Rage shareholders are ready to sue

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Shareholders who lost everything in the collapse of Rage Software are preparing to sue the company's stockbroker, Teather & Greenwood, and its auditor, BDO Stoy Hayward.

An action group has been formed led by Leon Kaye, a veteran of numerous investor action groups including those that have pursued Equitable Life, Resort Hotels and split capital investment trust companies.

The shareholders have engaged lawyers and have written to solicitors representing Teather & Greenwood and BDO Stoy Hayward demanding compensation.

Mr Kaye said: "We will certainly be issuing a writ in due course if we don't receive compensation."

Rage was a computer game software company that developed titles including games based on the Rocky character, played in the films by Sylvester Stallone, and a football game endorsed by England footballer David Beckham.

The action group claims that up to 8,000 private investors were misled by a prospectus that was issued by the company inviting them to subscribe to a placing and open offer to raise up to £5.5m.

On page 30 of the document, which was issued in May 2002, there is a profit and loss forecast for the full year ending in June 2002. That said the loss on ordinary activities before taxation and goodwill amortisation and impairment would be no less than £3.2m and no more than £9.1m.

The action group claims that such a wide range was misleading as the company already knew by then what the full-year loss was going to be. It eventually came in at the top of that range.

The group claims to have 500 members and Mr Kaye said it would be securing outside funding from a no-win, no-fee financier to support its legal claim.

Teather & Greenwood last night said that until it actually received a writ, it did not want to say anything. However, it is understood that it strongly refutes any wrongdoing.

A spokeswoman for BDO Stoy Hayward said: "We haven't received a writ and we don't see any basis to what they are saying.

"If we do receive a writ we will defend it vigorously."