Expert View: Time for the law to defend Glaxo's shareholders

The potential dangers for small investors of holding shares expanded beyond financial loss this week. Letters were sent to random shareholders of Glaxo by the Campaign Against Huntingdon Life Sciences (HLS) threatening to publish the individual's "details" on a hosted website.

I have a copy of this letter, and the lack of anonymity from the senders is striking. The address is clearly given in London W8, with a phone number and email address, GSKshareholder1860 @hotmail.com.

Clearly, the senders believe they are operating with impunity. The same cannot be said of the recipients, who must look on the prospect of this version of "publish and be damned" with horror. Despite threats to write to all 170,000 shareholders, they have targetted only 160 so far, a small enough group to be interviewed singly by police. Inevitably, many shareholders are elderly widows living alone, who are now barely able to sleep.

And with good reason. The catalogue of violence by animal-rights extremists has been rising steadily. Starting with the smashing the windows of butchers' and fishmongers' shops in the 1980s, and followed by a string of fire bombs in department stores, Boots shops and various manufacturing sites.

Individuals are being targeted more and more. In 2001, the HLS boss, Brian Cass, was beaten up by three men wielding baseball bats. There were 89 "home visits" in 2004 (most in the dead of night) to employees of various companies. In the same year, there were 177 attacks on private property.

Ironically, this is also the week that four people were sentenced for a campaign of violence against a guinea-pig farm. This had included throwing bricks, paintstripper and firebombs, but culminated with the attackers digging up and breaking open the coffin of one of the director's relatives and hiding her remains for the past 18 months. The police investigator said this "was beyond any rational understanding of protest".

Thus the shareholders have every reason to be frightened as individuals, although many say that the protesters have little chance of achieving their aim. Glaxo, like most large companies, is overwhelmingly owned by the mega-institutions.

Many of these are US houses, but most of the UK ones hold the shares on behalf of millions of pension pots (just about everyone with a pension holds Glaxo shares). In consequence, even if small shareholders panicked, this is unlikely to have the effect the protesters desire.

On the other hand, the pro-testers can point to past success with such tactics. HLS itself has been forced to delist, and in a less-publicised but similar action against a small construction company, Montpellier, the share price dropped calamitously last June when shareholders were sent threats.

The Glaxo letter boasts of this success, pointing out Montpellier withdrew from the contract they objected to.

The machinery of the law seems to be (slowly) kicking in. The prosecution of the guinea-pig four came only after the Serious Organised Crime and Police Act was passed. The police claim success in reducing the number of the notorious home visits (only seven so far in 2006). But the Glaxo and Montpellier cases indicate there is still a gaping hole when it comes to protecting individual share holders. But help may be at hand from legislation that is rumbling in the background to address the issue of shareholder targeting by fraudsters.

This was highlighted last week by a director of Balfour Beatty, who noted the attempt by one Frankfurt based "boilerroom" to con small investors on his shareholder register. Dubious or non-existent investments are punted to vulnerable individuals.

Why on earth should small shareholders' names be public, let alone their addresses? They are hardly going to mount secret bids. It is to prevent the boilerrooms that Lord Sainsbury is bringing in legislation. The Glaxo case suggests he should have a greater sense of urgency.

Christopher.walker@tiscali.co.uk