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Here on this page you can read the latest news of our progress to get compensation for the market abuse perpetrated by the Market Makers on ordinary private investors. |
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LSE Sued for Market Abuse Destruction of Value, Acts of Bad Faith and The shocking news was released today that the London Stock Exchange is being sued for gross market abuse, dishonestly deceiving the victims of a market abuse, acts of bad faith, reneging on promises, destruction of value and failure to abide by the Recognition Recquirements for Regulated Investment Exchanges. Shortly before A-Day, this brings into doubt the wisdom of investing in the London Markets, under the control of an Exchange that it appears is more interested in acting like a trade association in protecting their members, than in protecting the victims of a financial crime. The writ filed in the Central London County Court, alleges that in 2003 the London Stock Exchange dishonestly deceived the victims of a market abuse when they withheld the information that they instructed the valuer in a Settlement Offer to use restrictive and narrow parameters on an official valuation, to all intents and purposes predeterming the value being used to compensate the victims of the Room Service Shorting Scandal and then lied and misled the market about the true nature of the valuation of the Offer by stating that it was fair and free from influence by the Exchange or market makers. When this Offer failed to attract sufficient acceptances to enable the Exchange to restore the orderly market, the Exchange made a conscious decision to do something that was fundamentally wrong and deliberately used dilution shares of lower value, created after the market abuse, which then destroyed the true market value of the Room Service shares against the interests of the victims of the crime and contrary to their duties obligations and responsibilities as a Regulated Investment Exchange as well as promises to protect the investors interests and their legal rights to claim compensation. By doing this, the Exchange went back on their word and in one stroke destroyed their reputation which had been carried down through hundreds of years of trading through their motto: Dictum Meum Pactum - My Word is My Bond The Exchange has shamefully protected market abusers over the interests of the victims of financial crime and in doing so, has trampled the name, reputation and integrity of the City of London and their markets in the mud. This willful act of value destruction is contrary to the Recognition Requirements for Regulated Investment Exchanges, which are the guidelines laid down by the Financial Services Authority (FSA) that dictate how markets should protect consumers. Amongst these rules, it clearly states that the Regulated Investment Exchange (RIE) must afford proper protection to investors interests - especially in the case of financial crime or market abuse. Yet this does not excuse the Exchange for deliberately under valuing the compensation offered to the victims of the financial crime, and for then destroying the inherent value of the shares after the Offer was rejected. The Exchange deceived both the Market and the shareholders about the nature of the valuation and concealed the fact that they instructed the valuer. These instructions caused the valuer to ignore the true value of the share under the massive open short positions in the market which should have made the shares considerably more valuable. The instructions meant that the valuation result was controlled and predetermined by the Exchange. The Exchange dishonestly failed to reveal this fact to the market and it was revealed in a report by the LSE Complaints Commissioner after a complaint against the Exchange. Section 291 of the Act states that an RIE can not be held liable unless they acted in Bad Faith. However, acting dishonestly and concealing this act is an act of bad faith. As are actions far below the high moral and ethical standards required of a Regulated Investment Exchange. Under the Financial Services and Markets Act 2000 (FSMA), it is an offence under Section 397 to make a false or misleading statement that influences someone concerning the trading of listed securities. The Exchange did something fundamentally wrong and also acted in bad faith when they willfully destroyed the value of the shares, when they denied the very compensation that they had claimed could be sought through the courts. They dishonourably went back on their word. The Exchange has brought the entire credibility and integrity of the market into question. Just as they have in the Langbar International scandal, where a company that was once the largest cash shell company on the AIM was listed with no assets and has now been found to be nothing more than a ‘Pump & Dump’ fraud. |
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LSE Changes the Core Trading Rules The LSE has been forced by the various shorting scandals, foremost amongst which are Room Service Group and White Nile to alter the Core Trading Rules of the Exchange. LSE Notice 01/06 7 February 2006
And here are the changes to the Core Rules: Core trading rules G 3300 A member firm shall not, in respect of its on Exchange business: Order book conduct Griffiths Leaves Evolution Richard Griffiths, the co-founder of Evolution Securities, stepped down as a director of the stockbroker after alleged rumours that he was forced to depart by the FSA. The former sheep farmer said he would start a new venture but "never work in a regulated business again". The alleged rumours suggest that the Regal Petroleum Scandal was the last straw for the City Regulators and Griffiths had to go. Evolution Under Fire From Fund Managers From the latest reports in the press, it appears that Evolution is being treated to a taste of their own medicine. Apparently, up to 35 million Evolution shares are being shorted. |
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EVOLUTION FOUND GUILTY OF A Earlier today after 13 months of hard work, the FSA found Evolution Beeson Gregory Limited (now known as Evolution Securities), guilty of a serious market abuse in the Room Service Shorting Scandal. ----***---- Oh dear, it appears that the Chairman of Evolution Beeson Gregory is under investigation by the regulators for his dealings in Incite. It appears that he failed to notify a significant sale in shares. What a naughty boy. But then the whole company seems to be embroiled in one controversy after another. It must be a corporate policy. Market Rules Must Be Obeyed The first hearing has been held in the case against Xxxxx Capital. It’s interesting to note that the judiciary are surprised that the MMs didn’t try to settle this matter directly with their victims earlier. It is also noted that this case is setting new precedents that will protect investors interests. The first hearing has been held in the case against Xxxxx Capital. It’s interesting to note that the judiciary are surprised that the MMs didn’t try to settle this matter earlier. It is also noted that this case is setting new precedents that will protect investors interests. Mr Gxxxxx Sxxxx will regret making his statement to the FT last year, as it will be shown that his company did indeed have a ‘material position’ in Room Service shares and they failed in their obligation (as members of the London Exchange) to deliver on their contracts on the agreed settlement dates. An official complaint has now been made to the FSA about the LSE’s conduct in this case. Copies of the documents are being supplied to the Treasury Select Committee, the Shadow Treasury Office and the press. If the FSA does not do their duty and investigate what appears to be a very serious breach of the LSE’s obligations as an Recognised Investment Exchange, then they may find that they are also under investigation by the Parliamentary Committee, as well as the Opposition and the press. We hold that the LSE were negligent in: A) failing to suspend the share at the earliest opportunity when they were notified that there were serious irregularities and a possible market abuse in the trading of the shares B) that they misused rule 3045 which condoned the abuse by the market makers and created a ‘Shorters Charter’ for criminal exploitation of the market. C) that by using rule 3045, the LSE was guilty of failing to restore the market to an orderly state at the earliest opportunity in early December 2003, and therefore allowed a disorderly state to remain in existence for 2 months until the share was returned to the market at the end of January 2004. Unless the FSA is considering re-writing their RRRs they must find that the LSE was seriously negligent, not only in failing to protect investors, but also damaging the integrity of the London Markets. The charge of ‘being comatose’ should not be levied at the FSA, but at the LSE. When we discussed the LSE’s monitoring of market activity, they candidly admitted that they do not have the capability to spot market abuse, until it is pointed out to them. In this case, they were given ample warning, but chose to ignore all the signs and information until it was far too late. We consider that the LSE has now demonstrated that they are not a fit body to supervise their members. Their regulatory function should be removed and placed in the hands of the FSA. We suggest that the Treasury Select Committee ought to discuss this with the departmental heads of the LSE at the earliest opportunity. -----***----- Some very dirty tricks are being played by the culprits in this case. Evidence is being collected and our own experts will spring a nasty surprise on them if they continue, as this form of sabotage is covered by criminal legislation. -----***----- A very bad decision was made by the company and their lawyers at the recent Extraordinary General Meeting, held at Halliwell Landau in King William Street, London. This decision will probably have repercussions, with the possible involvement of the DTI in an official investigation. -----***----- The defences have been filed for one of the market makers and one of the brokers involved in the Court cases. Unfortunately for them, these defences were anticipated and will only result in the defendents being cornered at the hearing. It seems that the “It wasn’t me Guv” defence, or ‘passing the buck’ as it is more commonly known will get the defendents nowhere. Quite simply, the Defendent(s) will only end up looking extremely stupid when we show the Court our evidence and the other Defendent says that it was the market maker’s misrepresentation that caused the problem. The brokers are not prepared to take the blame for the market maker’s bad decisions and market abuses. The market makers have much bigger contracts with them to worry about than the amount they will pay making a fair settlement with the RSV shareholders. There’s another thing they need to consider. Whilst the Court paperwork is being completed, we have been lobbying important people in the House of Commons. Certain Select Committees will be taking a long hard look at the verdicts of the Court cases, as well as the FSA’s Enforcement Investigation findings. Then there’s the other Claims that are being processed. Through the Financial Ombudsman and the action against the LSE. The LSE has still not replied to the complaint letters sent by the Action Group members. Copies of these letters will be sent to appropriate people together with the press very soon. If the LSE has to failed to answer the Action Group, they will be obliged to answer the FSA and our MPs. It is their choice, but failing to reply is a very silly thing to do. The clock is ticking...................... and they are running out of time. -----***----- Through some excellent research by our members, we have managed to track down the details of one of market makers most ardent supporters, the de-rampers. This information will be provided to the FSA, as complaints have already been made against this person. We were amused to find out that this individual has no fewer than 26 directorships, with the vast majority of the companies located in the Cayman Islands. Whilst these islands are known for their tax haven status, they are also very convenient for people trading in the UK whilst hiding the company’s financial status. We believe that this person has a lot to hide, as he frequently de-ramps other shares. We will be passing this person’s name, address and employment details onto the directors of Chiddingfold Investments. We would like them to be able to recover compensation for the damaging allegations this person made. -----***----- Now that litigation has commenced against the market makers, we are preparing our case against the London Stock Exchange. Before the claims are filed with the Court, we will be sure to contact the foreign press and bourses, so they can have a good laugh. It’s a pity that the LSE refused to be cooperative with the Action Group. Despite telephone calls every day before the deadline and afterwards and 40 minutes with our lawyers, the LSE refused to alter the terms so that they would protect our members interests. Which in our opinion proves that they were not interested in protecting the victims of the market abuse, just protecting their Exchange members and covering up their negligence. -----***----- The legal papers have now been entered into Court and we are seeking justice for our members. The market makers (and the brokers that protected them) will find that the common sense of the Court will prevail. Not only that, but the Court will probably award a far higher settlement than the market makers could have negotiated had they tried. We’ve been in contact with a variety of legal personnel and City financial experts. One of things they all have in common, is that they agreed that the evidence was more than sufficient to find against the defendants. Some of these experts have decades of experience and told us that they’ve never seen a worse case of blatant market abuse. Most agreed that the regulators will have to act fast to prevent this sort of scandal recurring. The fact that the market makers refused to discuss a negotiated settlement (or even make a statement) will weigh very heavily against them. They will regret not talking to the Action Group. We gave them plenty of opportunities and were more than willing to discuss all aspects of the case Market experts believe that the FSA will have to make an example of the market makers or suffer even more abuses of the same sort. One scandal is bad enough, but more would be a terrible drain on the regulators resources. Indeed the actions of the LSE have almost guaranteed that more abuses will ocurr. We can but hope that organised crime does not notice the massive loophole the LSE has created. I expect that we will see a lot more short selling scandals unless the FSA acts quickly and decisively. They will need to ensure that the LSE redefines rule 3045 to make ensure that it applies only to existing shares. -----***----- The outrageous news that the London Stock Exchange has agreed to allow the trading of the shares issued on 2 December to settle the outstanding and uncompleted contracts entered into by the market makers proves to the world that the London Market’s reputation is in tatters. How can there be any credibility in the London markets anymore? Where trades are not settled on time and where the regulators approve the sale of any number of shares, on the belief that they will be issued at some time in the future. IS THE LSE SERIOUS? If that is the case I have a few trillion shares of Vodaphone I would like to sell (at today’s prices of course). Is the LSE living on a different planet? -----***----- The Exchange could not care less about the victims of the market abuse. We told them that the terms were unacceptable, but they enforced their terms anyway. Even though we told them that the shareholders legal advisers were warning the shareholders and the Exchange that the terms would not protect their rights to sue for damages through the Courts. It seems that the LSE is more interested in protecting their market maker members and covering up the fact that they failed to maintain an orderly market AND they allowed the market makers to continue their abuse past the date the LSE was aware that an abuse had occurred. The LSE argued over the revised terms and conditions of the offer to clear the settlement difficulties. Each time we’ve called, we’ve told them that we are trying to help them resolve their problem, so they can get back to sleep, and we can get on with the business of pursuing the market makers through the Courts. How can the LSE consider the offer fair, when they won’t give the eligible people enough time to consult their financial and legal advisers? The offer was made on Friday 19 December 2003, just before the Christmas holiday week. Of course the timing was abysmal, because most brokers were winding down activities for the festive season. In fact there was only 2 and a half business days the following week for anything to be done. The biggest problem for most people was that the Chiddingfold takeover over was announced on 2 December 2003 and only a few of the members had received the paperwork from their brokers. In fact it took nearly 3 weeks for the papers to arrive. So if the brokers were this slow at responding, then their customers would not receive the LSE ‘offer’ until just before the offer expired, with insufficient time to correct any mistakes in the paperwork. And the brokers did make mistakes. Some did not include the Terms and conditions on the acceptance sheet or even refer to the LSE RNS and LSE Notice. On top of this, every broker had altered the acceptance deadlines to either the 8th January, 9th January or 12th January. So you can imagine our surprise when we approached the LSE to ask them to extend the deadlines, only to be told that all they would do is consider it. Our lawyers reviewed the Terms and Conditions and found them unacceptable. So we asked them to revise the terms and submitted them back to the LSE. The alterations were very minor, but still the LSE came back to us to say that they wanted a different version. The LSE should realise that they should be protecting the interests of the private investors. We were not consulted about the offer to clear the settlement difficulties and we have not been offered a reasonable settlement, therefore we are obliged to seek redress through the Courts, which means we must protect the rights of our members. -----***----- The ‘offer’ from the LSE shows that they’ve been completely wasting their time for the past two months What is the point of having regulators who can not manage an orderly market and then when something bad does happen they fail to protect the very people they are supposed to look after. Worse than that this pathetic offer seems nothing more than a paltry bribe to sweep the matter under the carpet. When will they wake up and realise the other markets are laughing at the LSE’s ineptitude. The press understand, -----***----- The Evolution/Room Service scandal has many similarities to the Barings Bank scandal. Both were caused by lack of proper supervision, both were caused by traders knowingly going far and beyond the agreed market limits. Both have caused real loss to the shareholders, both could have been prevented had the regulators acted quicker and lastly, both will hopefully result in substantial fines for the perpetrators........the market makers and the employees who caused it. Justice has to be seen to be done-----***-----We’d like to extend our thanks to Shares Magazine this week. Their article on justice for investors was excellent and shows that more and more shareholders are taking action to recover what was taken from them either illegally or unjustly.The LSE are working on a new solution to the problem. Let’s hope that this time it includes the shareholders and not just the market makers and the company. This week we are preparing a nice surprise for all the brokers that are covering for their market maker buddies. We are going to expose the brokers that private investors do not want to do business with. Because they care more about their MM chums than they do about their customers. They would rather protect the guilty than the innocent. I wonder how many customers they will keep afterwards - not many. -----***----- The RSV Shareholders would like to say a massive thank you to for their wonderful expose on Mr Abbey activities. We knew that the people behind Chiddingfold had a ‘past’, but we were very pleased to hear that the London Stock Exchange is concerned about his previous ventures too. I wonder when Downing Street will take note of this and take action to bring this matter to a satisfactory solution. The public and press will not rest until the shareholders have justice. Maybe the FSA ought to turn their attention to Chiddingfold as well. They have certainly demonstrated questionable directorial behaviour, as they ignored the letters of the shareholders saying that there was a better alternative to the share dilution. Maybe a Section 459 action should be considered. -----***----- Our friends at the Financial Times called this evening, to pass on the news that the Financial Services Authority had decided that there was a case to answer and are now proposing to start the enforcement procedure. Let us hope that with this two things happen. Firstly that they encourage the LSE to arrange negotiations between the shareholders and the market makers. So that a suitable amount of compensation is agreed, for all the shareholders for the price abuse and the missrepresentation. Secondly that the FSA encourage the LSE to revisit their rule book and write some regulations that will prevent the market makers from abusive shorting in the future.Last night’s news that some of the placing shares were to be freed for trading on the market shows just how greedy the new “owners” of Room Service really are. One has to question why certain shareholders sold out in haste at the start of the week. Especially when you consider that they were mentioned in the offer and allegedly may have been in possession of privileged information. -----***----- This morning’s news that the LSE has suspended the share again, clearly indicates that they are also concerned that this scandal is giving a very sour taint to the market. The Exchange should have listened to the shareholders and arranged the meeting that we suggested at the start of November. This whole debacle has done nothing but show the weakness of the LSE to protect investors. These people, family people with savings and businessmen with successful track records in corporate recovery, were working together to try and protect the interests of the minority shareholders. The majority of whom are housewives and pensioners. If the LSE would spend more time listening to the shareholders and acting with them, this whole mess could have been avoided. All the LSE has done, is give other European investment centres a chance to hold the London market up for ridicule. -----***----- It seems that the press are enjoying looking into the background of a certain businessman. I wonder what sort of skeletons will fall out of his closet. Maybe a bit of spring-cleaning is in order. Although In this case it will probably have to be industrial strength! Better get a fire hose! Chiddingfold have now put their share issue plans into the open. Far from a fair dilution, in my opinion it looks more like exploitation. Had they consulted the shareholders (existing and shorted), we could have come up with a far better solution which would not have necessitated a dilution of value at all. I’m sure that the press consider this behaviour almost as bad as that of the Market Maker’s. -----***----- We have now been contacted by Smith Square. I feel that the leader of the opposition will champion the cause of pensioners, housewives and hard working private investors far better than Downing Street will. After all, all No.10 can send back is a form letter in response to a serious financial scandal. Doesn’t the Prime Minister and his Chancellor consider a breach of the market regulation and damage to the market’s reputation serious? -----***----- The Prime Minister and Chancellor both received letters yesterday morning. Someone at the PM’s direct communications unit dropped the ball and sent off the same form letter that they’d posted the last time. We’ve reproduced it for the website. We’ve sent the PM another letter to make sure his DCU is awake the second time! -----***----- The senior personnel at the London Stock Exchange have at last realised that they have to treat the matter “very seriously”. Over 3 weeks ago they told us that it was a “Serious Market Abuse”. But have they done something about it? NO All they did was talk with everyone EXCEPT the shareholders. Who are they paid to protect? Big business walking all over the private investor? I thought they were supposed to run an orderly market, not disorderly. -----***----- We anticipate that Tony and Gordon will not be amused at having to deal with another political ‘hot’ potato. They have enough to deal with, without the regulators causing them trouble too. Still, next Wednesday they can have a nice chat with Michael about how we tried to get Patricia and Jacqui (and Labour backbenchers) to sort this over 2 weeks ago and they paid lip service to us. -----***----- Our latest talks with the regulators, have informed us that SlasherTheSlash is not as well informed as he makes out to be. In fact Slasher ought to be aware that the regulators, FSA and LSE are watching both the Bulletin Boards and the websites. So if he is working for one of the Market Makers, he’s not helping them at all. -----***----- SlasherTheSlash - 21 Nov'03 - 17:58 - 2495 of 2496 Can you please explain how everyone's a winner? I cannot see how it benefits the existing shareholders. What happens if I do not what to buy more shares at discount to average losses up, what guarantee is there the discounted shares will achieve a value I could have sold my holding at if the MM had put the price up to control the market rather than continuing to short? -----***----- ‘Sprocket Tool’ and ‘Knitwit’ will soon be eating their words. Does anyone know how to bake them a big slice of humble pie? One of the de-rampers, admitted that the whole thing was a scam for the MM to take money from private investors. What he doesn’t realise is that the FSA and LSE are not amused because it has exposed the weakness of their regulatory systems. When the press start calling the FSA, LSE and DTI, we can expect them to take a long hard look at the MM’s license renewal. -----***----- The press have wind of the story now so the company and MM will have reporters all over them within the day. When the scandal goes public, the regulators will have to make an example to satisfy public opinion. The other market makers will not be pleased to be under intense scrutiny. Someone had better warn the directors of the MM to start using the backdoor, side door or anything BUT the front door. Those journalists get everywhere, and you can’t even get them out in the wash! |
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Created and designed by the RSV Shareholders’ Action Group © 2003 - 2007 |
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The information within this website is the property of the Room Service Shareholders’ Action Group. All statements are the opinions of the members and no malice is intended. |
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