Blue Planet Inv Tst Board's letter to shareholders

 
TIDMBLP 
 
24th August 2021 
 
Dear Shareholder, 
 
You may have received a letter from Philip J Milton of Philip J Milton & 
Company plc. Mr. Milton has not provided a copy of his letter to the Company 
although other shareholders did on the day they received it. We are grateful to 
them for that. The Board's advice is that you ignore it. It misrepresents the 
facts, and we refute his assertions. 
 
In particular, the Board would like to refute the following points in the order 
that they appear in the letter: 
 
  * Contrary to the statement in Mr. Milton's letter, all of the directors own 
    shares in the Company, either directly or indirectly, as disclosed in the 
    2021 Annual Report and one director purchased shares during that year. 
  * Your Board and Company Secretary have at all times engaged fully with Mr. 
    Milton. The information provided to him was not to his liking. 
 
  * On 5th August 2021 Mr. Milton completed a proper purpose form requesting a 
    copy of the Company's share register. He was provided with a copy of the 
    register on 12th August, within the deadline stipulated in the Companies 
    Act 2006. 
 
  * On 20th May 2021, some nine weeks prior to Mr. Milton's request for the 
    share register, your Company served a Section 793 notice on Philip J Milton 
    & Company plc. This is a provision of the Companies Act 2006 that compels 
    nominee accounts to disclose who the beneficial owners of a company's 
    shares are. We wanted to know who Mr. Milton's clients were (our 
    shareholders) so that we could communicate with them. Because of his 
    failure to comply with that s793 notice, the majority of the shares he 
    claims to have in his control are now disenfranchised in accordance with 
    the Company's Articles of Association. When Mr. Milton provided the 
    requested information in relation to shares owned by him and his company 
    those shares were re-enfranchised. He has, however, refused to provide any 
    information on his client's shareholdings in the Company, and as 
    consequence is now in breach of the Companies Act 2006. This is a matter we 
    hope will be resolved by Mr. Milton providing the information that we have 
    requested regarding his clients. To be clear, your Company is entitled to 
    this information by law and failure to comply with the Act is an offence. 
  * As regards our share price, the best way to improve that is by growing the 
    net asset value, which we are doing. It rose 31.2% last year. Furthermore, 
    our new focus on technology will almost certainly make the fund more 
    appealing to many more investors and we intend to start marketing it as an 
    alternative to established technology funds that sell on net asset value or 
    above while having less good performance. This should attract new buyers 
    for our shares and narrow the discount. As to the spread in our shares 
    this, unfortunately, is not something that we can control. We, like all 
    shareholders, resent it. We have written to the London Stock Exchange and 
    complained in the hope that they will do something about it. We would urge 
    all shareholders to do the same. 
  * Mr. Milton notes the Company's investment policy and its objective. He then 
    goes on to copy sections of Blue Planet Investment Management Ltd's website 
    (www.blueplanet.eu) relating to the services they can provide to their 
    clients. Those sections have nothing whatsoever to do with your Company. 
    This has been made clear to Mr. Milton. 
  * It is noted that Mr. Milton has used his letter to you as an opportunity to 
    sell his services, boasting about his "best investment period", without 
    substantiating any of it. This marketing of services was not noted in the 
    proper purpose request that Mr. Milton was required to complete prior to 
    receipt of confidential data regarding our shareholders (i.e., the share 
    register). It is there to ensure that confidential data is only released 
    for what the Companies Act calls a "proper purpose" and to ensure 
    compliance with both the Data Protection Act and the Companies Act 2006. 
    The fact that Mr. Milton, a regulated person, chose to omit that he wanted 
    to use the data for what would be regarded as an improper purpose under the 
    Act, is concerning. 
 
As far as the Board is aware Mr. Milton does not have any experience as an 
investment manager of listed investment trusts and most of his investment of 
client funds is in other investment funds and trusts, rather than directly in 
companies providing goods or services. He also fails to mention that in 2013 
(Decision reference: DRN0445269) and again in 2021 (Decision reference: 
DRN3501256) the Financial Ombudsman Service found that Philip J Milton & 
Company had put clients into inappropriate, high risk, investments and ordered 
them to pay compensation to those clients for the losses they suffered as a 
result of the firm's failure to adhere to their clients instructions. The 
Financial Ombudsman rulings can be found on their website 
www.financial-ombudsman.org.uk. Simply search "decisions" and type in the 
company name. 
 
Additional Matters 
 
To provide shareholders with more background on Mr. Milton's investments in the 
Trust we are providing information on the communications that took place in 
early 2021, the subsequent actions by Mr. Milton and his company and the 
effects of these. 
 
As it was entitled to, your Board changed the Trust's asset allocation in 
October 2020 to concentrate more on capital growth, including more technology 
stocks and fewer bonds. This change was welcomed and supported by shareholders. 
In so doing, it inadvertently created a problem for Philip J Milton & Co 
because it altered the risk profile of our shares, as perceived by Mr. Milton, 
to a level that was incompatible with his client's stipulated risk 
requirements. This change and our focus on capital growth no longer suited his 
clients. 
 
On the 8th of February 2021, Mr. Milton wrote to Kenneth Murray complimenting 
him on the Trust's investment performance and expressing his concerns regarding 
our increased focus on capital growth. In conversation he told Kenneth Murray 
that because of our change in focus, our shares were no longer suitable for his 
clients and in consequence, his firm would be selling them. 
 
That should have been straightforward, but they were unable to do so. The 
position they had built up was so large and illiquid that they could not sell 
it. Having been unable to sell their clients' shares and ensure compliance with 
client agreements and their clients' instructions that way, Mr. Milton then 
embarked on a series of attempts to get out of what is a problem of his own 
creation by other means. 
 
Mr. Milton wrote to Kenneth Murray again on the 5th of March 2021 expressing 
his view that as a result of the new asset allocation "the risk to investors in 
the Trust are immense" and asked the Board to consider changing the name of the 
Trust to the "Blue Planet Ethical Tech Trust" which he hoped would attract new 
buyers for the shares and allow him to exit the investment. That idea did not 
appeal to the Board and was rejected. Mr. Milton then asked us to revert to our 
previous asset allocation to give him time to find a buyer for his shares. The 
Board declined that as well but offered to help him find a buyer for his 
shares. Eventually after a series of other attempts to get out of his 
predicament, all of which the Board rejected, he sought to cajole then bully 
the Trust's investment manager into transferring the management of the Trust to 
his firm, presumably so that he could change the Trust's asset allocation 
policy and get out of his predicament that way. The manager notified the Board 
of the Trust about this. 
 
It would appear what Mr. Milton wanted was for your Board to run your Company 
for his benefit and not for that of all shareholders. We are never going to 
accept that. Having been unable to sell their clients' shares or get your Board 
to fix their problem for them, what Philip J Milton & Company did next was 
concerning. They bought more shares. This was despite Mr. Milton, who is also 
the firm's Compliance Officer, concluding that those shares carried "immense" 
risks and were unsuitable for his clients. 
 
Wealth managers typically have standard agreements with their clients. A copy 
of Philip J Milton & Company's client agreement can be found at: 
 
https://www.miltonpj.net/documents/Discretionary%20Client%20Agreement.pdf 
 
Appendix 2.  Section D2. of that agreement states that: 
 
"The Company has discretion to act on behalf of Clients within the given 
investment aims. There are no restrictions whatsoever on the type of investment 
which may be considered in fulfilling Clients' objectives except that the 
purchase of non-readily realisable investments.... is not permitted". 
 
The term "non-readily realisable investments" is not defined in Philip J Milton 
& Company's client agreement. What it would commonly be understood to mean, and 
which it is likely that most of Milton's clients will have taken it to mean is, 
investments that cannot readily be sold and turned into cash. 
 
On the 18th of March 2021, we were notified that Philip J Milton & Company had 
acquired an additional 663,729 shares in the Trust, taking their shareholding 
from 17.09% to 18.43% of our share capital. Those shares were acquired on the 
24th of February 2021, two weeks after they had notified us that they were 
unsuitable for their clients and would have to be sold and one month after the 
Financial Ombudsman had, for a second time, censured the firm and ordered it to 
pay compensation for putting its clients into unsuitable investments that 
carried more risk than those clients had stipulated they were prepared to 
tolerate. 
 
Philip J Milton & Company have now built up a 19.1% stake in the Company using 
their clients' money. That would take 323 trading days, at average trading 
volumes, to sell. Few would consider waiting for well over a year to achieve a 

sale as being readily realisable and we are concerned that their clients may 
now effectively be trapped in an investment they should not be in. 
 
Another point of concern to the Board relates to Philip J Milton & Company 
compliance, or apparent lack of it, with Clause D3 of the agreement they have 
with their discretionary clients. This states that: 
 
"Underlying beneficial ownership remains with the client who retains all rights 
attributable to Investments held (such as voting)." 
 
We have therefore requested evidence that the clients have explicitly given 
permission to Mr. Milton to cast their votes. We have yet to receive a 
satisfactory response. 
 
In summary, Mr. Milton's motives are not to further your interests. Nothing 
could be further from the truth. He is attempting to use you and the Company to 
get himself and his firm out of a serious problem of his own making. His 
clients are now collectively trapped in an illiquid investment that according 
to Mr. Milton they should no longer be in and which he cannot easily get them 
out of. 
 
In him we have a managing director and compliance officer of a regulated 
business who is in breach of the Companies Act and has been for months, who has 
twice been found by the Financial Ombudsman to have failed to adhere to his 
clients' instructions and who shows an apparent disregard for the agreements he 
has entered into with his clients. His implication that he somehow is "in 
liaison with the regulatory authorities" is wrong and an improper suggestion. 
 
Your Board is committed to creating value for you, our shareholders. We have a 
clear, carefully thought-out strategy that last year delivered a NAV total 
return of 31.6%. Our highest ever. We have a portfolio of carefully researched, 
exciting, rapidly growing companies in new and evolving markets. We are 
invested in the technologies of the future and are confident that our portfolio 
will produce exceptional returns for our shareholders over the coming years. In 
addition, we have since our merger in 2012 paid our shareholders dividends 
totalling 24.13p, the equivalent of 134% of our share price at the time of the 
merger. 
 
We hope you will continue to support your Board and ignore Mr. Milton's letter. 
Our future is very bright together. We wish you well and thank you for your 
support. 
 
Your sincerely, 
 
The Board of Blue Planet Investment Trust plc 
 
 
 
END 
 
 

(END) Dow Jones Newswires

August 24, 2021 10:47 ET (14:47 GMT)