Law Society condemns Whimp offers, injunction granted

Thursday 24th March 2011 3 Comments

The Law Society today urged shareholders to bin unsolicited predatory offers from Bernard Whimp, while the Securities Commission won an injunction stopping them going through.

The injunction granted by the High Court prevents Whimp's companies from taking ownership of shares, Businessday reported.

The offers for shares in Contact Energy, DNZ Property, Guinness Peat Group, TrustPower and Vector have been condemned by boards and shareholder groups as trickery as they offer more than the market price, but the amount is payable over ten years and dividends are forgone, making their value below current market value. Mr Whimp's position is that the offers are not misleading.

He sparked outrage late last year when he wrote to shareholders offering them less money than the shares were trading at on the market. The latest offers were made in the last few weeks.

The Government is moving to require such offers to have a comparison with the market price.

The convener of the Law Society's commercial and business law committee, John Horner, said he was heartened that Cabinet had decided to include rules to address the issues raised by low-ball offers in the current comprehensive review of securities law.

"Healthy capital markets require effective regulation, but not over-regulation - striking the balance is the trick."

Horner said Commerce Minister Simon Power's announcement that rules would be introduced to protect investors came only days after the latest low-ball offer.

"The tactic of paying above market price for shares, but using fine print to spread the payment over 10 years, was clearly designed to prey on less sophisticated investors. We commend Mr Power and his Cabinet colleagues for their decision to introduce the protections, and for his announcement that these will include protection around the use of information obtained from a public register and content requirements, along with a cooling-off period."

Until the new rules were in place, Horner said shareholders who received similar offers in the mail should seek advice. Often the best advice was to file the offer in the rubbish bin. Anyone who wasn't sure should definitely consult a lawyer or authorised financial adviser.

The Securities Commission earlier ordered Mr Whimp to correct the offers.

NZPA

Comments from our readers

On 24 March 2011 at 3:49 pm NORMAN SHERWIN said:

I replied to this offer with an old saying the first word beginning with F and the last also ending with F and posted back to him.

On 24 March 2011 at 4:55 pm Outraged said:

I did the same although I snipped off the barcode so I don't fall foul of the post office act which outlaws abuse of the mail service. I was actually far less polite than the post above and suggested he rot in hell.

On 25 March 2011 at 9:33 am Marilyn said:

I did as was advised by the newspaper article, and that was to send both my envelopes back empty, so he would have to pay the postage on them.