UK 02:31 Monday, 19 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Over the weekend, the issue of directors pledging shares for loans has spread from AIM to the Main Market. It is too early to say if anything untoward has happened, but next week we shall seek urgent clarification from Telecity (TCY), Partnership Assurance Group (PA) and Perform Group (PER) concerning arrangements made by directors of each company with UBS AG, over the course of 2014. In each instance (linked to in the RNSs above), it appears one director has used part or all of his respective holdings as security against loans received from UBS. There is nothing to suggest any rules have been broken, but, in light of the developing Equities First Holdings LLC scandal, the appropriateness of such transactions is now in question. Urgent clarification is needed from all three companies first thing Monday
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Comments
Sweet Karolina
The big issues with EFH are, it is non recourse, margin calls coming at 80% of loan amount rather than providing the holder of the “collateral” with a cushion and that the contract gives EFH Carte Blanche to sell.
Directors should be able to use their shares as genuine collateral for genuine loans. The shares should be held in escrow, margin calls should come before the share price makes the collateral worth less than the loan amount, the directors should not be able to just walk away at any time, if they default and the value of the collateral when sold does not cover the loan at time of default then the director must be personally liable for the difference. The interest rate on such a loan must be commensurate with market norms for secured loans using collateral that has the potential to change value very quickly – I would have thought 8% is reasonable. The 3% charged by EFH is clearly too good to be true,
So provided the UBS scheme is in line with the above, there really is nothing to worry about is there? and full disclosure will be forthcoming confirming the actual terms won’t it?
Slim Fizzlebeef
“when Rob Terry and Steve Scott were running The Innovation Group (TIG) into the ground they entered a “hedging arrangement” which was in fact a mechanism for them shorting the shares.”
hang on, hedging doesn’t mean shorting. shorting is selling shares you don’t own…
do you mean they hedged part of their long to lock-in the market price at the time?
Elrico
If one is “hedging” against a long, is this not shorting by another name? Fudging RNS statements designed to fool the market you have purchased, added to your existing holding is one nasty to many, but to short your own company should IMHO be prison time. Are the directors not working for the mutual benefit of shareholders and workers? Perhaps I’m just old fashioned!
Paul Scott
Hi Ben,
Thanks for this, interesting article. I’ve looked into all three companies, and from what I can make out, there seems to be a key point of difference with these UBS loans to the EFH “loans”. Namely that under the UBS deals you mention, title to the shares seems to remain with the Director.
Whereas with the EFH deals, the Directors concerned seem to actually transfer ownership of the shares at the time of the non-recourse “loan” occurring, together with a non-binding option to buy back the shares. Therefore the EFH deals are not really loans at all, they are disguised disposals of the shares. Whether the Directors who undertook those deals necessarily realised that or not, is open to question.
The UBS deals look very different to me (assuming the full details have been disclosed in the RNS). The Directors seem to retain legal title to their shares in the three UBS cases you mention, therefore those are not disposals, and look fine to me.
Only based on a quick review of the RNSs, so I might be wrong.
Regards, Paul.