Bad smell lingers around Royal Mail share sale
Sir, The news that Lazard Asset Management made a profit of £8m for its clients, by selling shares in the privatisation of Royal Mail during the first week of trading, is not in itself a surprise.
The real surprise for those outside the City should be that investment banks are still permitted to own asset management businesses, which can invest on behalf of others in the deals that their investment banking colleagues advise on.
After all, Chinese walls are there to be breached, knowingly or otherwise.
Moreover, if Chinese walls have to be put in place to try to avoid conflicts of interest, then perhaps the businesses should be owned and managed separately as wholly independent and autonomous entities, to remove the possibility of such conflicts altogether.
The additional fact that 12 of the 16 “priority” investors reneged
on their “gentlemen’s agreement” with the UK government, by selling off their shares almost immediately and generating massive short-term profits, adds to the whiff of cosy impropriety by City insiders.
So, while this episode might have been entirely legal and above board, however credibly those concerned may protest their innocence, if the man on the street thinks it smells bad, then it probably does