10 OCTOBER 1987, Page 22


Tell your budgie to lay off BP, but pass the form to your aunt


The Lord Chief Justice says: do not let your budgie stag the British Petroleum issue unless its teeth are unusually thick- skinned. Filling in application forms in the names of your pets can no longer be recommended, especially since the same effect can be achieved with perfect legality. That said, the Court of Appeal was able to release Mr Keith Best from prison by the skin of his teeth, taking the relatively merciful course of increasing his fine and completing the ruin of his. career. The next man to put in half a dozen applications for a privatised stock will not, as the Court made clear, be treated so lightly. This still leaves the judges some gradations of punishment for those who, unlike Mr Best, have promoted specious plans for investing in bubbles, stolen millions from those to whom they stood in a relationship of trust, parted the inexperienced from their life savings, or robbed the poor-box. If five extra applications deserve a sentence of imprisonment, what do these crimes de- serve? Transportation for life? (To Mar- bella?) Mr Best should now apply his training in the law (he is the author of Write Your Own Will) to the drafting of a Safe Stag's Guide. This would point out that, .since it is an established principle of English law that a company and its share- holders are distinct legal entities, there is nothing to stop the would-be-stag from setting up half a dozen companies, each of which would fill in an application form. The simpler and more general practice is for a stag to encourage applications from his sisters and his cousins and his aunts, not to mention the butler, the bootboy and the upstairs maid. They must not, of course, apply applications on his behalf, as the forms now make clear — no more than one application for the benefit of any person. But if they apply on their own behalf, and if he finances their applications, and if they make a turn, shall their gratitude fail? The fault lies not in the stags but in the system, based on offering stock at a price which. is, or is believed to be, below the price at which it can be sold in the market. Markets being what they are, this idea stimulates demand, but at this point the market mechanism is abandoned, and demand is met, not with supply, but with personal rationing. One citizen, one issue, one coupon, Mr Best — don't you know there's a war on? In the United States, home of popular capitalism, this nonsense is un- known. New issues are sold, at a price struck at the last moment between willing buyer and willing seller, to groups of firms which expect to sell the stock on to their customers. No light-footed stags, and no heavy-footed policemen. As for the BP issue, encourage your aunt, but first put a green baize cloth over the budgie.