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  • FIRST POST
    • DesmondT
    • By DesmondT 11th Oct 18, 10:40 PM
    • 5Posts
    • 3Thanks
    DesmondT
    Patisserie Valerie
    • #1
    • 11th Oct 18, 10:40 PM
    Patisserie Valerie 11th Oct 18 at 10:40 PM
    Hello
    I'm unfortunate to have a significant shareholding in PV via my SIPP. I did my research, studied the books (via Stockopedia), understood the business and invested a modest proportion of my fund over the last. year. All the indications were that this was a stable, low risk company with good growth potential. It now appears that there may have been some fraudulent accounting and at the very least it looks like the auditors were negligent.

    My question is, assuming that the Company goes into administration, what steps can I take to recover what are likely to be significant loses? If I own these shares through a SIPP (in my case Hargreaves Lansdowne) am I still able to bring an action as a shareholder? In general do I have any come-back on this?

    Thanks for any input.
Page 2
    • DesmondT
    • By DesmondT 12th Oct 18, 3:06 PM
    • 5 Posts
    • 3 Thanks
    DesmondT
    I regard investing more as calculated speculation than a random gamble - I do think there is a difference. I'm more than prepared to accept that some speculations will turn out badly - which is why I would never speculate more than I can afford to lose.

    But I do think I have a right to expect a Company to provide accurate and truthful accounts for me to base my calculations on. Am I being unreasonable?
    • Malthusian
    • By Malthusian 12th Oct 18, 3:26 PM
    • 4,784 Posts
    • 7,666 Thanks
    Malthusian
    But I do think I have a right to expect a Company to provide accurate and truthful accounts for me to base my calculations on. Am I being unreasonable?
    Originally posted by DesmondT
    No.

    (character limit)
    • Uxb
    • By Uxb 12th Oct 18, 4:01 PM
    • 1,194 Posts
    • 1,293 Thanks
    Uxb
    You are not being unreasonable - However...

    The sad reality is that for a company in serious trouble or for a company with undeclared 'issues' that expecting to to find advance warnings/indications in the accounts of these is unlikely.
    In short if there is fraud in the company then the accounts are likely also be fraudulent.

    Read up about the "accounts" of Enron - OK it was in USA, but same principle applies all looked rosy until the day they went bust.

    Of course all this as usual ends up leading back to the auditors who are expected to find any dodgy dealings. Never mind I'm sure "Lessons will be learned" and everyone will continue as before.
    • Nick_C
    • By Nick_C 12th Oct 18, 4:14 PM
    • 4,314 Posts
    • 6,106 Thanks
    Nick_C
    I did my research, studied the books (via Stockopedia), understood the business and invested a modest proportion of my fund over the last. year.
    Originally posted by DesmondT
    You invested in a single share, which you knew (as you did your research) had a risk of 100% permanent loss, and that risk has come to pass.
    Originally posted by Malthusian
    Are you saying individuals shouldn't buy shares but should only buy funds or gilts? I disagree! If you have a reasonable sum to invest, it is perfectly possible to spread your risks and have a diversified portfolio without paying a Fund Manager to do that for you.
    • Malthusian
    • By Malthusian 12th Oct 18, 4:43 PM
    • 4,784 Posts
    • 7,666 Thanks
    Malthusian
    Are you saying individuals shouldn't buy shares but should only buy funds or gilts?
    Originally posted by Nick_C
    No.

    I disagree!
    With whom?
    • Nick_C
    • By Nick_C 12th Oct 18, 4:45 PM
    • 4,314 Posts
    • 6,106 Thanks
    Nick_C
    I disagree with what I thought you were saying!

    So what is your point about OP investing in a single share as part of a larger portfolio?
    • Alexland
    • By Alexland 12th Oct 18, 4:46 PM
    • 3,356 Posts
    • 2,687 Thanks
    Alexland
    As expected, looks like a rescue plan is being formed

    "The company aims to raise £15m from selling new shares on the stock market. Chairman and largest shareholder Luke Johnson will put in a further £20m in the form of two separate loans to pay off urgent tax bills due to HM Revenue & Customs and keep the lights on."

    https://www.telegraph.co.uk/business/2018/10/12/patisserie-valerie-seeks-15m-stave-collapse-finance-director/

    Alex
    • Linton
    • By Linton 12th Oct 18, 4:52 PM
    • 9,813 Posts
    • 10,073 Thanks
    Linton
    Are you saying individuals shouldn't buy shares but should only buy funds or gilts? I disagree! If you have a reasonable sum to invest, it is perfectly possible to spread your risks and have a diversified portfolio without paying a Fund Manager to do that for you.
    Originally posted by Nick_C
    Rather difficult if you want to invest globally. However if you do want to invest in individual shares perhaps itwould be sensible if you invested no more than a sufficiently low % in any one share so that you could merely shrug your shoulders should it go bust. This is surely essential if you dabble in AIM shares.
    • Nick_C
    • By Nick_C 12th Oct 18, 4:55 PM
    • 4,314 Posts
    • 6,106 Thanks
    Nick_C
    However if you do want to invest in individual shares perhaps it would be sensible if you invested no more than a sufficiently low % in any one share so that you could merely shrug your shoulders should it go bust. This is surely essential if you dabble in AIM shares.
    Originally posted by Linton
    Completely agree. Still don't understand what Malthusian's point was though.
    • Zola.
    • By Zola. 12th Oct 18, 4:56 PM
    • 1,320 Posts
    • 554 Thanks
    Zola.
    I'd say the Finance director is crêpping themselves right now.
    • DesmondT
    • By DesmondT 12th Oct 18, 5:00 PM
    • 5 Posts
    • 3 Thanks
    DesmondT
    "The company aims to raise £15m from selling new shares on the stock market. Chairman and largest shareholder Luke Johnson will put in a further £20m in the form of two separate loans to pay off urgent tax bills due to HM Revenue & Customs and keep the lights on."
    In terms of the mechanics of this, will these new 50p shares be offered to existing shareholders first - or is that not allowed?

    Thanks
    • veryintrigued
    • By veryintrigued 12th Oct 18, 5:08 PM
    • 2,533 Posts
    • 2,056 Thanks
    veryintrigued
    I'd say the Finance director is crêpping themselves right now.
    Originally posted by Zola.
    Well that's scone and lowered the tone.
    • OldMusicGuy
    • By OldMusicGuy 12th Oct 18, 5:17 PM
    • 580 Posts
    • 1,190 Thanks
    OldMusicGuy
    But I do think I have a right to expect a Company to provide accurate and truthful accounts for me to base my calculations on. Am I being unreasonable?
    Originally posted by DesmondT
    Indeed you do, but as someone that worked in finance for several large corporates, I can tell you some sail pretty close to the wind. I have been involved in things that were designed to deflect auditors from paying too much attention to the areas where we were playing rather "fast and loose" with accounting standards and how much revenue was recognised.

    There is also alleged fraud here as well, and I've seen cases where very large companies have been swindled out of large sums of money by senior treasury and finance officials. That is quite hard to stop the first time it happens.

    In all of these cases it's the auditors that are there to provide a further set of checks and to verify that the accounts represent a true and fair view of what's going on. There are many cases I have seen where auditors are happy to take the cash for their services rather than really challenge the company on what they are doing. The audit companies and audit processes are definitely in need of reform IMO.

    Hopefully the rescue plan here might allow the company to continue trading and rebuild itself.
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 5:23 PM
    • 60,029 Posts
    • 53,385 Thanks
    Thrugelmir
    In terms of the mechanics of this, will these new 50p shares be offered to existing shareholders first - or is that not allowed?

    Thanks
    Originally posted by DesmondT
    Existing shareholders are likely to be heavily diluted. As the company is essentially worthless, except for the intangible value of the brands themselves.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • CakeCrusader
    • By CakeCrusader 12th Oct 18, 5:24 PM
    • 565 Posts
    • 287 Thanks
    CakeCrusader
    Their finance director was arrested this morning; https://www.theguardian.com/business/2018/oct/12/finance-director-of-crisis-hit-patisserie-valerie-arrested-chris-marsh


    Their cake are watery and tasteless by the way, they are batch made and frozen. So not worth £3.50-£4.00 for one slice.
    • kidmugsy
    • By kidmugsy 12th Oct 18, 5:26 PM
    • 11,728 Posts
    • 8,258 Thanks
    kidmugsy
    But I do think I have a right to expect a Company to provide accurate and truthful accounts for me to base my calculations on. Am I being unreasonable?
    Originally posted by DesmondT
    If you mean that you expect always to be provided with accurate and truthful accounts then of course you are being unreasonable.

    The accounts are prepared by humans, who will include among their number the ill, the ignorant, the dim, the reckless, and the crooked. Mistakes will be made: some accidental, some deliberate, some a blend of the two.
    Free the dunston one next time too.
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 5:27 PM
    • 60,029 Posts
    • 53,385 Thanks
    Thrugelmir
    I regard investing more as calculated speculation than a random gamble - I do think there is a difference. I'm more than prepared to accept that some speculations will turn out badly - which is why I would never speculate more than I can afford to lose.

    But I do think I have a right to expect a Company to provide accurate and truthful accounts for me to base my calculations on. Am I being unreasonable?
    Originally posted by DesmondT
    Google Polly Peck and have a read. Fraud is nothing new. Nor is a Company suddenly hitting a rocky financial patch. Companies like the people that run them, come and go.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • kidmugsy
    • By kidmugsy 12th Oct 18, 5:34 PM
    • 11,728 Posts
    • 8,258 Thanks
    kidmugsy
    With risk comes reward
    Originally posted by Thrugelmir
    I have a great aversion to this cliche on the grounds that it's complete rubbish. Risk need not yield reward.

    Without risk you are unlikely to receive unusual reward, true; but that's a plain different statement.
    Free the dunston one next time too.
    • Economic
    • By Economic 12th Oct 18, 5:42 PM
    • 316 Posts
    • 323 Thanks
    Economic
    Yes, jumping out of an aircraft without a parachute is very risky, but the reward is very low!
    • Thrugelmir
    • By Thrugelmir 12th Oct 18, 6:13 PM
    • 60,029 Posts
    • 53,385 Thanks
    Thrugelmir
    I have a great aversion to this cliche on the grounds that it's complete rubbish. Risk need not yield reward.
    Originally posted by kidmugsy
    The greater the return sought the higher the risk that must be undertaken. Is that better?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
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