Stakes: Three Lloyds-owned platforms – Scottish Widows, Embark and Stock Trader – were set to block investors from voting on Saba’s proposals
Lloyds caved in to pressure last night and will now give shareholders in seven London-listed investment trusts a say on plans to oust their boards.
The Mail on Sunday this weekend revealed Scottish Widows and two other platforms owned by the bank were not allowing investors to vote on a shake-up of the trusts proposed by Wall Street financier Boaz Weinstein.
His hedge fund, Saba Capital, is proposing to replace directors at seven investment trusts with its own nominees, saying leaders have ‘failed shareholders’ and made poor decisions.
Industry experts branded Lloyds’ conduct ‘utter madness’ and praised the Mail for exposing the issue.
‘It’s deplorable that some platforms are denying investment trust shareholders their right to vote,’ said Richard Stone, head of industry body the Association of Investment Companies (AIC).
‘This behaviour by platforms deprives shareholders of their rights and hands activists like Saba an unfair advantage over thousands of ordinary shareholders. We’d like to thank the Mail for highlighting this poor treatment of customers and we’ll be doing everything we can to stop this.’
Power grab: Wall Street financier Boaz Weinstein is proposing to replace directors at seven investment trusts with its own nominees through his hedge fund, Saba Capital
But in a major U-turn last night after the scandal was exposed by the Mail, a spokesman for Lloyds said that it now had a ‘workaround’ for the problem ‘in place so that those customers can let us know and we’ll vote as per their direction’.
Saba has stakes in each firm ranging from 19 per cent to 29 per cent and needs to win 50 per cent support from voting shareholders to succeed.
As a result, it will win if other investors do not actively vote against the proposals.
Most of the trusts have large numbers of small investors, many of whom hold their shares through investment platforms, and as a result, their turnout is crucial in deciding the outcome.
Karen Brade, chairman of the Keystone Positive Change trust, one of the seven being targeted by Saba, accused the Lloyds-owned investment platforms of jeopardising the ability of shareholders to vote.
‘It is easy to vote on many platforms,’ she said.
‘But some are dragging their feet and even preventing shareholders from voting at all. That is utter madness and a complete failure of duty to their clients. The Mail is
absolutely correct to call out those institutions who are obstructing shareholder democracy.’
The three Lloyds-owned platforms – Scottish Widows, Embark and Stock Trader – do not consider the meetings called by Saba to be ‘corporate actions’ and thus do not allow investors to vote on them.
But the stance has fuelled concerns that investment platforms are not doing enough to inform shareholders of Saba’s plans nor making it easier for them to vote on the proposals.
Last week, City watchdog the Financial Conduct Authority wrote to the UK’s main investment platforms to ask them how they informed shareholders about voting in the battle between Saba and the trusts.
Weinstein suffered a bloody nose last week when investors in the £1.3bn Herald Investment Trust, the largest firm on Saba’s hitlist, decisively rejected his attempt to kick out the board.
The Baillie Gifford US Growth Trust and Keystone Positive Change hold their meetings on Monday.
CQS Natural Resources and Henderson Opportunities Trust meet on Tuesday. European Smaller Countries will learn its fate on Wednesday next week before Edinburgh Worldwide holds the final meeting of the seven on February 14.
The other six trusts face similar votes in February, starting next week.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .