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Browse: Home / 2009 / February / 13 / UK: High Court Rejects Legal Challenge by Former Northern Rock Shareholders

UK: High Court Rejects Legal Challenge by Former Northern Rock Shareholders

By Securities Docket on February 13, 2009, 6:51 am

In the UK today, former shareholders in Northern Rock failed in their legal challenge to the Government over the bailout of the company.  The Times Online reports that the shareholders, which included two hedge funds and about 150,000 individual investors, applied for judicial review after accusing the Government of setting up an unfair and unlawful compensation scheme for shareholders when the bank was nationalized a year ago.

The High Court judges ruled that the shareholders’ rights had not been infringed, however.  Lord Justice Stanley Burnton said:

We have some sympathy with the position of the former long-term shareholders of Northern Rock, who doubtless believed they had an investment in a reliable bank. Ultimately, however, they entrusted their investments to the hands of the management of the company.  As it turns out, their business plan was flawed and could not survive the unprecedented circumstances of the latter part of 2007.

Lawyers for the former shareholders argued that the little they received for their shares “amounted to a breach of European human rights laws intended to ensure that investors receive compensation related to the fair value of any property taken by the state.”  The High Court rejected this argument, and ordered the two hedge funds leading the challenge to split the legal costs between them.

Read the Times Online article

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Posted in Global | Tagged Dismissals, UK

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