NRK

David Greene, partner at solicitors Edwin Coe, is considering legal action against Northern Rock (NRK) and its directors after being contacted by 45 private investors. Greene, who led a claim against the Government on behalf of Railtrack shareholders, says Northern Rock failed to warn the market about its funding difficulties. Management was aware of the extent of the problems on August 9, says Greene, but an official announcement was not made until 14 September. Investors who bought shares between these dates, were purchasing in a ‘false market.’

Greene comments: ‘Investors were possibly paying £3 more than they should have done.’

Northern Rock chief executive Adam Applegarth is reported as saying the money markets, on which the bank relied for its own funding, ‘just froze’ on 9 August. On 14 September the lender revealed to the market it had been forced to go to the Bank of England for emergency funding. Between these dates, shares fell 44% from 789p to 438p. In testimony to the House of Commons treasury select committee last week, Bank of England governor Mervyn King said he was aware of Northern Rock’s problems on 14 August.

Greene estimates the 45 private investors that have approached him lost a combined £60,000. Northern Rock declined to comment.