Two former UK government ministers have expressed alarm over the tactics of a U.S. investment firm, Litani, which is reportedly contacting Aviva's retail investors with offers to buy their shares at a significantly discounted price. Ros Altmann, a former pensions minister, and John Glen, an ex-Treasury minister, have called for urgent examination of the situation, suggesting the firm is attempting to exploit shareholders.
Litani has allegedly written to approximately 100,000 Aviva retail investors, offering to purchase their shares for £5.30 each. This price is substantially lower than Aviva's closing share price of £6.61 on the preceding day. Aviva itself has reportedly warned its shareholders against accepting these offers.
Altmann described the firm's actions as a "cynical attempt to exploit the vulnerable shareholders, who will most likely be elderly, who could be bamboozled by the technical terms being used and the way it’s being presented to them and not understand what’s going on." She added, "The brazen brass neck of this thing is unbelievable."
Glen stated that the development is "worrying" and requires "urgent examination," characterizing the offers as the "worst sort of ‘plausible’ offer that does not do justice to the underlying reality." He emphasized that while "buyer beware" is a primary principle, the Financial Conduct Authority (FCA) would not want to see such practices proliferate.
The situation follows Aviva's unsuccessful High Court challenge to prevent Litani from accessing its shareholder register, which enabled the U.S. firm to contact private investors directly. Aviva has a substantial base of around 500,000 retail investors, many of whom acquired shares when its predecessor, Norwich Union, demutualized.
Concerns have been raised that other large listed companies with significant historical shareholder bases, such as British Gas owner Centrica and BT, could also become targets for similar tactics.
The FCA has acknowledged awareness of Litani's actions and advised investors to "carefully consider their options before making a decision." However, Altmann expressed strong reservations, suggesting the activity appeared akin to an "FCA-authorised scam" and questioned whether the regulator was taking sufficient action to prevent such practices.
Altmann has proposed that amendments to financial services legislation could potentially halt these activities. Suggested changes include revising rules on access to shareholder registers, barring "mini tenders" that offer heavily discounted prices, and tightening requirements for FCA-authorised sponsors involved in such offers. Lawyers representing Litani reportedly declined to comment on the matter.
Nikhil Rathi, chief executive of the FCA, is expected to face questions regarding these activities when he appears before MPs on the Treasury select committee. John Glen is a member of this committee.