Northern Rock shareholders today (8 May) launched a judicial review as they bid to win improved compensation from the Government following the nationalisation of the crisis-hit lender.
The review is being sought by the UK Shareholders Association (UKSA), representing approximately 150,000 private shareholders that held up to 25% of the bank’s shares. David Greene, head of litigation at
In addition, activist hedge fund SRM Global Fund – which acquired an 11.5% stake in the bank – is joining the UKSA in calling for a review. SRM is being advised by White & Case litigation partner john Reynolds.
The shareholders allege that the Government’s compensation scheme is likely to produce a nil value whereas Northern Rock’s book value before its nationalisation in February was at least four pounds per share.
Commenting on the news, a spokesman for SRM said: “Northern Rock’s shareholders have had an unfair compensation proposal forced on them and the only redress is through the courts.
“No shareholder enters into litigation lightly but in these circumstances institutional investors and individual shareholders have no alternative. It is entirely within the Government’s power to avoid lengthy and expensive litigation by introducing an unbiased compensation scheme.”
