Practices deny power backlash

Law practices which acted as share shops for the PowerGen and National Power issue say they have not suffered a client backlash in the face of the post-launch debacle.

Seven of the 130 share shops which handled the share issues last month were law firms, and reported high levels of interest from potential investors ahead of the deadline.

But the announcement of an investigation into electricity sector profit levels by industry regulator Stephen Littlechild caused a share price collapse in the wake of trading in the firms.

Ian Cooper, investment manager of Sussex firm Adams & Remers, says: "There's been a rather sanguine reaction, and only two people who purchased have mentioned it. People seem to have adopted the attitude of 'that's life'. But from a wider point of view, something will have to be done about how the Government acted in the issue."

David Lough, of Cripps Harries Hall, says: "We have had no adverse reaction from people who used us as a share shop. For our own clients, we recommended the issue for very few because of the regulatory risks. But for the most part, we were being used by the public as an execution-only service."

Lough says the shares are still attractive for clients seeking high yields in the long run, and insists that his firm would not be deterred from acting as a share shop in similar future issues. "Acting as a share shop helped get our clients preferential rates," he says, "and we have gained portfolio clients as a result of being a share shop."

Nicholas Grazebrook of Birmingham firm Shakespeares says his firm advised against clients stagging the issue.

"There hasn't been much reaction. We never encourage people to take up an issue as a position in a stag market, and we didn't recommend it for advisory clients. Those clients allocated shares accepted the intervention of the regulator in the normal way, and haven't complained to us. I still think the shares will give a good yield."

Both Grazebrook and Cooper agree with Lough that their