Hostile plan to oust LSE Chairman to be foiled as Xavier Rolet and Sir Chris Hohn close ranks

Sir Chris Hohn, head of hedge fund TCI which owns 5% of the London Stock Exchange, is entitled to call unscheduled shareholder meetings, this time accusing LSE senior ranks of forcing outgoing CEO Xavier Rolet to leave, and accusing the venue of poor governance and gagging Mr Rolet

Surveillance among Tier 1 market participants

The old school tie network is a very powerful one, especially among London’s long-established traditional derivatives executing venues.

London Stock Exchange, one of the world’s only credible listed venues with a global standing that exists outside of Chicago’s futures industry heartlands, is most certainly a bastion of old-school might, which manifests itself in the powerful and accurate means by which the venue’s influential leaders and board members will not tolerate any underhand delusions of grandeur.

Having, exactly as predicted by FinanceFeeds, managed to very easily fend off a merger between itself and Germany’s Deutsche Boerse last year which was riddled with European political malintent to force London’s mainstays to be dependent on economically and technologically barren Europe, a notion far too grave for Lord Myners, and the senior board members of London’s most established exchange to ignore.

This week, a further example of the might of London Stock Exchange’s leadership has been demonstrated, as the venue’s board has requested an extraordinary shareholder meeting which is considered to be an instrumental means of assisting the exchange to remove incumbent Chairman Donald Brydon.

Donald Hood Brydon CBE was previously Chairman of the Royal Mail and led its privatization, as well has having been Chairman of Sage Group and the Medical Research Council and Patron of The British Postal Museum & Archive

He was previously Chairman of Smiths Group, the London Metal Exchange, Amersham plc, Taylor Nelson Sofres, ifs School of Finance and EveryChild and a past Director of Allied Domecq and Scottish Power.

Brydon went to George Watson’s College, before studying at the University of Edinburgh and graduating in Mathematical Science in 1967.

During this time he was chairman of the University’s Conservative Association alongside his fellow Watsonian Malcolm Rifkind, who was secretary. He was also elected President of Edinburgh University Union. Brydon remained in Edinburgh to teach at the University for several years after graduation.

In 1977 Brydon began a 20-year career working at Barclays, during which time he became Chairman and Chief Executive of the company’s investment arm, BZW Investment Management. From 1997 to 2002 Brydon was Chief Executive Officer at AXA Investment Managers SA. In 2004 Brydon was awarded a CBE for services to the financial industry.

A true conservative, Donald Brydon is a key part of the armory of London Stock Exchange during the Brexit period, as his likelihood of aligning with London’s interests in keeping well away from hostile attempts by European venues to take components of the trading infrastructure to Europe, assisted by socialist, anti-capitalist, anti-financial markets industry European peers and Europhile MEPs.

The unscheduled shareholder meeting was called by activist LSE shareholder Sir Chris Hohn, himself a notable hedge fund manager who established The Children’s Investment Fund Management (TCI) which is a prominent value-based investment fund manager noted for long-term, owner orientated engagement with publicly listed companies.

Profits generated by the fund were proportionately allocated to The Children’s Investment Fund Foundation a registered charity in England and Wales that focuses on improving the lives of children living in poverty in developing countries. In 2016, Forbes listed Sir Chris as one of the 25 Highest-Earning hedge fund managers in 2015. His 2015 total earnings of $250 millions ranks him the 12th among the 25 top earning hedge fund managers.

Sir Chris believes that Donald Brydon is making attempts to forcibly remove LSE CEO Xavier Rolet from his position, and has launched a campaign to keep Mr Rolet as the head of the venue.

Sir Chris sent a very harsh letter to the LSE yesteday, stating that Mr Brydon has “failed to provide shareholders with any substantive basis for the removal of the chief executive” and accused him of poor corporate governance for allegedly gagging the chief executive.

The letter continued: “Hiding behind confidentiality agreements denies shareholders the ability to review your actions and demonstrates the bad corporate governance over which you are presiding.”

Sir Chris has previously claimed that Mr Rolet has signed an agreement not to publicly discuss the reasons for his departure, which was announced last month, and the LSE has denied that its governance was in any way improper.

TCI’s resolutions to be voted on at the meeting include the removal of Mr Brydon as chairman and the immediate termination of a search for Mr Rolet’s replacement. If the resolution were passed, Mr Rolet would then be allowed to continue as chief executive until 2021, subject to his consent.

As the owner of more than 5% of LSE, TCI is entitled to request the shareholder meeting, and LSE has 21 days to call the meeting, after which it has a further 28 days to confirm the date.

As former London Stock Exchange CFO Jonathan Howell once said to FinanceFeeds CEO Andrew Saks-McLeod during one of many meetings in 2007 during the time at which the London venue was in the final stages of acquring Borsa Italiana, “Just another day at the coalface.”

Image: Paternoster Square, London. Home of the London Stock Exchange

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