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Ross Resignations a Necessity

David Ross's resignation from Carphone Warehouse has been swiftly followed by other board departures, this time from the London Organising Committee of the Olympic Games (LOCOG) and National Express.

Ross was appointed to Mayor Boris Johnson's 2012 planning board (it's an unpaid role) in May this year. But in the past couple of days it's been revealed that Ross has been using his share-holdings as collateral in personal loans, and is now under investigation by financial regulators at the FSA. Failure to disclose his use of his holdings to the companies concerned -- Big Yellow, National Express, Carphone, and Cosalt -- could find him in breach of City regulations.

As Jeremy Warner explains, Ross can do what he wants with the shares, but if he pledges them to others, the markets must be informed. The rules came into play as a result of similar behaviour in the last recession of the early 1990s, when Asil Nadir of Polly Peck, and other high profile figures, were found to have used their corporate stakes as collateral against personal loans. So maybe it's a case of history repeating itself as the economy turns downward again.

Did Ross, a lawyer and accountant, not know the rules? His old friend and business partner Charles Dunstone defends him by saying they are pretty complicated -- in which case, they need untangling, and fast. Whatever the case, Ross's directorships will all be on the line -- rightly. Reputation in business has become too important to trifle with -- Carphone's share price dropped 4.3 per cent on the news. "He's let you down, hasn't he," says the redoubtable Jeff Randall in his interview with Dunstone. And he has.

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