E&Y in legal threat over Railtrack float
In a bizarre twist to the Railtrack saga, Ernst & Young could face legal action for its involvement in the flotation of the collapsed rail company, for which it is now acting as high profile administrator.
The firm acted as accounting adviser to the government in Railtrack’s flotation, but would escape accusations of a conflict of interest under current ICAEW guidelines on material relationships.
Class Law, the class action legal specialists, has launched an action group for Railtrack investors, declaring its intention to sue the government and its advisers for misleading information.
It said one claim would be for misrepresentations in the 1996 prospectus for the privatisation of Railtrack.
‘If such a claim were to be pursued, it is thought that the defendants would include the government and the advisers at the time of its flotation,’ the firm said.
Class Law’s Stephen Alexander said he was mainly interested in suing the government but would not rule out action against advisers.
‘If the government is sued it might bring in the advisers as third parties,’ he added.
Other advisers on the flotation included reporting accountant and auditor Deloitte & Touche, SBC Warburg and NM Rothschild.
On the issue of a potential conflict, a spokesman for E&Y said: ‘There is no conflict.’
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