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Northern Rock Ex-directors Barred From Aiding Investors' Legal Case

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The former directors of Northern Rock have been gagged, preventing them talking to former shareholders of the bank preparing a legal case against the terms of nationalisation.

Lawyers from White & Case acting for SRM Global Masterfund, one of the two hedge funds challenging nationalisation, wrote to 17 former executive and non-executive directors of Northern Rock. The letter said that the former directors could have valuable information about the near-collapse and nationalisation of the bank and requested meetings to prepare statements that could be presented to the court.

The directors included Adam Applegarth and Matt Ridley, who were chief executive and chairman when the bank received emergency funding from the Bank of England in September. Also included were Sir Ian Gibson, the bank's former senior independent director, and Sir Derek Wanless, who headed the audit and risk committees.

Lawyers from Denton Wilde Sapte, representing 14 of the former directors, replied saying SRM's request would necessarily involve confidential matters related to Northern Rock. SRM's lawyers made it clear that they were not seeking confidential information about the operation of Northern Rock.

Sources close to the case say that SRM wants instead to hear an account of the affair from directors of the company at the relevant time, including what happened during the failed private-sector bidding process. Some of the former directors, whose reputations have been damaged by their association with the Northern Rock debacle, may welcome the chance to put their side of the story.

Freshfields, Northern Rock's lawyers, wrote to White & Case to say that the company was not prepared to waive the directors' duties of confidentiality.

The Government's terms will be examined by the High Court in a judicial review in a week-long hearing starting on 12 January. The case is being brought by SRM, RAB Capital and the UK Shareholders Association, which represents small investors. Legal & General, the biggest investor in the FTSE 100, is supporting the action as an interested party.

The NR fiasco gets even more worrying if they are stopping ex directors from revealing what was going on?

Political interference?

Could the courts overturn this gagging order?

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  • 396 Brexit, House prices and Summer 2020

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