Stop this daylight robbery: Regulators must protect vulnerable shareholders from
We have grown all-too-accustomed to predators trying to grab assets from UK investors on the cheap but the rapacity has hit new depths.
Insurance company Aviva is warning its small investors of a barefaced attempt to persuade them to sell their shares at significantly less than market value.
A company called Litani LLC has sent documents to thousands of small investors. The paperwork specifies that it is offering to buy shares at much less than they are worth.
Presumably it is hoping people will be taken in by the documents’ official appearance and will not read or understand them properly.
It is shocking in its audacity. What is even more shocking is that no-one has been able to stop such an arrant rip-off.
Aviva did not want to hand over its share register to Litani, but was forced to do so by a court ruling late last year.
Bad deal: Insurance company Aviva is warning its small investors of a barefaced attempt to persuade them to sell their shares at significantly less than market value
The FCA does not regulate ‘mini-tenders’ of this sort. However, according to lawyers, they are likely to be classed as a financial promotion that must be approved by a regulated firm.
In this case it is an outfit called Gateway 21, which says on its website it is authorised by the FCA to approve financial promotions.
It is very unfortunate indeed that Aviva has been thwarted in its efforts to protect its 500,000 private shareholders from daylight robbery.
Aviva has large numbers of individual shareholders on its register because it was formed from a group of demutualised insurance companies.
Others are in a similar position, including privatised utilities like Centrica and telecoms giant BT. Shareholders in these companies may be at risk of copycat scams.
Because their stock market floats happened decades ago, many of the individual investors are now elderly and vulnerable.
These scams must be stopped right now.
Token resistance
Tokenisation of wholesale financial markets is a mouthful, but it is important stuff.
Former regulator Chris Woolard, whose job it is to champion tokenisation, says it could create £33billion of economic value and £14billion of extra annual tax revenues by 2035.
Ambitions include issuing a tokenised gilt, or British government IOU, that could be used as collateral, which would act as a signal of official confidence.
Tokenisation is essentially a big back-office upgrade that should speed up processes, dispense with lots of admin and reduce costs.
What is it? Simply put, a unique digital token is created to represent a gilt, share or other asset and stored in blockchain-based digital wallets.
The tokens are smart, with code embedded so they can be traded and settled instantly. They do come with new risks, including vulnerability to hackers, money-launderers and various criminals.
The fact they can be traded instantly could spark super-rapid sell-offs and exacerbate market crashes.
There are questions about regulation, investor protection and compensation.
Woolard is talking about a ‘digital Big Bang’ similar to the original version in 1986 that transformed the City.
That would be great. I loved those heady days of power suits, champagne and optimism, but there is plenty for the regulators to ponder.
Friction and delay are not automatically all bad: they can act as circuit-breakers of sorts and removing them may have unintended consequences.
Annoyance economy
I am thinking of compiling a personal FTSE index, measuring Futile Time Spent Entreating companies to honour customers with even basic levels of service.
My index hit a high last week, pushed upwards by delivery firm DPD, Barclays Bank and tech company HP, which does not actually stand for Horrible Printers but Hewlett-Packard.
Trying to sort out the various problems probably took a day in total – a day when, in effect, I was working for these companies free of charge, solving issues that need not have arisen.
At Barclays, the human staff were exemplary but were thwarted by tech. Setting up a new printer with HP’s app went swimmingly, until it didn’t. No help was available by phone because that helpline isn’t open at weekends.
As for DPD, I was passed around their online chat like a parcel. I knew complaining would be pointless before putting myself through the ordeal, but companies will get away with even more if no-one objects. It is Dial F for Frustration.
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