A global finance firm is being taken to court by its own workers in a £3.5billion lawsuit after the value of their shares collapsed amid claims of a ‘betrayal’ by their bosses.
FNZ, which has 600 staff in Scotland at offices in Edinburgh and Dundee, provides software for companies including Barclays, Lloyds, Aviva and Santander, serving more than 26 million investors worldwide, and has received taxpayers’ funding from Scottish Enterprise.
Staff have been told their shares in FNZ, which began as a small start-up, have lost a large proportion of their value, in some cases running to millions of pounds.
Now casualties of the shares scandal have launched a £3.5billion ($4.6bn – US dollars) class action lawsuit against bosses of FNZ in a bid to recover their losses – but the company insists the claim is ‘entirely without merit’.
A staff member who has been with FNZ in Scotland for more than a decade and asked not to be named told the Mail: ‘Staff received a generic email about the shares which a lot of people thought was a phishing scam.
‘It knocked us sideways and there is a deep sense of betrayal and anger that people who helped to build the company up – working round the clock and sleeping in the office – are now being treated in this way by a firm which they helped to turn into a global powerhouse.’
The staff member, who has suffered a six-figure loss as a result of the share dilution, said: ‘It is a complete betrayal – trust has broken down between staff and management and there has been zero communication.
‘We are all going through a range of emotions – it almost like grief – knowing that long-held plans have fallen apart and in many cases retirement will have to be delayed.
NNZ’s Blythe Masters
Alex Salmond , the then First Minister and Scottish National Party leader at the opening of the headquarters of FNZ on January 19, 2012 in Edinburgh
The firm has 600 Scots staff
‘Everyone is recalibrating their plans.’
The company’s Scottish operation began back in 2010 with workers ‘squatting’ in the offices of Standard Life before acquiring its own premises, with Alex Salmond officially opening the Edinburgh base.
Scottish Enterprise gave FNZ a research and development grant of £510,000 in 2024/25 to fund a project to expand its technological platform.
FNZ has become an international success story in the financial technology sector but bosses needed to raise more cash to cover large operating losses following its global expansion – which they did by selling shares to institutional investors.
But this meant existing shareholders owned a smaller fraction of the overall business – known as ‘share dilution’ – vastly reducing the value of their stake in the firm, which has around 2,000 staff in the UK.
Staff were told they could retain their current level of ownership by investing more of their own cash in shares – with sums varying from hundreds of pounds to millions of pounds.
In some cases, their contracts mean they lose their shares if they leave and there is no way to sell them as the company is not listed on the stock market, meaning many of those affected, some nearing retirement, are effectively trapped in their jobs.
It is understood that FNZ bosses believe no more than 50 staff in Scotland are affected by the shares collapse.
The group chairman Gregor Stewart, who is also chairman of the Royal Scottish National Orchestra, is a named defendant in the lawsuit and has responsibility for corporate governance oversight.
In the firm’s 2023 annual report, Mr Stewart said: ‘Alignment with our employee stakeholders remains a core priority for the Group and we have expanded our employee share plan to include around 2,751 employees, or almost half the total workforce.
‘On behalf of the board, I extend my sincere appreciation to all of our colleagues for their continued professionalism and dedication.’
The claimants are suing FNZ Group Limited and 17 current and former directors in a lawsuit in New Zealand, where the main holding company, FNZ Group, is registered.
They say the board’s decision to raise funds by issuing preferential shares to private equity institutional investors deliberately and knowingly destroyed the value of their hard-earned stakes in the company they served.
The defendants include British-born group chief executive Blythe Masters, one of the highest-profile women in the financial sector.
Her formidable reputation was built over 27 years at JP Morgan during which she rose from intern to senior executive status – and was once dubbed ‘the woman who invented financial weapons of mass destruction’.
An FNZ spokesman said: ‘FNZ notes the claim filed in New Zealand and considers it to be entirely without merit.
‘We are confident that our directors have at all times acted in the best interests of the company, its clients, employees and all stakeholders.
‘The investments by FNZ’s institutional shareholders reflect a strong commitment to the company’s long-term growth and success, an outcome that can only be in the best interests of all its stakeholders.’
