# Sons Of Gwalia and Minister Chris Bowen



## condog (20 January 2010)

My god the minister chris bowen thinks that a 6:1 high court majority finding the directors who criminally mislead investors, that the fact they are found liable and shareholders have a right to compensation is wrong and wants to change the law retrospectively to prevent shareholders having such rights...

Can some one else copy this over to HotCopper or any other shareholder advocate forums your involved in....

I suggest anyone not knowing the case read about it at 

http://www.businessspectator.com.au...-Gwalia-pd20100120-ZUTXM?OpenDocument&src=sph

Then if you think it stinks that investors are allowed to be criminally mislead by directors with absolutely no legal recourse....then contact the minister an tell him how much it stinks:

Parliament House
M1/24
Canberra ACT 2600
Australia

Telephone: (02) 6277 7200

Facsimile: (02) 6273 4406

Email: chris.bowen.mp@aph.gov.au

I never though id be saying it but for once i think judges reflect the thoughts of society better then our politicians...


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## GumbyLearner (20 January 2010)

*Re: Sons Of Gwalai & Min Chris Bowen*



condog said:


> My god the minister chris bowen thinks that a 6:1 high court majority finding the directors criminally mislead investors is wrong and wants to change it retrospectively....
> 
> I suggest anyone not knowing the case read about it at
> 
> ...




Strange isn't it condog. I always thought Governments were reluctant to introduce retrospective legislation except for war criminals like that Polyukhovich. Maybe the ALP have a whiff of some future collapses and looking after their big-boy lobbyists mates. 

Incidentally Polyukhovich was also a 6:1 decision. 

Just my


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## GumbyLearner (21 January 2010)

Quite surprised that ASFer's haven't had a chomp at this!

Or maybe I'm wrong. Most ASFer's are pacifist trolls waiting to be robbed! 

I can see an extravagant litigation bonanza just waiting to happen on this one.
Bring it Minister Bowen. 

Bring it!


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## Wysiwyg (21 January 2010)

Check your thoughts Gumby. They may not be your own. :sheep:


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## GumbyLearner (21 January 2010)

Wysiwyg said:


> Check your thoughts Gumby. They may not be your own. :sheep:




Oh no. They are my own thoughts. So much for the shareholder democracy 
promised by these new labour bureaucrats!! Even for the people they claim to care about.
Self-pocket liners from what I can see! If you are on holiday. Look after yourself.


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## GumbyLearner (21 January 2010)

GumbyLearner said:


> Oh no. They are my own thoughts. So much for the shareholder democracy
> promised by these new labour bureaucrats!! Even for the people they claim to care about.
> Self-pocket liners from what I can see! If you are on holiday. Look after yourself.




But the sheep jumping rope. I like that. What I don't like is the ALP making smooth-sailing for the BIG 4 lenders. 

Vote 1 the little guy.

DOG ****!!


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## condog (21 January 2010)

*Sons Of Gwalia Issue*

Not sure what happened whether i forgot to post it , or it got deleted...so I will err on the side of caution in case it was deleted......Even though I thought it was completely appropriate and very relevant...

The sons of Gwalia decision was a 6:1 majority that rough terms  found if directors are criminally guilty of misleading shareholders....then shareholders are entitled as equal creditors to other high ranking creditors......

This has two major implications...
1. Clearly share holders have more chance of getting some money back and directors may be laible....(the good)
2. Companies may be liquidated / woundup much sooner as the creditor to asset ratio is much higher (the bad)

The business spectator had a fantastic article explaining it this week....

Minister Chris Bowen seems to think its crazy to have a situation where share holders can go after directors who are found guilty of criminally misleading the investors....

IF you think this stinks and Investors should have recourse against misleading directors I suggest you make some noise and make it loud....straight to his office...

Obviously this is an emotive issue for some people who may be caught up in such cases, so how about everyone behave so this thread stays alive.....

By the way its no mean feat to be able to prove directors guilty....to my knowledge ASIC has failed to do so on almost every occassion they have tried....
So this ruling only applies in extreme cases anyway....

PS i have no vested interest in this argument and am not currently involved...I do hold IMF shares, which some think are affected, but i believe they are not and may actually benefit from such a change...my reason for raing this is im a shareholders advocate at heart...


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



condog said:


> Minister Chris Bowen seems to think its crazy to have a situation where share holders can go after directors who are found guilty of criminally misleading the investors....




Chris Bowen is just another political hack scumbag who will end up working for a big 3 accounting or consulting firm. Probably never worked a hard day in his life like the rest of the dregs, trogs, terrigal elitist crybabies in the ALP. He doesn't give a rats about shareholders, his decision to do this is extraordinary given it's retrospective effect. The fact that shareholders have to line up with unsecured creditors stinks. You would think directors owed a duty to keep shareholders informed. 

Most people who own shares certainly don't vote ALP anyway, so this decision isn't going to effect the supposed battlers they pretend to stand up for.


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## skc (21 January 2010)

*Re: Sons Of Gwalia Issue*



GumbyLearner said:


> *The fact that shareholders have to line up with unsecured creditors stinks. *




Isn't that very fundamental premise of equity and debt market pricing? The heirarchy of risk determines the appropriate return. Equity holders line up behind creditors in the event of collapses, and that's why equity holders look for 12% returns vs debt holders who gets a return well below that.

If anything the original SoG judgment was a landmark because it changed that... and I am not sure I agree with that original decision. What if the creditors were also criminally mis-led? Why should they all of a sudden rank behind equity holders?


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## Trembling Hand (21 January 2010)

*Re: Sons Of Gwalia Issue*



condog said:


> my reason for raing this is im a shareholders advocate at heart...



 Being a shareholder has never put you, as the owner, ahead of those that you seek to use their credit. That's just business fundamentals.



GumbyLearner said:


> The fact that shareholders have to line up with unsecured creditors stinks.



 Thats just nonsense. Shareholders have always been after creditors. You seem to have no fundamental idea about what a company is.


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



Trembling Hand said:


> Being a shareholder has never put you, as the owner, ahead of those that you seek to use their credit. That's just business fundamentals.
> 
> Thats just nonsense. Shareholders have always been after creditors. You seem to have no fundamental idea about what a company is.




What I meant to say was The fact that shareholders rights have been diminished by this decision in favour of unsecured creditors stinks.
The lifeboats on the Titanic weren't just meant for the Captain and the crew he employed.

Thanks for the correction TH. Always great to hear you are still around. Picking up on my mistakes.


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## Trembling Hand (21 January 2010)

*Re: Sons Of Gwalia Issue*



GumbyLearner said:


> What I meant to say was The fact that shareholders rights have been diminished by this decision in favour of unsecured creditors stinks.
> The lifeboats on the Titanic weren't just meant for the Captain and the crew he employed.


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



Trembling Hand said:


>




Just make sure when you hire the next employee TH you offer them stock & options as past of the remuneration package being offered. Now that's a business fundamental incentive worth working for!


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## Trembling Hand (21 January 2010)

*Re: Sons Of Gwalia Issue*



GumbyLearner said:


> Just make sure when you hire the next employee TH you offer them stock & options as past of the remuneration package being offered. Now that's a business fundamental incentive worth working for!




Xactly. That comment shows how clueless your argument is, as usual. Then as an employee of the company they can run it into a brick wall but as an shareholder still take money out of the company before the creditors that they lied to.

CLUELESS.

Shareholders MUST come last otherwise there is no incentive not to blow up or rob if the going get tuff.!!


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



Trembling Hand said:


> Xactly. That comment shows how clueless your argument is, as usual. Then as an employee of the company they can run it into a brick wall but as an shareholder still take money out of the company before the creditors that they lied to.
> 
> CLUELESS.
> 
> Shareholders MUST come last otherwise there is no incentive not to blow up or rob if the going get tuff.!!





Do you think an employee/shareholder would run a company into the ground deliberately to send not only the company broke but also themselves? 

MORONIC.

It's people like you who sound more than happy to line the pockets of the banks and let the gravy train fees of liquidators roll on without question.


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## Trembling Hand (21 January 2010)

*Re: Sons Of Gwalia Issue*



GumbyLearner said:


> Do you think an employee/shareholder would run a company into the ground deliberately to send not only the company broke but also themselves?
> 
> MORONIC.



hahahahahahahahha. Astoundingly clueless!!


Your talking in circles now. Directors send companies broke every day. You would have them lining up BEFORE creditors just because they own a couple of shares.



GumbyLearner said:


> It's people like you who sound more than happy to line the pockets of the banks and let the gravy train fees of liquidators roll on without question.



 What are you talking about? Theres is no discussion on that. You trying to build a grass man here? (they are even weaker than a straw man!!


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



Trembling Hand said:


> hahahahahahahahha. Astoundingly clueless!!
> 
> 
> Your talking in circles now. Directors send companies broke every day. You would have them lining up BEFORE creditors just because they own a couple of shares.
> ...




Just as clueless as an unsecured creditor who doesn't do due diligence to check the liquidity and soundness of the company they are lending to?  :


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## GumbyLearner (21 January 2010)

*Re: Sons Of Gwalia Issue*



GumbyLearner said:


> Just as clueless as an unsecured creditor who doesn't do due diligence to check the liquidity and soundness of the company they are lending to?  :




Say like a Bank?


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## Purple XS2 (21 January 2010)

Can't resist pitching my .

Any court decision which equates creditors with shareholders is fundamentally incorrect. I haven't had the time look up the Sons of G. case, but I can only assume the decision is rather more nuanced than that.

Pardon my bluntness, but treating ripped-off shareholders on a par with ripped-off suppliers and tradesmen etc is a Company Law 101 error that only a low-grade journalist, or the readers thereof, would dream of making.

Blurring the distinction between debt and equity means we can kiss the stock market, Capitalism, and the World As We Know It (for better or worse) goodbye.

Regards,
P.  (who, I'm pleased to report, did get a pass grade for Company Law 101).


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## skc (21 January 2010)

It's not only company law 101 but finance 101. You can legislate the risk appropriation between equity and debt holders all you want, the market will work a way around it by pricing things accordingly.

If shareholders get elevated to the same notch as debt holders, the simple outcome is that the credit will get more expensive, and that the equity return will be lower. The entire share market will work on a lower PE... 

To me, in the case of criminally mis-leading information, the directors should face criminal charges (which they do I believe). But the corpse of the company should be carved up in accordane to the heirarchy of risk that founded the company in the first place.


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## doctorj (21 January 2010)

I'd be shocked if Today Tonight and other 'hard hitting' journalists aren’t all over this one to protect the ‘little guy’ from the ‘corporate fat cats’.

Debt holders must rank before shareholders in a wind up regardless of director fault or debt holders are going to want equity-like returns.  It isn’t about protecting the Banks but, as others have said, protecting the inherent differences in debt and equity instruments.  Shareholders have unlimited upside but have the most at risk.  Debt holders pay for reduced risk with limited upside.


Attached is a pathetic attempt to illustrate the link.  Risk and return are always linked and, as some others have said, anything that results in a change in the risk profile of an instrument will result in the market finding an equilibrium – in this case through a higher interest rate.


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## condog (27 January 2010)

*Re: Sons Of Gwalia Issue*



Trembling Hand said:


> Being a shareholder has never put you, as the owner, ahead of those that you seek to use their credit. That's just business fundamentals.
> 
> Thats just nonsense. Shareholders have always been after creditors. You seem to have no fundamental idea about what a company is.




I raised this issue , not because of where shareholders need to slot into the creditors list, but because Chris Bowen thinks shareholders should have no legal recourse against directors who intentionally and criminally defraud investors.....
Thats the bit thats astounding to me.....

Whether we are first or last in the creditors line is unimportant , as long as we know at the time of investment.....

But fact is ASIC requires full and timely disclosure. We make our investment on the presumption that will be upheld by the Govts own enforcer.....and now Chris Bowne comes out and says.....not only form here on , but retrospectively, shareholders have no right for legal recourse for being criminally defrauded by directors......

This astounds me and every shareholder in Australia should be filling Chris Bowens inbox voicing there absolute concern and discust.....


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## condog (27 January 2010)

doctorj said:


> Debt holders must rank before shareholders in a wind up regardless of director fault or debt holders are going to want equity-like returns.  It isn’t about protecting the Banks but, as others have said, protecting the inherent differences in debt and equity instruments.  Shareholders have unlimited upside but have the most at risk.  Debt holders pay for reduced risk with limited upside.




Thats a good attempt, but i disagree...most debtors sell to a customer and if they have tight inventory control and efficient logistics, they recieve a 20%+ ROC within 30 days......thats a considerably higher return and lower risk then a lot of shareholders recieve.....

But again Im not arguing the order, just the fact the ministers communist views towards investors is appalling and needs urgent redress by shareholders....

By the way people we are not part of a union etc.....so our only voice is our collective individula voices..... If you agree please act NOW, by emailing, faxing or ringing the minister.....  just google "Chris Bowen"


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## skc (27 January 2010)

condog said:


> Thats a good attempt, but i disagree...most debtors sell to a customer and if they have tight inventory control and efficient logistics, they recieve a 20%+ ROC within 30 days......thats a considerably higher return and lower risk then a lot of shareholders recieve.....




Huh? What are you talking about? 

I thought we were talking about banks lending money at 7%, rather than 15%.

Surely the business return of a "trade debtor" has nothing to do with anything discussed here...


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## Trembling Hand (27 January 2010)

*Re: Sons Of Gwalia Issue*



condog said:


> I raised this issue , not because of where shareholders need to slot into the creditors list, but because Chris Bowen thinks shareholders should have no legal recourse against directors who intentionally and criminally defraud investors.....
> Thats the bit thats astounding to me.....




Condog i just don't think you have a grasp of whats going on here. Firstly that's simply not true about no recourse from directors. It is still illegal to trade while insolvent just like it always is. 

But. You seem to think that because employees defraud the company the company should be compensated by the company 

It just doesn't make sense.



condog said:


> By the way people we are not part of a union etc.....so our only voice is our collective individual voices



 You are right. We are shareholders/owners of companies. With that comes the freedom to choose what we own and what we walk away from. That comes with rewards that can be great but there is also risk involved. 

If that risk to reward doesn't sit well with you may I suggest a nice unionised job in a factory production line. :


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## doctorj (27 January 2010)

condog said:


> Thats a good attempt, but i disagree...most debtors sell to a customer and if they have tight inventory control and efficient logistics, they recieve a 20%+ ROC within 30 days......thats a considerably higher return and lower risk then a lot of shareholders recieve.....
> 
> But again Im not arguing the order, just the fact the ministers communist views towards investors is appalling and needs urgent redress by shareholders....
> 
> By the way people we are not part of a union etc.....so our only voice is our collective individula voices..... If you agree please act NOW, by emailing, faxing or ringing the minister.....  just google "Chris Bowen"



Surely it would be more 'communist' to change the risk/reward pay off for debt in favour of the 'average shareholder'?


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