Tory treasurer pledged Numis shares against loans

Spencer reveals loan deal that should have been disclosed to market

Michael Spencer, the Conservative Party treasurer and chief executive of City broker Icap, yesterday admitted to pledging shares in a company he chairs as security for a loan without properly disclosing it for several months.

IPGL, a company that is 55 per cent-owned by Mr Spencer and his family, pledged shares in the stockbroker Numis as collateral for a loan from HSBC. Mr Spencer is non-executive chairman of Numis.

The revelation comes just weeks after David Ross, the co-founder of Carphone Warehouse, left his post as deputy chairman of the company after admitting he used his holding in the business to guarantee personal loans on commercial property without telling his colleagues. Mr Ross also resigned as Boris Johnson's Olympics financial adviser.

Mr Spencer, who first took out the loan towards the beginning of the year, did not disclose the arrangement for almost a year because legal advice he received stated he did not need to, according to Numis.

However Mr Ross's highly publicised case forced a rethink of whether it was appropriate not to disclose the holding, prompting Mr Spencer to tell the board, Numis said.

Mr Spencer is the second-largest shareholder in the company, with a 12.2 per cent stake worth about £15m. Numis revealed that his entire holding of 13.1 million shares had been placed as security against a loan agreed on 6 October, which replaced a similar advance negotiated in January.

Numis is listed on the Alternative Investment Market (Aim), and the London Stock Exchange's rules state Aim-listed companies must disclose certain share dealings by directors. According to the Aim Rules for Companies of February 2007, such a dealing is "any change whatsoever" to the holding of Aim securities by a director, including the acceptance by a director of "any option relating to such securities or of any other right or obligation, present or future, conditional or unconditional, to acquire or dispose of any such securities."

Following the Ross affair, Numis itself sought full disclosure of any such use of shares as collateral by company directors, and it was only after making this request that it found out about the IPGL loans, said a person familiar with the matter.

Numis said that at the time of the original loans, IPGL took legal advice and "believed that the granting of security over Numis shares under normal corporate borrowing facilities did not amount to dealing within the meaning of the AIM rules".

After the furore over Mr Ross, however, IPGL "sought further advice and concluded that notification should now be made" to the board of the investment bank and brokerage, Numis said. IPGL still owns the shares.

Mr Spencer, one of the UK's richest men, also owns about 23 per cent of Icap, the interdealer broker which he founded in its first guise in 1986 as a firm called Intercapital. Part of this stake has also been put up as collateral, but this has already been formally announced.

The news raised questions, in light of the Ross affair, on whether Mr Spencer will be asked to step down as chairman of Numis. Numis declined to comment on the issue, but the person familiar with the matter said it is extremely unlikely that he will, as the board sympathises with Mr Spencer on the lack of clarity about the rules that prompted his confusion. A spokesman for Icap could not be reached to comment on the situation.

Mr Spencer set up Intercapital initially to concentrate on the interest rate swaps market. In October 1998, the firm merged with Exco, a listed money broker, and formed Intercapital plc. This merged with rival Garban in 1999, adding government bond expertise, before renaming itself Icap in 2001.

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