Activist investor warns London Stock Exchange against “character assassination” of outgoing boss Xavier Rolet
Activist investor Sir Chris Hohn today lashed out at the London Stock Exchange (LSE) Group, saying that its board appears to be threatening a “character assassination” of its outgoing chief executive Xavier Rolet.
In the latest twist in the LSE soap opera over the alleged forced retirement of Rolet, Hohn called for the Bank of England and the Financial Conduct Authority (FCA) to take the dramatic step of ordering the removal of LSE chairman Donald Brydon.
Hohn’s hedge fund, The Children’s Investment (TCI) fund, has mounted a high-profile campaign to remove Brydon and extend Rolet’s contract.
Read more: Plot to save stock exchange boss Xavier Rolet risks triggering a messy exit
In October Rolet announced he would retire from the FTSE 100 firm by the end of 2018, but he has reached a mutual agreement with the board not to discuss the reasons for his departure.
An LSE spokesperson said: “In requisitioning the extraordinary general meeting, TCI triggered a process which we are now adhering to. The next step in that process is to issue a circular, in order that all shareholders have the same amount of information at the same time.
“As regards regulatory oversight, we have kept regulators abreast of developments throughout.”
However, Hohn accused the LSE board of presiding over a “corporate governance crisis” and expressed his frustration over the agreement preventing Rolet from speaking out.
Hohn wrote: “It appears to us that Xavier Rolet is being improperly threatened by the board with severe reputational damage unless he steps down […] or publicly confirms that he does not want to remain as CEO”.
Read more: Xavier Rolet under “confidentiality agreement” ahead of LSE departure
“His silence speaks loud and clear to shareholders that he wants to continue,” Hohn claimed.
The LSE board faces a crunch shareholder meeting by the end of the year – which the LSE must call within the next fortnight – to vote on a resolution put forward by Hohn to remove Brydon from his post. A shareholder circular announcing the meeting is predicted to set out details of incidents of a tough management style from Rolet to bolster the case for his departure.
TCI is trying to drum up support from other large investors for his efforts to remove Brydon. He has already received public backing from Egerton chief investment officer John Armitage.
The row comes at a crucial moment for the LSE, as its dominant euro-denominated derivatives clearing business faces intense political pressure to relocate to the EU after Brexit, in a threat to thousands of jobs within the City of London.
Read more: Threat to City as 20 big banks including HSBC support new clearing bid
A member of the board of the German central bank, the Bundesbank, today said it was “essential” for “third-country” firms to move their euro clearing operations within the EU.
Speaking in Frankfurt, Carl-Ludwig Thiele said: “It seems to me absolutely imperative that a third-country CCP [central counterparty clearing house], if it poses significant risks to the EU and the euro, ultimately must relocate its euro clearing business within the EU.”
The LSE did not immediately respond to a request for comment. The Bank of England declined to comment. The FCA declined to comment.
Read more: London Stock Exchange cancels meeting with hedge fund as Rolet feud deepens