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LSE Ignoring Russian Listing Flaws, US Law Firm Alleges

by Robin Pilgrim, LawAndTax-News.com, London

29 November 2005


The London Stock Exchange and the Financial Services Authority have been accused of being so keen to attract Russian listings in the UK that they will accept inferior levels of documentation to those required from British firms wanting to go public.

According to a report in the Observer on Sunday, Philadelphia-based law firm, Marks and Sokolov has suggested that there were substantial discrepancies between the documentation provided to the LSE by Evraz Holdings and information provided by the same firm to a Luxembourg court.

According to Marks and Sokolov, the metals company stated when it issued global depositary receipts worth $422 million earlier this year that the Kachkanarsky Gok ore facility is owned by an Evraz subsidiary.

However, in statements given by the firm during separate court proceedings, ownership of the facility was ascribed to two other Russian companies.

"The circular contains serious misrepresentations," Bruce Marks told the Observer, continuing:

"If the shares are not owned by Evraz but by the Russian companies, there are different investor risks. If the shares are owned by Evraz, they would not be at risk if claims were brought against the Russian companies."

"Investors would find it harder to pursue claims against Evraz if Evraz is not the direct owner of the shares."

Marks and Sokolov have called on the FSA to scrutinise the listing information provided by Evraz. The financial regulator has yet to comment on the matter.


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