might
affect the conclusion. But it is certainly not natural justice that a
buyer of any business should dictate the terms of reference for the
determination of the purchase price.
Launch of Legal Action Fund.
We estimate that there are over 150,000 private individuals who have
been affected by this matter. We are therefore asking everyone who was a
shareholder in Northern Rock to register their interest in this legal
challenge and contribute a minimum of £25. Larger donations are invited
from shareholders with more than 1,000 shares, in proportion to their
holdings. Go to this page for more
details of the appeal: Appeal or simply go here
to donate: Donation
Please donate to this fund if
you have not already done so. We really do need contributions from everyone if
we are to obtain justice for shareholders.
The picture below is of shareholders at a meeting held by UKSA in
Newcastle in November 2007 (for more photos of events organised by UKSA see
Photos ).

Latest information (in chronological order from 17/2/2008 - latest at
bottom). As the company has now been nationalised, making a lot of our past
comments only of academic interest, we have moved them to a separate page which
is here: NorthernRock_Past.
THE
NATIONALISATION OF NORTHERN ROCK. (17/2/2008). UKSA
has issued the following press release following the announcement by the
Government that Northern Rock is to be nationalised:
Press058_NRK_Nationalisation. Soon after we issued the following
note: Update_24
FAIR COMPENSATION NOT BEING OFFERED. On 20/2/2008 we issued the
following note (and later extended it on 24/2/2008) about the terms of the compensation to shareholders and
our commitment to pursue legal action to obtain some redress:
Update_25 . This note was
issued on 2/3/2008 concerning various aspects of the current position:
Update_26. The following note
was issued on 7/3/2008 about the forthcoming debate in Parliament of the
Compensation Order: Update_27
and this note was issued after those debates:
Update_28
PRESS CONFERENCE TO ANNOUNCE NEWS ON LEGAL ACTION AND APPEAL LAUNCH.
On the 19th March UKSA held a press conference in London and we
subsequently issued the following note:
Update_29. This
gives more details of the basis of our legal challenge to the
Compensation Order and how we intend to promote this campaign and raise
funds to fight this issue. Some photographs taken at the press
conference and of our activities in the North East are present at:
Press_Conference . Update 30
covered the FSA review of its activities on Northern Rock and other
news.
2007 RESULTS AND STATUS ON LEGAL ACTION. This note was issued following publication of the
accounts for 2007: Update_31,
and this note was issued on the 20th April to bring supporters up to
date with the latest news:
Update_32. Following rejection by the Government of our submission
on the unfairness of the compensation terms, we issued the following
press release confirming that legal action will be proceeded with:
Press061. We
also issued the following note concerning the recent funding of other
banks: Press060 and sent a
letter to Alistair Darling requesting an inquiry into the leak that
prompted the run at Northern Rock:
Darling_Letter_30042008. A summary
of recent news was issued in
Update_33. The following press release was issued on the 8th May
when the application for a judicial review was filed:
Press062 and
Update_34 was issued to our
supporters.
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