Minister sounds alarm over Aviva shares ‘scam’ after US predator targets private investors

Britain’s investment minister yesterday said he was ‘concerned’ after the Mail revealed how a US predator is targeting Aviva’s private investors by trying to buy their shares on the cheap.

Lord Stockwood said the Government would work with City regulator the Financial Conduct Authority (FCA) to ensure investors were ‘protected’.

It came as FCA chief Nikhil Rathi was pressed by MPs on US firm Litani, which has written to 100,000 Aviva retail investors offering to buy their shares for 530p each – well below yesterday’s close of 657p.

The move has been branded a ‘scam’ by City insiders to hoodwink vulnerable members of its 500,000 shareholders, many of whom received stock when predecessor firm Norwich Union was de-mutualised. 

Aviva has written to them warning against accepting the offer. There are fears other firms with historically large shareholder bases, such as British Gas owner Centrica and BT, could be targeted.

Ros Altmann, the former pensions minister, yesterday raised the matter in the House of Lords, asking what the Government was doing ‘to protect shareholders in major British firms from being targeted’ by what are known as mini-tender offers – which ‘seek to enable unauthorised firms to buy shares from vulnerable shareholders below their market value’.

Stockwood said: ‘The Government is committed to promoting a culture of retail investment and is concerned by reports of shareholders being targeted by unsolicited offers to sell shares below market value. Shareholders should carefully consider any such offer.

‘The law is also clear: Communications relating to buying and selling of shares must be fair, clear and not misleading, and we will continue to work with the FCA to monitor risk and ensure investors remain appropriately protected.’

Following Altmann’s assertion the offer was not fair, Stockwood said that ‘sometimes an under-market price could be appropriate’ in cases of ‘no liquidity’ – meaning shares are hard to sell.

He added: ‘We need to look at the specific instance to make sure there is no wrongdoing and we believe the FCA has the right process to do that.’

Separately, ex-Treasury minister John Glen pressed FCA chief Rathi at a Treasury select committee hearing. 

He said: ‘If this happens on a mass scale, lots of people will wonder why they’re being offered, and what’s going wrong in the company.’

Rathi replied: ‘Any communication that goes to those shareholders must be fair and clear and we will be keeping an eye on it.’