Tuesday, February 10, 2009

Good question....

I liked this question from today's leader in the Independent...

Both RBS and HBOS launched rights issues last year, tapping their existing shareholders for more capital. This was justified as an emergency and one-off measure. Yet this capital raising was followed by heavy asset write downs and a share price collapse. Did management know what was coming when they made their appeal for more cash from shareholders?

What did they know? When did they know it? Above all, did they write anything down?


  1. Yup, a great question

    interestingly, the (UK) standards for risk-disclosure related to share-issues are far higher than those for annual reports & accounts

    we may be nudging closer towards identifying prima facie criminal offences

  2. "did they write anything down?"

    Certainly not, they knew it would only be used as evidence against them!

  3. This has the whiff of illegality and criminal charges about it. And there may be some shareholders angry enough to do something about it.

  4. This is one of the reason traders were calling short on HBoS. They were villified for it. Hugh Hendry said just tonight on Sky News (without directly referring to HBoS) that short selling can be a tool against companies that say one thing but do another, such as deceiving their shareholders or being suspected of fraud.

  5. As some others have observed, there are serious questions in the significant matter of market disclosure and director's obligations. It appears there were serious doubts about the prevailing business models' viability some while ago. Were the directors acting recklessly or negligently in respsect of company law? More to the point, should the directors have disclosed substantial adverese factors to the market in early October (as known, as elaborated by the Panorama program's timeline? If they argue being unaware to not have made disclosure, how could they have been other than guilty of negligent or reckless conduct. Sadly I am not a lawyer otherwise I'd have go. PCAndrew

  6. Um, was there anyone in the country who DIDN'T believe this was a shameless tapping of bulltards for cash PRECISELY in order to allow for writedowns?