Registering a bet
Diana Sassoon reports on a debatable use of shareholder lists
Sunday 24 March 1996
An investment firm has been targeting Ladbroke shareholders with offers to speculate in small company shares - including what are called "penny shares" - having got the investor's names from Ladbroke's shareholder register. These are higher risk than investing in larger companies, and you should be prepared to lose any money you stake and not see a dividend.
Steve Devaney, Ladbroke's head of corporate affairs, said: "We have absolutely nothing to do with Park Equity Services. We don't like our share register being used for any form of marketing without our consent. But there's nothing we can do."
Ladbroke plans to send out a letter to shareholders distancing itself from the service with its annual report in the next few weeks.
All company shareholder registers have to be made available, by law, within the public domain. Anyone can obtain them for the price of an administration fee, from Companies House or a share registrar firm. "We aren't greatly in favour of it. But the law says the lists must be compiled and made public,'' said Phil Boyd, senior compliance manager at the Data Protection Registrar.
Mr Boyd says that in other cases questionable practices have taken place: for instance, lists of company directors and shareholders have been run off against the electoral register to compile a new list of rich women living alone, which was then offered to direct marketing agencies.
The offer letter sent to Ladbroke shareholders, came from Tunbridge Wells-based investment company Park Equity Services. PES has mailed Ladbroke's shareholders with an offer of a free stockbroker's report about "Ladbrokes plc''. If the investor requests the free report, they also open themselves to approaches from the company to deal in high-risk penny shares and other small company stocks. The mailing highlights the firm's "commission- free dealing service" and says: "It is in these areas [smaller companies] that investors have made some of their greatest gains."
"It's like using a sprat to catch a mackerel,'' said one industry insider. By accepting the offer for the Ladbroke report, the new client accepts the authorisation buried in the small print for PES to cold-call them with the share offers. Cold-calling for this sort of investment would be illegal, unless the client agrees.
When acquiring new clients, PES is careful to go through an investor factfind, in keeping with regulatory-body Fimbra's rules. Punters should be aware of the high risk of the investment.
But in other areas PES's small print stretches Fimbra's rules to the limit, according to a securities partner of a top city law firm. "The [company's] clause used to cover possible conflicts of interest is as widely drawn as I've ever seen ... It could be used as a licence to profit at the expense of the client," he said.
Some argue that the Fimbra rules under which PES operates lack teeth, compared with those laid down for most other stockbroking firms under the regulation of the Securities and Futures Authority (SFA). Fimbra closed to new members 18 months ago, and is gradually being wound down, with companies like PES being forced to apply for regulation by other bodies. PES has yet to be admitted elsewhere.
It is possible to make money from these investments. But risk warnings cannot be too strong. You should steer clear unless you have money you can afford to lose. And if you do decide to have a flutter, shop around. Try to check the share price with another stockbroker. But it can be difficult to check the performance of an investment firm's recommendations. In the absence of such proof of expertise or value, it may be safer to choose your stockbroker through personal recommendation, or simply bin the mailshot.
- 1 National Orgasm Day: Six reasons (plus one bogus one) why they're good for us
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 4 Doctor Who: Christopher Eccleston says why he left the BBC series after just one series
- 5 'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories
Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
John Green schools morning show hosts after awkward interview with Cara Delevingne
Supermodel Gisele Bundchen mocked for wearing a burka to avoid being seen visiting plastic surgeon in Paris
'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...