William Stern (businessman)
Encyclopedia
William George Stern is a businessman most notable as the owner of the British
Stern Group of companies. When it collapsed in 1973, Stern became Britain's biggest bankrupt with debts of £118 million. The uninsured losses sustained by thousands of investors led directly to the creation of Britain's first Policyholders' Protection Act.
During the 1960s, rising economic fortunes in Britain lead to the creation of the first unitized
property funds. Initially, only pension fund
s and charities were permitted to purchase units in these trusts, but these regulations were relaxed under the leadership of Prime Minister
Edward Heath
who came to power in 1970, after which time the general public could also invest via insurance companies. One such intermediary was Nation Life Insurance, part of the Stern Group.
As a result of the stock market crash and secondary bank crisis of 1973–74, property prices in Britain tumbled dramatically. Investment fund customers attempted to liquidate their rapidly devaluing bonds, but the funds had insufficient cash to meet their redemption obligations, leading to their collapse. Nation Life, and its parent company, were forced into administration
, and William Stern was declared bankrupt. The scandal was raised in the British Parliament on several occasions, and a BBC
documentary on the subject aired in 1974. Thousands of private investors lost their life savings, since at the time there was no compensation scheme in place to protect them. As a direct consequence of Nation Life's failure, the 1975 Policyholders' Protection Act was introduced, which mandates investors' insurance by paid for by a one percent levy
on investment premiums.
After being discharged
in 1987, Stern resumed his business activities, until a second commercial empire under his control collapsed in the 1990s with debts of £11 million. He was subsequently banned from serving as a company director for twelve years in April 2000, following the emergence of evidence that he had appropriated £1.5 million from the business despite his prior knowledge that it was on the brink of failure.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
Stern Group of companies. When it collapsed in 1973, Stern became Britain's biggest bankrupt with debts of £118 million. The uninsured losses sustained by thousands of investors led directly to the creation of Britain's first Policyholders' Protection Act.
During the 1960s, rising economic fortunes in Britain lead to the creation of the first unitized
Strategic business unit
In essence, the SBU is a profit making area that focuses on a combination of product offer and market segment, requiring its own marketing plan, competitor analysis, and marketing campaign.A Strategic Business Unit emerges at the cross-over between:...
property funds. Initially, only pension fund
Pension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
s and charities were permitted to purchase units in these trusts, but these regulations were relaxed under the leadership of Prime Minister
Prime Minister of the United Kingdom
The Prime Minister of the United Kingdom of Great Britain and Northern Ireland is the Head of Her Majesty's Government in the United Kingdom. The Prime Minister and Cabinet are collectively accountable for their policies and actions to the Sovereign, to Parliament, to their political party and...
Edward Heath
Edward Heath
Sir Edward Richard George "Ted" Heath, KG, MBE, PC was a British Conservative politician who served as Prime Minister of the United Kingdom and as Leader of the Conservative Party ....
who came to power in 1970, after which time the general public could also invest via insurance companies. One such intermediary was Nation Life Insurance, part of the Stern Group.
As a result of the stock market crash and secondary bank crisis of 1973–74, property prices in Britain tumbled dramatically. Investment fund customers attempted to liquidate their rapidly devaluing bonds, but the funds had insufficient cash to meet their redemption obligations, leading to their collapse. Nation Life, and its parent company, were forced into administration
Administration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
, and William Stern was declared bankrupt. The scandal was raised in the British Parliament on several occasions, and a BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
documentary on the subject aired in 1974. Thousands of private investors lost their life savings, since at the time there was no compensation scheme in place to protect them. As a direct consequence of Nation Life's failure, the 1975 Policyholders' Protection Act was introduced, which mandates investors' insurance by paid for by a one percent levy
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
on investment premiums.
After being discharged
Bankruptcy discharge
A discharge in United States bankruptcy law, when referring to a debtor's discharge, is a statutory injunction against the commencement or continuation of an action to collect, recover or offset a debt as a personal liability of the debtor...
in 1987, Stern resumed his business activities, until a second commercial empire under his control collapsed in the 1990s with debts of £11 million. He was subsequently banned from serving as a company director for twelve years in April 2000, following the emergence of evidence that he had appropriated £1.5 million from the business despite his prior knowledge that it was on the brink of failure.