Pyramid Building Society - Non-withdrawable Shareholders

Non-withdrawable Shareholders

Pyramid had offered to customers a class of "non-withdrawable investing shares" which paid interest like a time deposit, but at a higher interest rate. Many customers who took them up were apparently unaware of the distinction between shares and deposits, and staff were paid commissions for selling the shares so were presumably not particularly motivated to make the difference clear.

Those shares ranked behind depositors in a wind-up, so after the collapse those shareholders stood to receive nothing at all. Their plight dragged on for a very long time. In 1992 they had a setback when the Victorian Supreme Court confirmed that they ranked behind depositors. One of the holders, Phillip Lauren, then sued the government and ministers on the basis he had been misled by their advice to keep his money in, and a group of the shareholders marched on state parliament in September 1992.

When the government changed the new treasurer Alan Stockdale was also not inclined to rank the non-withdrawable shareholders with depositors. In fact he was even less sympathetic than Cain's government had been, believing Cain shouldn't even have guaranteed the ordinary deposits.