BCS - BrisConnections Unit Trusts

[sails]

Re: Brisconnections shareholders - financial ruin

...In a radio link Julia posted some time ago http://www.abc.net.au/rn/nationalinterest/stories/2009/2503496.htm it stated that only 12% was allocated for retail investors. Is this so?

Sunder, in the name of ethics, how did such a large percentage (estimates suggest nearly 80%) end up in unsuspecting retail hands?

Hey Sunder, while you are waving your righteous ethical flags around - can you please answer my question?

 

[sails]

Re: Brisconnections shareholders - financial ruin

...2. If that were true, would he have needed to acquire more shares than absolutely necessary to call an EGM? Would he have even needed enough to call an EGM? Couldn't this "most share holders" have just called one and wound up the trust without him?

Perhaps some of these "most" shareholders are very frightened people and preferred to give their shares to someone else who was willing to take them.

Honestly Sunder, I can never understand why you refer to them as if they have knowledge and experience on par with institutional investors. Many of these hapless people appear to be very frightened, and possibly financially uneducated mums and dads who are at risk of their lives and their families lives being ruined.

 

[investedz]

Re: Brisconnections shareholders - financial ruin

Just been skimming through this thread.
I know its been mentioned before, but I find it amazing how this share is easily open for purchase on a regular brokerage account, which from a perspective of an ordinary share investment, has something like a 100000% loss (pay $1 for each 0.01c share purchase).

I've been trying to upgrade my trading level to level 4, to be enabled access to sell naked put options, which I don't intent to do, but instead sell naked puts against purchased puts for a credit (credit spread).

OK now a bit of math...
If I sold a $100 strike put option worth say $3000, on a $100 share, and the next day the share price went down to $0, I would be liable for $97000 ($1000 per each $1 loss on the stock = $100000, minus the $3000 you made selling the put).

That would mean an ROI of something like -3233% (I hope I got the math right)

Conclusion:
So access denied to a trading level, because I didn't meet a criteria, and because I could make a 'potential' loss of 3233%... compared to freely being allowed to buy a share with 'instant' liability
of 100000% initial share purchase...

 

[cutz]

Re: Brisconnections shareholders - financial ruin

Just been skimming through this thread.
I know its been mentioned before, but I find it amazing how this share is easily open for purchase on a regular brokerage account, which from a perspective of an ordinary share investment, has something like a 100000% loss (pay $1 for each 0.01c share purchase).

I've been trying to upgrade my trading level to level 4, to be enabled access to sell naked put options, which I don't intent to do, but instead sell naked puts against purchased puts for a credit (credit spread).

OK now a bit of math...
If I sold a $100 strike put option worth say $3000, on a $100 share, and the next day the share price went down to $0, I would be liable for $97000 ($1000 per each $1 loss on the stock = $100000, minus the $3000 you made selling the put).

That would mean an ROI of something like -3233% (I hope I got the math right)

Conclusion:
So access denied to a trading level, because I didn't meet a criteria, and because I could make a 'potential' loss of 3233%... compared to freely being allowed to buy a share with 'instant' liability
of 100000% initial share purchase...

Hi Investedz

I see your point regarding doing the exam and filling out the appropriate paperwork for level 4 trading but I think that has more to do with broker protection against rouge clients, as far as brisconnections goes the broker is just a facilitator and does not have any other obligations (after the trade & settlement) unlike option accounts. Saying all that i do think it's wrong for that type of instrument to be trading like a share(Brisconnections that is)

Bit off topic but what’s the upshot, why were you knocked back on level 4?

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Why aren't lawyer jokes any good?

Lawyers don't think they are funny and nobody else thinks they are jokes.

When I get home at the end of the day I like to go through with my kids what they've done that day. What they did at school and how they got on with this or that. Sometimes they ask me about my day. I might talk a little about my day and as I do web sites sometimes we'll sit at the PC and go to a site I've done and I can show them.

I wonder how that works in the households of the BrisConnections legal team:

What did you do today daddy/wife/husband?

Well child/wife/husband, today I helped a bunch of rich men and a powerful company to take the life's savings of a bunch of ordinary people who made a bad investment.

 

[drsmith]

Re: Brisconnections shareholders - financial ruin

Conclusion:
So access denied to a trading level, because I didn't meet a criteria, and because I could make a 'potential' loss of 3233%... compared to freely being allowed to buy a share with 'instant' liability
of 100000% initial share purchase...

The more this goes on the more one realises that partly paid shares (with a future financial obligation) will need to be traded in a more restrictive environment than fully paid shares, perhaps along the lines of options or futures contracts.

That could be a positive (and perhaps the only positive) legacy of Brisconnections.

 

[sails]

Re: Brisconnections shareholders - financial ruin

The more this goes on the more one realises that partly paid shares (with a future financial obligation) will need to be traded in a more restrictive environment than fully paid shares, perhaps along the lines of options or futures contracts.

That could be a positive (and perhaps the only positive) legacy of Brisconnections.

LOL :iagree: :iagree: and have suggested it a few times in this thread. Although it's been a bit like this...:horse:

 

[investedz]

Re: Brisconnections shareholders - financial ruin

Bit off topic but what’s the upshot, why were you knocked back on level 4?

I aced the questionnaire

But my assets was the problem, I opened the account as a trust, and my assets was all just cash (quite a fair amount), I guess I needed illiquid assets, eg, bricks and mortar, as collateral for a worst case scenario.

Their suggestion was to get some experience off buying and selling long options, and try applying again in about 2 or 3 months. I assume they will assess me on how well I go.

 

[cutz]

Re: Brisconnections shareholders - financial ruin

I aced the questionnaire
But my assets was the problem, I opened the account as a trust, and my assets was all just cash (quite a fair amount), I guess I needed illiquid assets, eg, bricks and mortar, as collateral for a worst case scenario.

They definitely don’t need bricks and mortar, just enough cash to meet the margins. Strangely enough they let traders carry out buy/write on level 2.

I thought you being ex optionsexpress they would have given priority treatment.

 

[Prospector]

Re: Brisconnections shareholders - financial ruin

LOL :iagree: :iagree: and have suggested it a few times in this thread. Although it's been a bit like this...:horse:

yeah yeah, but the message is getting there....

 

[sails]

Re: Brisconnections shareholders - financial ruin

yeah yeah, but the message is getting there....

Hope so, Prospector.

...I see your point regarding doing the exam and filling out the appropriate paperwork for level 4 trading but I think that has more to do with broker protection against rouge clients, as far as brisconnections goes the broker is just a facilitator and does not have any other obligations (after the trade & settlement) unlike option accounts. Saying all that i do think it's wrong for that type of instrument to be trading like a share(Brisconnections that is)...?

Covered calls and even most warrants pose no risk to the broker. But we still have to say we have read the educational material and sign documents stating we fully acknowledge and understand the risks involved.

If people don't bother to read the material and then lie on their application forms or knowingly take massive risks, it is their own fault if they get burnt.

It would be interesting to find out just how many unwitting retail bcsca holders would have been spared if basic educational material had been required prior to approval to trade instalment shares. And if every broker was required to ensure clients were warned of impending payments before the point of sale whether by phone or online. With everything so computerized, it should not be hard to implement

The approval systems are already in place and seem to work well for derative trading - hopefully this will be extended to instalment shares in the very near future to prevent anymore unnecessary casualties...

 

[Junior]

Re: Brisconnections shareholders - financial ruin

Where else can you buy a $1 million liability by clicking a button and spending $500?

You should be able to prove that you can afford to pay the future installments. i.e. provide proof of income/assets.

I'm sure the system will be different in the future.

 

[Sunder]

Re: Brisconnections shareholders - financial ruin

Perhaps some of these "most" shareholders are very frightened people and preferred to give their shares to someone else who was willing to take them.

Honestly Sunder, I can never understand why you refer to them as if they have knowledge and experience on par with institutional investors. Many of these hapless people appear to be very frightened, and possibly financially uneducated mums and dads who are at risk of their lives and their families lives being ruined.

Answer to your other question:

Retail investors bought them on the open market. Some with eyes wide open, others in ignorance. I'm not sure what other answers you're looking for?

We've already had this argument. Does it matter that these people are uneducated? They made a mistake, and while it's sad that this mistake will kill them finacially, nobody else should be paying for it. Should Macquarie shareholders wear the pain because ignorant mums and dads failed to do due dilligence? Doesn't this just create moral hazard? Let's just gamble on penny dreadfuls with outstanding contributions... If we win, we win big. If we lose, the underwriter will wear the bill.

Is this your idea of fairness?

 

[Prospector]

Re: Brisconnections shareholders - financial ruin

Should Macquarie shareholders wear the pain because ignorant mums and dads failed to do due dilligence? Doesn't this just create moral hazard? Let's just gamble on penny dreadfuls with outstanding contributions... If we win, we win big. If we lose, the underwriter will wear the bill.

Is this your idea of fairness?

This is more than a penny dreadful though. A penny dreadful goes bust you do your dough. You know your risk upfront.

Where else other than BCSCA can you sign up for a $2 million liability by spending just $500 and one click of a mouse. When you sign up for a mortgage you have to get signatures here there and everywhere and have them witnessed. There are processes that the lending company have to follow through on, for consumer protection. It is a requirement that the lender can 'prove' that THEY have done due diligence on your ability to service the loan. How could the financial regulators even think this scheme was ok?

 

[nomore4s]

Re: Brisconnections shareholders - financial ruin

This whole mess has been poorly handled on a number of fronts imo.

But what it highlights to me is the fact there are so many people out there who are willing to bet on a stock for no good reason besides it is 0.001c. Is it any wonder scam artist continue to search the net for new victims.

 

[thermalmonster]

Re: Brisconnections shareholders - financial ruin

If Mr B gets all his share transactions reversed because buying them or being gifted them will make him bankrupt
Then I think I will apply the same logik and get my transaction reversed off COMSEC.

Even now you can still by shares enough to Bankrupt a 3rd world country let alone a mum & dad investor!!

And Why Trevor Rowe has Still got a Job is beyond me....

If you were a share holder that was actualy aware of the 3rd installment you would be calling for his head with a 6 month share price of 0.001

Yet the guy still has his fat cat salary a .... but doesnt seem to want to collect his shares yet...??? why is that Trev???

 

[Macquack]

Re: Brisconnections shareholders - financial ruin

Yet the guy still has his fat cat salary a .... but doesnt seem to want to collect his shares yet...??? why is that Trev???

Trev might argue that he is not worthy of the shares (based on BCSCA's share price performance).

Or he has not yet decided who to donate them to.

 

[thermalmonster]

Re: Brisconnections shareholders - financial ruin

Yes he is probably waiting to see what happens with Mr B before he signs his off market transfer.
If he were made have them now, perhaps he too would be voting to have the company wound up.....

He must be the only Chairman in the world not to own shares in his own company...

Im sure someone on the forum will proove me wrong though

 

[Julia]

Re: Brisconnections shareholders - financial ruin

But what it highlights to me is the fact there are so many people out there who are willing to bet on a stock for no good reason besides it is 0.001c. Is it any wonder scam artist continue to search the net for new victims.

Yes, I've also had this thought many times when reading this thread.
Just can't get that anyone would not take a quick look at the chart and see how the price has fallen through the floor so quickly and then start asking some more questions before buying.

 

[investedz]

Re: Brisconnections shareholders - financial ruin

They definitely don’t need bricks and mortar, just enough cash to meet the margins. Strangely enough they let traders carry out buy/write on level 2.

I thought you being ex optionsexpress they would have given priority treatment.

They gave free brokerage for the first month as a new member. Other than that, was treated the same as any other customer.

Where else other than BCSCA can you sign up for a $2 million liability by spending just $500 and one click of a mouse.

That could be rephrased to:
"Where else other than BCSCA can you sign up for a $2,000,500 liability with one click on a mouse."

Yes, I've also had this thought many times when reading this thread.
Just can't get that anyone would not take a quick look at the chart and see how the price has fallen through the floor so quickly and then start asking some more questions before buying.

It is sad, but it happens. This is where statistics comes to play, where in these times of volatility, a share that is ridiculously low multiplied by the number of opportunistic people multiplied by the % of those people who are inexperienced will click on that buy button.

It's like having a manhole open on the side walk without any barriers in a busy street. The people with clear heads who watched where they were walking can easily walk around it.

As for the busy people distracted by the share prices on their mobile phones...