Jarvis Investment Management Limited · DRN-6242541

The complaint Mr M complains that Jarvis Investment Management Limited failed to make him aware that he was able to convert his holding of Gazprom Neft (“Gazprom”) shares before their impending cancellation from the London Stock Exchange (“LSE”). What happened On 24 February 2022, Mr M purchased 311 Gazprom shares through Jarvis and those shares were held as Depositary Receipts (“DRs”) in his share dealing account with them. On the same day, the Russian military launched their invasion of Ukraine. Following the invasion, sanctions were introduced thereafter meaning the DRs were no longer able to be traded in the UK. Gazprom declared on 29 April 2022 that they would cancel all DRs listed on the LSE. They explained that from 29 April 2022, for 20 business days, investors could liquidate or transfer their Gazprom holding before they delisted their depositary receipts from the LSE. The latter would help consumers avoid losing their entire holding of DRs; Gazprom would allow the DRs to be converted into ordinary Gazprom shares. This required an account to be opened with a Russian bank, in order for the shares to be held post-conversion from DRs. On 6 May 2022, Jarvis state that they sent Mr M a letter about the issue, explaining that the Gazprom DRs would be cancelled. And, on 28 October 2022, 22 August 2024 and 20 September 2024, the issuer of the DRs, BNY Mellon, opened the books again to allow for the conversion of Gazprom DRs. Mr M telephoned Jarvis on 26 March 2024 to look into converting his Gazprom DRs and during that call, they explained that they would look into whether he could convert his stock and would then get back to him. As Mr M didn’t hear back from Jarvis, he called them again on 19 April 2024. As nothing further was heard, Mr M called Jarvis again on 20 May 2024 and on 22 May 2024. Jarvis issued an update to Mr M via email on 22 May 2024, stating that they would provide a response to his enquiry by the end of that week. As no response was issued, Mr M emailed Jarvis again on 3 June 2024, 4 June 2024, 10 June 2024, 19 June 2024 and 27 June 2024. Jarvis eventually confirmed to Mr M on 10 July 2024 that they weren’t able to convert his shares due to the sanctions on Russia. On 12 July 2024, Mr M emailed Jarvis to question their stance and then chased a reply from them on 29 July 2024. Jarvis replied on 9 August 2024 which is when Mr M decided to formally complain to them. Jarvis issued their response to Mr M’s complaint on 30 September 2024. Jarvis said, in summary:

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“I do think that the service we provided you did not meet our usual standards and I do apologise for the delayed communication while your query was investigated and any frustration this has caused you… In regards to the Gazprom conversion, I do not think that Jarvis is at fault for not notifying you in August 2023. Jarvis was not notified by BNY regarding the conversion option and we would have been unable to participate in the conversion due to the Russian sanctions regardless. In order for Jarvis to participate in the conversion, the shares would need to have been deposited into a Russian custodian account. As Jarvis do not have a custodian in Russia, we were unable to participate”. Unhappy with that outcome, Mr M brought his concerns to this service. He said, in summary, that had he known he could convert his Gazprom DRs, he would have done so and then liquidated his holding. As he wasn’t given the opportunity to take any action, Mr M stated that he has suffered considerable financial loss due to the cancellation of his shares. The complaint was then considered by one of our Investigators. He initially concluded that whilst Jarvis hadn’t responded to Mr M’s queries about the issue as promptly as they should have done, in relation to the cancellation of his holding of Gazprom stock, he didn’t think Jarvis had acted unfairly and therefore, he didn’t uphold this part of the complaint. Our investigator felt that in light of the communication failings, Jarvis should pay Mr M £350 to apologise. Mr M, however, disagreed with our Investigator’s findings and asked him to look at the complaint again. He said that he’d never received Jarvis’ letter of 6 May 2022 and in any event, he has family in another country that doesn’t have sanctions against Russia who he could have transferred his shares to. He also explained that when the conversion window was open, he could have opened an ‘S-type’ account with two other providers to convert his DRs into local shares which was a legally viable option for UK citizens even after the sanctions. Mr M went on to say that Jarvis has a fiduciary duty as nominee to communicate corporate actions which they failed to do. After reconsidering what Mr M had to say, our Investigator decided to look at his complaint again and issued a new view upholding his concerns. He said, in summary, that as it was entirely foreseeable that the DRs would be de-listed, Jarvis should have taken steps to sell the holding once they received no instructions from Mr M. In addition, in light of the fact that Jarvis should have sold Mr M’s holding, he felt that they should pay him a further £150 for the trouble caused, so £500 in total. After reviewing what our Investigator had to say, Jarvis explained that they didn’t agree with the new outcome. They also said, in summary: • The relevant DRs representing two underlying PJSC Gazprom ordinary shares were suspended from trading by the LSE on 3 March 2022. In context, while the rollout of sanctions against various Russian entities was staggered, the LSE's driver of the suspension to a vast swathe of Russian related shares, was to maintain orderly markets. • After this date, there was no opportunity for Jarvis to sell the PJSC Gazprom DR. Jarvis went on to say that they didn’t agree with the recommendation to make a redress payment equivalent to any share price in May 2022, as any such share sale was never possible. In addition, the recommendation seemed to indicate that they cover the cost of sale proceeds as of a point in time in May 2022, but the client retains the beneficial ownership of the shares. • The Investigator was recommending that an action should have been taken based on the

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fact that a client did not respond to their 6 May 2022 letter as there was foreseeable harm. Ignoring the fact that there was no ability to arrange any sale of the DR at any point after 3 March 2022, Jarvis said that they didn’t agree an execution-only broker is able to follow a course of action where a client has not provided explicit trading instructions. In addition, they had not offered any messaging to customers of what action they may take, if they had not heard from them by a particular date. • To say an execution broker must now start to consider effecting a sale, in this case, based on a non-UK share being delisted from a UK market but still trading on its domestic market, would be a major reversal of how the execution-only stockbroking sector operates. Not least, if Jarvis did follow this course of action and executed a sale based on their reasonable view of future events but then received a complaint that they had sold the shares without the client’s instruction and the price has since gone up (as it did), they don't believe they would have any legal or regulatory basis to defend their actions. • Jarvis referred to another complaint related to Gazprom DRs that this service had considered that was published on our website. Jarvis highlighted that this had not been upheld. Our Investigator was not persuaded to change his view as he didn’t believe Jarvis had presented any new arguments he’d not already considered or responded to. Unhappy with that outcome, Jarvis asked the Investigator to pass the case to an Ombudsman for a decision. After carefully considering matters, I explained that I had decided to issue a provisional decision as I was minded to reach a different conclusion to that of our Investigator. This window aimed to give both parties the opportunity to consider what I had to say and provide any comments before I reached my final decision. What I said in my provisional decision: I have summarised this complaint in less detail than Mr M has done and I’ve done so using my own words. The purpose of my decision isn’t to address every single point raised by all of the parties involved. If there’s something I’ve not mentioned, it isn’t because I’ve ignored it - I haven’t. I’m satisfied that I don’t need to comment on every individual argument to be able to reach what I think is the right outcome. No discourtesy is intended by this; our rules allow me to do this and it simply reflects the informal nature of our service as a free alternative to the courts. My role is to consider the evidence presented by Mr M and Jarvis in order to reach what I think is an independent, fair and reasonable decision based on the facts of the case. In deciding what’s fair and reasonable, I must consider the relevant law, regulation and best industry practice. Where there’s conflicting information about what happened and gaps in what we know, my role is to weigh up the evidence we do have, but it is for me to decide, based on the available information that I've been given, what's more likely than not to have happened. And, having done so, I’m planning to uphold Mr M’s complaint in part - I’ll explain why below. I think it would be useful to start by explaining the nature of the investment that Mr M holds with Jarvis. A depository receipt (DR) is a certificate that allows a non-UK company’s shares to be traded on a UK or US market, even though the underlying shares are actually issued and held in the company’s home jurisdiction. In this case, the Gazprom DR represented a Russian share that was being traded on the UK LSE market through a depositary bank. When sanctions were imposed on Russian entities following the invasion of Ukraine, this

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structure became significantly more complicated than directly holding the actual shares on the Russian market themselves. Sanctions restricted UK firms from trading, transferring or interacting with Russian securities and the depository banks responsible for administering the DR programmes, were themselves prevented from continuing with normal operations. I think it would also be useful to explain the nature of the relationship that Mr M has with Jarvis. Mr M holds an execution-only dealing account, which means that he is not paying Jarvis for advice, guidance or ongoing monitoring of his investments. The fee he pays is solely for Jarvis to act as custodian of his assets and to execute the specific trading instructions he chooses to give them. Jarvis is authorised by the Financial Conduct Authority (‘FCA’) only to provide non-advised, execution-only services and their regulatory permissions in this instance do not allow them to act as an investment manager or to make decisions on a customer’s behalf. Under this type of service, Mr M is responsible for researching, selecting and funding his own investments, choosing which markets to invest on and deciding when to buy, hold or sell. He is also responsible for keeping himself informed about any corporate actions or events affecting the investments he has chosen. While Jarvis will typically try and pass on any relevant information when they’re able to do so, this isn’t guaranteed. Short timescales, market-driven deadlines or factors outside of Jarvis’ control, such as the issuer or depository failing to provide timely or complete information can limit what can be shared. Jarvis don’t provide advice or assess the suitability or ongoing appropriateness of Mr M’s portfolio, that’s his responsibility. Jarvis’ responsibilities are limited to safeguarding the assets they hold on his behalf, accurately executing the instructions he provides and issuing communications about material events when they have the information and operational ability to do so. In line with these obligations, from what I’ve seen, Jarvis issued a notification to Mr M on 6 May 2022 explaining that Gazprom intended to cancel their DRs. Whilst Mr M states that he never received Jarvis’ letter, as we’re an evidence-led service, I do have to place weight on the contemporaneous evidence that’s available to me, so I’ve no reason to doubt that it was sent and it was addressed to the same property that Mr M has noted he resides at on his complaint form to this service. As an execution-only provider, Jarvis are not permitted to make investment decisions on Mr M’s behalf, so the decision on how to respond to any corporate events remains Mr M’s responsibility under the terms of the service that he has with them. However, it’s important to note that Jarvis say they were never informed by the depository of the conversion offerings that Mr M has highlighted so weren’t able to share that information with him anyway. I’m of the opinion that even if Jarvis had been aware of the later opportunities to convert Mr M’s Gazprom DRs into local Russian shares, they wouldn’t have had the operational ability to assist him with that process. As Jarvis was never informed of those conversion windows by the depositary, and critically, don’t maintain a custodian relationship with any Russian institution, without a Russian custodian, Jarvis could not have legally or practically held the underlying shares that would have resulted from any conversion. And, as Jarvis also highlighted, UK sanctions restricted firms from transacting with or supporting activity involving Russian securities, meaning they were unable to participate in any conversion even if they had been notified. So, even assuming Mr M had received more timely updates from Jarvis, those factors would still have prevented Jarvis from carrying out the conversion on his behalf. Mr M explained that he could have opened an S-type account through another provider in order to convert his DRs into local Russian shares, and that this option was legally available

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to UK citizens. I acknowledge that Mr M may have been able to explore such options independently. However, Jarvis was not made aware of the conversion opportunities by the depositary, and as an execution-only provider, they weren’t required to research or inform consumers about all potential offshore or non-UK mechanisms that might enable them to work around sanctions on Russia. Jarvis’ responsibilities were limited to passing on information they received and could operationally act upon, which didn’t include facilitating Russian custodial arrangements or advising on alternative international routes. In light of this, I can’t reasonably conclude that it would be fair to find Jarvis at fault for not drawing Mr M’s attention to the possibility of using overseas providers to pursue an outcome that Jarvis themselves had no ability to support. When Mr M chose to purchase the Gazprom DRs on 24 February 2022, this was at a time of exceptionally heightened geopolitical risk, given that the Russian military had just launched their invasion of Ukraine that same day. The financial and economic implications, including the likelihood of sanctions and market disruption affecting Russian-related securities were widely and prominently reported across both national and international media, which I think even a casual observer could not reasonably have missed. In those circumstances, I think it’s more likely than not that Mr M would have been aware of the elevated risks associated with buying Russian securities at that particular moment. Despite this, I’ve seen no evidence that he contacted Jarvis at any point before March 2024 regarding his investment or the evolving situation. Taking all this into account, I think it’s fair to place significant responsibility on Mr M to monitor the risks arising from his own investment decisions in what was (and still is) a highly unusual and rapidly developing situation. For completeness, I will comment more broadly on the letter that Jarvis stated they sent to Mr M in May 2022 covering the cancellation of the Gazprom DRs which, he states, he never received. Having looked at the content of that letter, I don’t think that it was particularly clear what the impact of any inaction might be, I say that because it simply states: “Due to amendment in Russian laws PJSC Gazprom has instructed BNY Mellon to terminate the deposit agreement. Cancellation of admission to trading on the London Stock Exchanges main market is expected to occur within 20 business days of 29th April 2022. lt is expected that the DRS will be converted to Gazprom shares through standard procedure under the deposit agreement subject to mandatory requirements of Russian law. Please note Jarvis will be unable to facilitate any trading in the resultant shares”. I’ve not read the ‘deposit agreement’, but it seems to me that Jarvis are suggesting the consumer’s holding will be converted into normal Gazprom shares on 29 April 2022 (which obviously wasn’t the case). There’s no suggestion that the consumer needs to take any action and the only notable warning is that Jarvis won’t be able to undertake any trading in the shares that then follow. However, given Mr M states that he never received that letter, I don’t therefore believe it makes a difference to the outcome of this complaint. However, I do think it’s worth addressing the point made by Jarvis in response to our Investigator’s supplementary view. Jarvis’ letter didn’t provide any messaging indicating they might take unilateral action if Mr M failed to respond, and from what I’ve seen, they didn’t have the contractual or regulatory authority to dispose of his assets without his prior consent. So, I agree with Jarvis that taking such action could have exposed them to a significant risk of complaint, particularly if the value later rose, as occurred here.

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I therefore think in light of the relationship that Mr M had with Jarvis, I can’t reasonably conclude that they’ve treated him unfairly. It was his responsibility to keep track of the investments within his account and ensure that he took the appropriate actions as and when needed. It therefore follows that I’m not planning on upholding this element of his complaint. Using financial services won’t always be hassle free and sometimes mistakes occur. From what I’ve seen of the file, Jarvis don’t appear to have challenged the fact that their customer service offering wasn’t as responsive as they’d wish it to have been. Mr M made repeated attempts to contact them from 2024 onwards about the Gazprom DRs and despite his best efforts, much of his queries repeatedly went unanswered. Whilst I’ve not seen any evidence to persuade me that those communication failings resulted in a financial loss to Mr M, I do think he has suffered some degree of trouble and upset. It’s for that reason that I require Jarvis to pay to him £350 if they’ve not already done so. I’m satisfied that the above outcome is fair and reasonable in all of the circumstances. Responses to my provisional decision After reviewing what I had to say, Jarvis responded explaining that they accepted the outcome. They also stated that the £350 compensation had been paid to Mr M’s bank account on 26 November 2025. Mr M didn’t provide any further comment. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As neither party have provided any new information that has made me change me mind, it therefore follows that I have reached the same conclusion for the same reasons that I set out in my provisional decision above. My final decision I’m upholding Mr M’s complaint in part and require Jarvis Investment Management Limited to take the action that I’ve set out above to put things right for him, which the firm states they now have. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 22 April 2026. Simon Fox Ombudsman

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