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November 12, 2001

Activists Dog Animal Research Firm and Its Investors
    by William Baue

Animal rights proponents protesting European animal research firm Huntingdon Life Sciences have extended their ire to its major U.S. backer, Stephens, Inc.

SocialFunds.com -- Huntingdon Life Sciences (ticker(London): HLD), headquartered in the UK and Europe's largest contract animal research laboratory, is being besieged with protests by animal rights activists at its corporate headquarters in Britain as well as at its New Jersey facility in the United States. Huntingdon violated conditions of Good Laboratory Practice in the UK, and the United States Department of Agriculture fined the New Jersey lab for violations against the Animal Welfare Act.

These documented instances of animal rights violations have translated into economic instability for the company. Pressure from activist organizations, notably In Defense of Animals (IDA) and Stop Huntingdon Animal Cruelty (SHAC), has prompted most of Huntingdon's investors to back out.

On October 6th, "market maker" National Securities decided to halt its support of the company, and ten days later Fleet Securities followed suit. A market maker is a brokerage or bank that maintains a bid and ask price in an over-the-counter security by being willing and able to buy or sell at publicly quoted prices. Six other market makers abandoned sales of Huntingdon stock in August and September.

"We were doing no volume in HLS (Huntingdon) anyway and we'd had customer complaints," said a Fleet representative. "So it was giving us no income and a lot of hassle."

On October 18th Oracle Investment Management, Inc. announced it was selling off its 23 million shares in Huntingdon as a result of "the pressure we have received from the animal activists," according to Oracle President Larry Feinberg.

"Our investment was originally designed to back a new management team that would bring some humanity to an otherwise inhumane business. We are disappointed in the lack of progress of the company under this current management team," Feinberg stated.

In the meantime, Huntingdon had pieced together a transatlantic stock swap that would effectively transfer ownership to the United States, where laws protect the identity of investors with less than a five percent stake in the company. Although the company would change its name to Life Sciences Research and its location to Maryland, its makeup would stay essentially the same. The board of directors would remain unchanged, and current Huntingdon stockholders would retain about 85 percent of the new company's stock.

One of Huntingdon's major stockholders, Stephens Inc., has been the target of intense protest ever since the Little Rock-based investment bank bailed HLS out from the brink of bankruptcy with a $33 million loan in January 2001. Two dozen activists were arrested at an October 29th protest in Little Rock, where 300 people gathered to urge Stephens to divest.

While respecting activists' right to protest, Stephens director of corporate communications Frank Thomas reiterates the bank's right to "stay the course" in supporting a "sound, well-managed" company.

Thomas points out that the last documented animal rights violation occurred in 1996, prior to Stephens' investment, and that Huntingdon terminated the guilty employees. Thomas is "comfortable and confident" that Huntingdon's new management team follows strict ethical guidelines, despite the fact that Oracle listed its lack of confidence in the new team as one of its reasons for selling its HLS stock.

Frank Hampton of Stop Huntingdon Animal Cruelty's stateside branch (SHAC USA) begs to differ with Thomas' facts. Hampton points out that four investigations, two in 1997 and two in 2000, uncovered acts of cruelty perpetrated by HLS employees against its lab animals.

In 1997, the British television journalist Zoe Broughton gained employment at HLS and covertly filmed "It's a Dog's Life," a documentary exposing Huntingdon's animal abuse; that same year, Michelle Rokke of People for the Ethical Treatment of Animals (PETA) similarly filmed damning footage, including the live autopsy of a monkey; in September 2000, Britain's Daily Express revealed falsification of results in baboon xenotransplantation experiments; and in October 2000, SHAC received further documentation of animal abuse, including a list of 41 infractions identified by Britain's Good Laboratory Practice Monitoring Authority at HLS's Occold lab in 1999.

HLS may be able to skirt the damaging impact of animal rights protests and the exodus of its market makers by means of new technology. ECNs, or electronic communications networks, facilitate direct investment without the intermediary of a broker or market maker. But activists have been creative in pressuring Huntingdon, and may very well soon find other means of hounding the company.

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