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Welcome to the SmartLogik Action Group web site. In April 2002, tens of thousands of shareholders became disenfranchised when a “waiver was arranged with the stock exchange. This waiver enabled the new board of directors - a new board that had only been in place for 9 months - to sell the valuable core assets without firstly asking the shareholders to vote in an Extraordinary General Meeting. By taking this action, they succeeded in brushing aside the voting rights of the thousands of people who collectively owned the company. We are now fighting to make our voices heard and obtain compensation for this major injustice.
Every vote counts in a true democracy and, as we have seen in the Ukraine election, people do not like it when the democratic process is interfered with. And in the corporate world too, every shareholder vote counts, but only when we are allowed to vote - so what happened to shareholder democracy and Corporate Governance in the case of SmartLogik?
If you are a shareholder or even if you are not, support this campaign, because the issues involved affect all of us directly or indirectly. It could be your other shareholding, pension or job that is affected next time!
The shareholders case is crystal clear and it appears that a new record has been made. To the best of our knowledge, SmartLogik Group PLC is the only fully listed, public limited company never to have published an annual, audited set of accounts! Investors have a fundamental right to know what happened to their money and, the laws governing the operation of PLC’s are very clear about this. If this SmartLogik anomaly is not corrected, it will further undermine the trust that investors are supposed to have in PLC’s and the regulation of the capital markets.
The main advantage is that they have access to the capital markets and can offer their shares for sale through a recognised stock exchange. In SmartLogik’s case, it was a FULLY LISTED COMPANY quoted on the main LONDON STOCK EXCHANGE (LSE) and NASDAQ. As a PLC and in order for the world to see what they did with the money raised from the markets, they were obligated to publish audited accounts in an open and accurate manner.
This major failure means that there has been absolutely no accountability to the thousands of people from around the world - small and large investors - who invested their money in this company. This is absolutely crystal clear. What signal does it send to future investors? Until we are allowed to see independently audited accounts, we will never know why the company’s money was spent so quickly. Crucially, were the promises made at the start of SmartLogik supportable or, were the shareholders misled? Quite simply, until we are allowed to see the audited accounts it is impossible for us to say.
This covering up of the evidence is not right and raises serious questions that must now urgently be addressed. We are now fighting to get those accounts published.
After spending all the company’s money, to add insult to injury, the directors sold the core assets by going behind the backs of the shareholders and arranging a waiver with the stock exchange. The shareholders, who collectively owned the company, were never even consulted over the sale of the assets. We want to know exactly how the waiver was arranged and, we are questioning it’s legality. By taking advantage of this waiver mechanism, the directors were able to avoid the inconvenience of having to consult with the shareholders in the normal way. It also enabled them to avoid the inconvenience of having to publish the accounts.
The result was that the valuable, “best of breed knowledge management technology was sold for a paltry sum (5 million). Amazingly, for this meager sum, the directors also threw away the valuable 5 million per annum income stream with “blue chip customers like the BBC, Yell, BAA, UK House of Parliament, DTI, etc. Cynically, not one penny of the promised ,000 of “pipeline contracts that made up the deal was returned to the shareholders.
This was a fantastic deal for the new owner, but a major ‘kick in the teeth for the thousands of shareholders who had identified the true value of this company and, in good faith, had invested their money in it. Again, the shareholders were misled and we want to know why. In July 2001, a new board of directors took over. They stopped providing quarterly financial reports and just 9 months later had spent all of the cash and stripped away all of the valuable assets. Were we not entitled to assume that these new directors would do their best for the shareholders? What about the fundamental principles of fiduciary duty and Corporate Governance? Post Enron, post Sarbanes-Oxley these are not trivial matters at all.
Understandably, the thousands of people who invested in SmartLogik are enraged about the way in which they have been treated! Our case is crystal clear and blatantly, we have been let down by the system. We are now fighting for redress and compensation.
This web site provides shareholders of the former SmartLogik Group PLC with a point of communication on the world wide web. Hopefully, if enough shareholders are willing to contribute a little time and money, we will be able to pool our resources and carry out a full investigation under the law. Please complete and send the form to indicate your support.
High-profile class action lawsuits in the USA have been and still are being successfully pursued against companies who have misled shareholders. It is now our only way of obtaining justice for SmartLogik shareholders in the UK, USA and worldwide. There are around 8,000 SmartLogik shareholders (many of these are nominees, so the actual number of individuals is a lot higher) and, by acting together we become a powerful group. If each of us contributed a small sum, we could raise sufficient funds to investigate the case through the law. After reading this section, please see the Class Law and Leon Kaye web sites (Business Info page) for further information on some class actions currently being progressed in the UK.
Many shareholders believe that the demise of SmartLogik happened under suspicious circumstances and, are justifiably angry. Questions need to be answered over the legality of the sale of the core technology assets that were widely regarded as the best in their field (“best of breed knowledge management software). This was done without going through the normal route of firstly obtaining shareholder approval. It raises the fundamental principals of accountability to shareholders and fiduciary duty of Directors. Did they act in the best interests of the shareholders and the company? Are we supposed to trust that the Directors will act in the best interests of the company and its shareholders, or not? If not, what are the implications for investor confidence in the stock market? Importantly, were there any offers of financial assistance that would have enabled the company to keep trading as SmartLogik Group PLC, thus preserving our investment for the future?
Do not forget that this was a company in the paradoxical situation of being massively undervalued compared to its competitors, such as Autonomy. Yet it had the “best of breed technology and an existing revenue stream from a blue-chip customer base, including organisations such as the BBC, BAA, Yell, Telegraph, UK House of Parliament, etc. This is the proposition that we shareholders had invested in. All this was taken away from us in a quick fire-sale without even going through the normal process of seeking shareholder approval in an EGM - the Board obtained a waiver from the UK Listing Authority and thereby, were able to brush aside the views of the shareholders, thousands of people, who had invested their savings in this company.
The new owners, APR, who benefited from the fire-sale are now proud to display SmartLogik technology as their main offering (see APR Smartlogik web site).
With all the high-profile corporate scandals in the USA, Eliot Spitzer (New York Attorney General) and the SEC (Securities and Exchange Commission) have been aggressively cleansing the US system in order to obtain financial compensation for investors and to rebuild confidence in the market. This is absolutely fundamental to our whole financial system. However, in the case of SmartLogik, despite receiving complaints from many shareholders, the response from the DTI (the government Department of Trade and Industry in the UK) has been that it is in the hands of the Official Receiver - Ernst & Young.
The DTI and the UK Listing Authority should be ashamed of the way the SmartLogik shareholders have been treated. Many shareholders who supported SmartLogik have lost large sums of money over the suspicious collapse of this company. A thorough investigation should have been carried out by now and, shareholders should have been informed.
It is interesting that an organisation of the government DTI, UK Trade & Investment, is using SmartLogik technology (see www.tradeuk.com). They obviously appreciate the value of this technology.
Questions need to be answered over SmartLogik. In July 2001, a new Board took over the running of the company and, illion cash was raised from the major shareholders - Fidelity Investments (who, until recently, were listed as a customer of APR Smartlogik), Bradshaw Asset Management, Shell Pension Fund and, Dan Wagner. This new Board was to replace Dan Wagner and, was heralded as the saviour of the company. Yet, only 9 months later, all the money had been spent and the company had been run into the ground!
How was this money spent so quickly and, importantly, why did this coincide with the decision of the new Board to stop quarterly financial reporting? Shareholders of this UK PLC have not even been allowed to see fully audited accounts for 2001 and 2002. There has been a complete lack of visibility over the financial accounting of this company - a UK Public Limited Company quoted on the LSE and NASDAQ. Shareholders have been misled and ignored. We are now demanding answers. The DTI claims that UK financial accounting standards are beyond reproach and far superior to those in the USA. Well, in the case of SmartLogik, we haven’t even been allowed to see the accounts!
Our goal? Hopefully some justice; possibly some financial compensation. In 2002, a number of shareholders complained to the Official Receiver, Ernst & Young, and also to the DTI. We did this believing that the proper way to proceed was through the responsible authorities. All this is on record and, Ernst & Young have now submitted their report to the DTI. The problem is that this process is being carried out behind closed doors and, we are not allowed to see the information. It also is taking a very long time.
If you believe you deserve more than a tax loss on your SmartLogik investment, please complete the form to show your support. The thousands of shareholders who have been misled and brushed aside in this manner will not be going away. We are determined to obtain redress - there is most definitely unfinished business here.
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