Last month shareholders in the bank went court arguing that the Government had under valued their shares when it bought the bank in January 2008. They said their human rights had been affected, as they would receive nothing for their investment.
The judicial review was launched by the hedge funds SRM and RAB, along with the Northern Rock Shareholders Action Group, and Legal & General.
Lord Justice Stanley Burnton, one of the two judges presiding over the judicial review says: “We have come to the conclusion that the provisions made for the compensation of the shareholders of Northern Rock do not infringe their rights.”
Liberal Democrat Shadow Chancellor Vince Cable says:“This is a welcome judgement. The purpose of nationalising Northern Rock was not to bail out shareholders.
“A situation where taxpayers’ money is used to pay off shareholders would be entirely untenable. Northern Rock was effectively bankrupt when it was nationalised and although I have some sympathy for small shareholders who have lost money, we must remember that holding shares carries a risk.
“The two hedge funds who brought this case to the High Court deserve to lose their shirts. They bought Northern Rock shares on the cheap soon after the run on the bank in the hope of making a quick buck. We should not reward such cynical and reckless speculation.”