A customer complained that she’d lost out because the trading company didn’t give her the information they should have when a corporate action took place. We investigated.
Patricia had held 200 shares in company A for many years. Company A was involved in a merger, following which, the business told Patricia she’d received cash and four shares in the newly-merged company in exchange for her shares.
Patricia complained the trading company didn’t send her the election options relating to the merger. She said she should have been given the choice of receiving either cash or shares. She said that she would’ve opted to receive shares and had lost out as a result.
The company said they didn’t provide Patricia with the election options because they were given incorrect information by a third party – their international custodian. They also said even if Patricia had been given the choice, there was no evidence she would’ve opted to receive shares. They said her argument was based on hindsight, because the share price of the new company had increased.
The company also argued that Patricia should have bought the shares with the cash proceeds, if she’d wanted them. That would have left her with a smaller loss.
They offered her £150 for the poor service she’d received.
How we helped
We looked into what happened. We also looked at the terms and conditions of Patricia’s account. We thought it was fair the company should be responsible for Patricia not being given the election options.
Patricia said she’d owned shares in company A for at least 10 years and wanted to continue holding shares in the newly-merged company long-term. We couldn’t be sure what Patricia would have decided if she’d been given the election options. But because she’d held shares in company A for 10 years, we considered it most likely she’d have chosen shares in the newly-merged company.
But we did think Patricia could’ve done more to mitigate her losses, by using some of the cash to buy shares in the new company.
Putting things right
We upheld Patricia’s complaint.
We thought Patricia should be put back in the position she would have been in had nothing gone wrong and she’d ended up with shares in the new company. But because we thought she should have done more to mitigate her loss, we thought it would be fair and reasonable for Patricia and the company each to meet 50% of the cost of doing so.
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