Shareholders advised to show caution following SFO landmark ruling

This entry was posted on Wednesday, January 18th, 2012 at 11:07 am

More news on the recent landmark ruling by the High Court last week that has seen shareholders being urged to ask thorough and searching questions of the companies they plan to invest in.

Investors have been left stunned by the ruling, which came down in the favour of the Serious Fraud Office (SFO). Essentially, it means that shareholders who have earned money gained through coporate fraud – even if they were completely innocent parties in the corruption or mismanagement – will be pursued “vigorously”  by the SFO for those gains.

The agency’s victory in the courts came against Mabey Engineering, a parent business of Mabey and Johnson, who have to pay back money gained through a share dividend derived by contracts won by unlawful conduct.

The call for caution from investors was made by risk experts Interchange, whose chief executive John Burbridge-King observed that investors are now exposed to greater risk in their investments. He therefore urged those looking at new opportunities to be thorough in their due diligence before making any investments.

Despite stating that “honest investors dislike dodgy dealings and companies that do not hold up to scrutiny”, Burbridge-King suggested that investors run the risk of incurring persecution in any investment they make, despite the day-to-day dealings of their chosen company being out of their hands.

Investors are now being asked to perform thorough checks for any sign of corporate fraud within companies they are looking at, though critics suggest that this will stop investments being made into perfectly legally-operating businesses.

If you have been accused of corporate fraud, we can help. David Phillips & Partners have over 25 years of experience and specialise in providing expert defence in fraud cases of all types, including tax fraud, VAT fraud and white collar fraud.