Letter to Hector Sants at the FSA

Mr Hector Sants,

Chief Executive,

The Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

15^th November 2009

Dear Mr Sants

I am writing to the FSA today to complain in the strongest terms about the behaviour of the Chief Executive Officer and management team of a company in which I am invested - Blinkx, listed on AIM.

Back in January 2008 the Blinkx CEO, Suranga Chandratillake, was at the DLD08 conference when he was asked by Martin Sorrell of WPP about the Blinkx business model. Mr Chandratillake replied that Blinkx was ‘very close to break-even’. This was, in my view, a very clear representation of Blinkx’s financial position, stated in public and on the record. It also happened to be untrue.

There are of course many definitions of break-even, and a company’s position can of course change (for example a company may be on target for break-even, but then execute a takeover which saddles it with debt and postpones that break-even point).

However, as recently as the interims for the 6 months ended 30^th September 2009 (online at Investegate - http://www.investegate.co.uk/Article.aspx?id=200911030700118192B ) there is not, to my inexpert eye, any indication that any kind of break-even has been reached – and this more than 20 months after Mr Chandratillake’s reply to Mr Sorrell.

This is not a matter of memory or contemporary reporting, Mr Sants – unfortunately for Mr Chandratillake the exchange with Mr Sorrell was caught on video, and can be viewed here:

http://criticaldistance.blogspot.com/2008/01/blinkx-business.html

The exchange betweenMr Sorrell and Mr Chandratillake begins at about 43 minutes into the video, and at about 44m 20s Mr Chandratillake quite clearly says – in public, on the record and on video – that Blinkx is “very close to breakeven”.

As I say, there may of course be legitimate reasons why Mr Chandratillake said what he did and why the company did not then achieve break-even: but I’m sure I’m not the only shareholder who increased their shareholding in the company as a result of that statement; and having made the statement, if circumstances then changed surely it was incumbent on Mr Chandratillake and the management team to explain what had changed and why. As it is we are now nearly two years down the road with no explanation whatsoever of why Mr Chandratillakie’s very clear representation of fact has not, so far as I can tell, been borne out by the company’s published figures.

On a separate but related note, Mr Sants, I understand that it is a requirement of being listed on AIM for a company to keep available an up-to-date list of major shareholders. Blinkx, despite repeated requests from myself and other shareholders, had consistently failed to do so. Their list of shareholders on the Blinkx website (at http://www.blinkx.com/investors?category=Shareholder%20Information) is out-of-date – the company, has, for example, recently completed a share placing that took Autonomy’s stake to 13.6% (from memory). The list of shareholders does not reflect this change, nor many others.

I would ask that the FSA investigates these matters and, if it agrees with my interpretation, that it should censure Mr Chandratillake and Blinkx to the greatest possible degree. The company and its management team seems to have forgotten its responsibilities to shareholders – I think they need reminding of their obligations.

Yours sincerely,