It is one of a number of firms - including Goldman Sachs, James Capel and Kidder Peabody - that have lost money on the issue, either from their own or clients' accounts.
Like other investors, many of whom are also contemplating litigation, Pru-Bache has been angered by the circumstances surrounding the bond and a twin preference-share issue.
The issues, made in 1989, were convertible into shares owned by News Corp in its rival, Pearson. When the latter demerged its Royal Doulton fine china subsidiary last year, the market initially assumed that anyone converting the News Corp bonds and shares would also receive Royal Doulton shares, then worth around pounds 15m.
News Corp came to the same conclusion, and published a notice to that effect in the Financial Times in December 1993. However, in January it published another notice saying it was taking legal advice on the issue.
In February, it backtracked on its earlier interpretation, saying that investors would not receive the Doulton shares. The value of the bonds/shares exchanged into shares in Pearson and Royal Doulton was considerably more than the redemption value. Without the Doulton shares, it was worth less. As a result, say the investors, dealings in the shares were conducted on the wrong basis for a number of weeks and a false market was created.
The Zurich-based International Securities Market Association, which acts on behalf of firms active in the Eurobond market, says it is 'seriously concerned' that News Corporation has so far failed to resolve the situation.
It argues that serious regulatory issues are raised because a false market was created in the bond and preference shares, which should be investigated by the UK authorities.
John Langton, ISMA's chief executive, flew to London last week and attempted to interest a number of bodies, including the Securities and Futures Authority, regulator of many ISMA member firms, in the matter.
Mr Langton is understood to have warned that London's reputation could be at risk if it was not prepared to regulate such dealings.
The bonds and preference shares were listed on the Amsterdam, Frankfurt and Luxembourg stock exchanges, but a number of the dealings took place in London, where many of the firms involved are also based.
The sums are relatively small, and no firm is thought to have lost more than a few hundred thousand pounds. However, the banks and securities houses involved are known to be furious, believing important principles are at stake.
One banker said: 'It's the most outrageous situation that anyone has seen for a very long time.' He added that it had badly shaken the faith of investors in News Corporation and lessened their willingness to participate in any future capital raisings.
However, some banks are reluctant to take a publicly aggressive stance as News Corp is a frequent consumer of investment banking services.
News Corp did indicate that it would pay compensation to firms that lost money as a result of the mistakenly published notice and asked its law firm, Allen & Overy, to handle the claims.
Pru-Bache is apparently planning litigation in Germany in relation to the bond issue, which was denominated in marks.
It has around 19 clients who were holders of the bond.Reuse content