Investor urges inquiry into ‘structural failings’ at UK Takeover Panel
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The House of Lords has been urged to conduct an inquiry into the UK Takeover Panel’s “structural failings” by investor Julian Treger, after he was sanctioned by the mergers and acquisitions watchdog in a landmark case.
Treger, who was ostracised from UK’s financial sector earlier this year by the panel following a 12-year investigation, argued that the regulator displayed “inexplicable and inexcusable delay and conduct” in its handling of the case.
“The Panel is not merely an expensive and inefficient oddity, operating at the edges of the regulatory system — rather, its opacity and lack of professionalism are quite at odds with proper regulation,” he wrote in a letter to Lord Forsyth of Drumlean, chair of the Lords financial services regulation committee, on October 1.
Treger, an activist investor who previously led Audley Capital, was given the panel’s most serious sanction — known as the “cold shoulder” — following what the watchdog called “the most complex investigation” in its 56-year history.
As well as Treger, nine others were given the official “cold shoulder” in the case, including the former chief executive of MWB Group Holdings, the property investor behind Hotel du Vin and London’s Liberty department store. This measure bars regulated financial companies and individuals from working with recipients on UK takeovers for a number of years.
The panel said in July that Richard Balfour-Lynn, a veteran hotelier, and several others had misled MWB’s shareholders and the panel regarding a series of transactions over a decade ago, by concealing the extent of their ownership of the company.
The panel found that three members of MWB’s management, led by Balfour-Lynn, concealed the fact that they had acquired control of it in a series of transactions between 2009 and 2010 and then breached a regulation requiring them to make an offer for the group.
While the management trio controlled nearly 30 per cent of the company, the panel said the individuals acquired another 2.5 per cent stake without disclosing that to the market. Furthermore, a 15.2 per cent stake in the company that was represented as controlled by Treger’s Audley Capital, was in fact acquired and controlled by the members of management.
Balfour-Lynn, 71, and two other former managers were also forced to pay compensation of up to £33mn plus interest to affected shareholders, a rare punishment from the panel. Balfour-Lynn unsuccessfully appealed against the compensation order.
However, Treger wrote in his letter to the Lords that “in reality, little or nothing will ever be paid, and that is a direct result of the Panel’s inexplicable and inexcusable delay and conduct”.
Treger, who was sanctioned for misleading the panel, said in his letter that he has his “own grievances”, and “that what they believed was not true, and that my own position had been misrepresented to them by others”.
He added that: “The real lesson to wrongdoers in practice from the Panel in this matter is effectively that you can flout the rules and the regulator will let you get away with this.”
He said: “This is even more disgraceful when contrasted with the costs of the entire case which I believe were close to £10mn — £10mn which the shareholders of MWB will never see.”
Treger wrote that he had raised the issue of the lengthy timeline with the panel’s new director-general Omar Faruqui, who has been a senior Barclays banker. He said Faruqui declined to address the matter.
A representative for the panel declined to comment. A representative for the House of Lords said the financial services regulation committee “is currently engaged in two inquiries. It has no comment on the issues relating to the Takeover Panel” and added that it had replied to Treger.
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