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    Court upholds ruling on illegality of Transneft share arrest

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    MOSCOW, September 13 (RIA Novosti) - Transneft Oil Company [RTS: TRNF] won a legal victory Wednesday after the Moscow City Court rejected an appeal lodged by prosecutors and upheld a lower court's ruling saying the arrest of its preferred shares was illegal.

    On May 5, the company's shares were frozen after the Prosecutor General's Office launched a probe into alleged illegal privatization of shares and abuse of office. It said shares had been unlawfully distributed among various companies, and were later discovered at Registrator ROST, one of Russia's largest companies that services share registers.

    Moscow's two biggest markets had to suspend trading in Transneft preferred shares, driving them down 7-8% on stock exchanges.

    A prosecutor who attended today's court session said the Basmanny Court, which issued the August 3 ruling declaring the share arrest illegal, had failed to take into account the facts of the case and maintained that there were grounds to freeze the shares.

    "The restriction of circulation on the securities market was caused by the need to conduct a financial-economic study, in particular, in order to establish real holders of preferred shares," he said.

    On August 16, the Prosecutor General's Office asked that the Basmanny Court ruling to be declared null and void. As an appeal had been filed, the ruling did not come into force and trading in Transneft stock was not resumed.

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