BCS - BrisConnections Unit Trusts

Re: Brisconnections shareholders - financial ruin

I dont think this is about buying very cheap shares at all. I would never have bought into Paladdin at 11c - that went to around $9.00; and all I ever thought I would lose was the initial investment. That is the thing; by buying this share you buy into debt; Telstra instalments were advertised hugely in all the media. There has been nothing in the media (prior to this debacle) about BCSCA in SA, and I presume most of Australia, making the buying of these shares such a unique situation that there should have been warnings splashed by online brokers all over the page! If they do these warnings when shares simply go ex-dividend even, why not when you are buying such massive debt. Makes no sense.

Re: Brisconnections shareholders - financial ruin

Prospector said:

I dont think this is about buying very cheap shares at all. I would never have bought into Paladdin at 11c - that went to around $9.00; and all I ever thought I would lose was the initial investment. That is the thing; by buying this share you buy into debt; Telstra instalments were advertised hugely in all the media. There has been nothing in the media (prior to this debacle) about BCSCA in SA, and I presume most of Australia, making the buying of these shares such a unique situation that there should have been warnings splashed by online brokers all over the page! If they do these warnings when shares simply go ex-dividend even, why not when you are buying such massive debt. Makes no sense.

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Prospector, that is not really what I was saying, the installment is a totally different issue.

All I meant is there have been a lot of people buying into this share because they have seen it's price, read a bit about the company/project thought it was worth a gamble as the price couldn't fall any further and put $500 or so on it. All I was commenting on was how many people have done this.

Re: Brisconnections shareholders - financial ruin

Junior said:

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

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People have been buying Multiplex Prime Property Fund (MAFCA) and getting a $200,000 liability for a $500 investment. That one hasn't fully blown up yet. There are still a few misguided buyers around.

Not quite in the same league, but some buyers of the Westpac Office trust (WOTCA) have got a liability close to twice their investment.

Re: Brisconnections shareholders - financial ruin

Prospector said:

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?

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So does negligence on the financial regulators part (assuming, that there is any, and I'm yet to be convinced), make it ethically okay to force the underwriter to pay for the mess, through legally questionable means?

Re: Brisconnections shareholders - financial ruin

Sunder said:

So does negligence on the financial regulators part (assuming, that there is any, and I'm yet to be convinced), make it ethically okay to force the underwriter to pay for the mess, through legally questionable means?

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Well, maybe it should have been part of the underwriters risk management strategy to ensure that the Buying process ensured that only 'qualified' people (ie people who can afford the liability attached to these shares) should have had access to purchase them. Maybe the underwriters should have stipulated in the agreement that these shares should never have been publically available; or if publically available, the purchasers should have had to jump through hoops before they could buy them.

If the underwriters had anticipated the risks better and planned for them, but didnt, then maybe it is their problem!

Re: Brisconnections shareholders - financial ruin

Sunder said:

So does negligence on the financial regulators part (assuming, that there is any, and I'm yet to be convinced), make it ethically okay to force the underwriter to pay for the mess, through legally questionable means?

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As it stands the underwriter won't have a choice. Most of these retail investors can probably only afford to pay <10% of the liability. The trust should be wound up and no one should have to pay. The road project should be terminated unless state or federal government wants to fund it.

Re: Brisconnections shareholders - financial ruin

Prospector said:

Well, maybe it should have been part of the underwriters risk management strategy to ensure that the Buying process ensured that only 'qualified' people (ie people who can afford the liability attached to these shares) should have had access to purchase them. Maybe the underwriters should have stipulated in the agreement that these shares should never have been publically available; or if publically available, the purchasers should have had to jump through hoops before they could buy them.

If the underwriters had anticipated the risks better and planned for them, but didnt, then maybe it is their problem!

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That still doesn't answer the question. The emphasis should have been through legally questionable means Of course the underwriter will end up paying, but in my book, two wrongs don't make a right. Does it in yours?

Re: Brisconnections shareholders - financial ruin

Sunder said:

That still doesn't answer the question. The emphasis should have been through legally questionable means Of course the underwriter will end up paying, but in my book, two wrongs don't make a right. Does it in yours?

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Are you talking about the recent developments (Bolton) or the situations that initiated the recent developments (the ease with which the shares were bought in the first place?)

A moot point anyway; the underwriters, in order to minimise their risk, should have ensured that only qualified people had access to buy these shares. Had they ensured that, then Bolton would never have been in the scene.

Hey Sunder, two wrongs dont make a right? Arent you the one who said previously that life is rarely fair?

Re: Brisconnections shareholders - financial ruin

Sunder said:

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?

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Were there actually any small investors that bought online with their eyes wide open – knowing the massive debt they were taking on? Not talking about any subsequent off market transfers here either.

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.

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Personally, I think education does matter when it comes to helping prevent people’s lives being potentially ruined with such unprecedented and extraordinary magnitude …

Should Macquarie shareholders wear the pain because ignorant mums and dads failed to do due dilligence?

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Wow, we can agree on something! Merriam-Webster’s Online Dictionary states ignorance is:
"1 a: destitute of knowledge or education <an ignorant society> ; also : lacking knowledge or comprehension of the thing specified <parents ignorant of modern mathematics> b: resulting from or showing lack of knowledge or intelligence <ignorant errors>2: UNAWARE, UNINFORMED"
http://www.merriam-webster.com/dictionary/ignorant

No, I’m not talking about who should pay. I’m talking more about who I think shouldn’t be allowed access to these sorts of shares in the first place. Weren’t the underwriters fully aware of the risks up front before putting their shareholders funds at risk? What if there had been better prevention/protection in place and these Mums and Dads didn't have access to them in the first place, wouldn’t the underwriters still own these shares and be fully liable anyway? There didn’t appear to be anyone else "in the know" wanting these shares – is that so?

Doesn't this just create moral hazard?

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Do you think it could be a potentially a bigger moral hazard if those who are financially better educated and “in the know” do nothing to help prevent uneducated people from falling into such a potentially disastrous situation?

Let's just gamble on penny dreadfuls with outstanding contributions...

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LOL Sunder, is your statement above (underline is mine) designed to stir? Do you really think they knew about the outstanding contributions to even have such a thought? And you clearly agree they were "ignorant" aka "uneducated". If they had been fully aware, we wouldn’t be having this discussion. This thread would probably not even exist.

If we win, we win big.

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For normal shares, a low share price means a secure stop loss. If it goes bust, the initial investment is lost. I would appear that they may have felt fairly safe with a secure stop and an otherwise reasonable risk to reward.

If we lose, the underwriter will wear the bill.

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You admit above these people were “ignorant” aka “uneducated”. So how could they possibly be thinking about the underwriters when they didn’t know (a) it was a contributing share, and (b) that underwriters even existed?

Is this your idea of fairness?

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My idea of fairness is to make it more difficult for unsuitably funded people to get their mouse hovering over these types of “impending doom” shares. I think some warning and perhaps some minimal required education before the point of sale would be fair, don’t you think? Prevention is usually better than cure. I have gone on about this for so long now, I thought my idea of fairness was pretty clear...

Re: Brisconnections shareholders - financial ruin

Sunder said:

That still doesn't answer the question. The emphasis should have been through legally questionable means Of course the underwriter will end up paying, but in my book, two wrongs don't make a right. Does it in yours?

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Agree that two wrongs don't make a right, but why take the little "ignorant" guys down for tiddlywinks?

So if there are two wrongs - where did the first "wrong" happen?

You seem to get a bit upset in some of your posts, Sunder. Other than holding shares, do you have some vested financial interest in this?

Re: Brisconnections shareholders - financial ruin

Courier Mail reports

Largest unitholder and BrisConnections to front court

http://www.news.com.au/couriermail/story/0,23739,25195570-3122,00.html
Kerrie Sinclair

March 16, 2009 11:00pm

TOLL-road company BrisConnections is taking its fight with its largest unitholder, Australian Style Investments, to the Supreme Court in Victoria.

Australian Style Investments, controlled by young Melbourne businessman Nicholas Bolton, has an 18.14 per cent stake in BrisConnections and wants it wound up on the view that would yield unitholders more value than keeping it going.

BrisConnections, in retaliation, is seeking a Victorian Supreme Court order to kill off Mr Bolton's Australian Style Investments.

BrisConnections also wants the court to declare invalid Mr Bolton's request for a unitholder vote to wind up the company which has a 45-year contract from the Queensland Government to fund, build and operate Brisbane's $4.8 billion Airport Link.

Mr Bolton and many retail investors bought up BrisConnections units late last year as its units plunged from a $1 July float price to just 0.1c, the lowest tradeable level possible on the Australian stock exchange.

Some investors say they were unaware the units were partly paid and that they would be legally required to pay two more instalments of $1 a unit.

Justice Ross Robson is to start taking evidence today in the BrisConnections counter action against Australian Style Investments.

BrisConnections and ASI are the only formally listed parties in the case but Macquarie Capital Partners and Deutsche Bank - BrisConnections' two underwriters - have been permitted representation.

Macquarie and Deutsche will have to help meet any shortfall from the next instalment due from unitholders on April 29.

As requested by Mr Bolton, BrisConnections has organised an April 9 shareholder meeting at its northern Brisbane headquarters to vote on a proposed wind-up. But BrisConnections said it would ask Justice Robson to rule that meeting should not proceed. Mr Bolton's wind-up proposal would have to be backed by unitholders controlling 75 per cent of votes.

BrisConnections says unitholders will be financially worse off if they wind up BrisCon. It says a wind-up would "in no way extinguish unitholders' obligation to pay the outstanding instalments".

Re: Brisconnections shareholders - financial ruin

Junior said:

The trust should be wound up and no one should have to pay. The road project should be terminated unless state or federal government wants to fund it.

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With respect, that's a simplistic and wholly unsuitable suggestion.
The project is apparently much needed in Brisbane, the work is well under way and going to time and budget. I don't see why the tax payers of either Qld or nationally should have to pick up the tab for this.

Re: Brisconnections shareholders - financial ruin

It certainly is well under way...they've demolished massive amounts of houses and shops to make way for this. If work stopped now there would be a massive uproar from pretty much everyone.

Re: Brisconnections shareholders - financial ruin

Julia said:

With respect, that's a simplistic and wholly unsuitable suggestion.
The project is apparently much needed in Brisbane, the work is well under way and going to time and budget. I don't see why the tax payers of either Qld or nationally should have to pick up the tab for this.

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Is it worth potentially bankrupting hundreds of individuals in order for it to proceed?

Re: Brisconnections shareholders - financial ruin

Junior said:

Is it worth potentially bankrupting hundreds of individuals in order for it to proceed?

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MacQuarie will have to pay up, it was their design, they got paid millions for the risk, they deserve no way out.

Re: bankrupting 100s of individuals, I am sure they could come to an arrangement with Macquarie to both their mutual benefit. If some are bankrupted, at least they went in themselves, better than Storm clients.

Re: Brisconnections shareholders - financial ruin

sails said:

Agree that two wrongs don't make a right, but why take the little "ignorant" guys down for tiddlywinks?

So if there are two wrongs - where did the first "wrong" happen?

You seem to get a bit upset in some of your posts, Sunder. Other than holding shares, do you have some vested financial interest in this?

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You're reading way too much into this. I don't hold BCSCA, MQG, or whatever the code is for Deutch Bank, and I don't get upset over this. I do use hyperbole and similies/metaphors a lot, which makes it colourful language.

Reading your responses above, I get the feeling you can't detect written change between sarcasm, hyperbole, hypotheticals, and things that I mean literally. Yes, some of my comments are leveraging off yours and do not reflect my views.

For example, you think that the first wrong was that retail investors COULD buy these shares. I don't believe there was a first wrong: I'm leveraging off your belief that a wrong has occured, and you believe this justifies commiting a second wrong to right it. I do this to point out the flaws in your logic, or ethics, or whatever it is.

Re: Brisconnections shareholders - financial ruin

Sunder said:

You're reading way too much into this. I don't hold BCSCA, MQG, or whatever the code is for Deutch Bank, and I don't get upset over this. I do use hyperbole and similies/metaphors a lot, which makes it colourful language.

Reading your responses above, I get the feeling you can't detect written change between sarcasm, hyperbole, hypotheticals, and things that I mean literally. Yes, some of my comments are leveraging off yours and do not reflect my views.

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Your posts are colourful???

For example, you think that the first wrong was that retail investors COULD buy these shares. I don't believe there was a first wrong: I'm leveraging off your belief that a wrong has occured, and you believe this justifies commiting a second wrong to right it. I do this to point out the flaws in your logic, or ethics, or whatever it is.

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LOL, it wasn't my post that you were replying to when you mentioned the two wrongs thing - I simply asked where you thought the first wrong had occoured...

Anyway, how about a little compassion then - basic Sunday school stuff?

Re: Brisconnections shareholders - financial ruin

sails said:

LOL, it wasn't my post that you were replying to when you mentioned the two wrongs thing

Anyway, how about a little compassion then - basic Sunday school stuff?

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Principle remains - You, with several other posters, believe a great wrong has been done by allowing retail investors to buy those shares. The reply was in reference to that.

Compassion to who?

1. The man facilitating fraud
2. The people acting fraudulently by taking up the offer
3. The Macquarie shareholders who are going to have to stump up?
4. The poor people who are doing the right thing by holding onto their shares (or listing them on the open market, trying to sell to genuine buyers), hoping they can work out something with Brisconnections?

Two of those deserve sympathy, but we're not talking about those are we? It seems most people are cheering on Robin Hood.

Re: Brisconnections shareholders - financial ruin

Sunder said:

trying to sell to genuine buyers

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:lol:

Don't you mean ignorant suckers.

Re: Brisconnections shareholders - financial ruin

Sunder said:

Principle remains - You, with several other posters, believe a great wrong has been done by allowing retail investors to buy those shares. The reply was in reference to that.

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I have previously been suggesting better prevention and education - not "a great wrong has been done"...

Compassion to who?

1. The man facilitating fraud
2. The people acting fraudulently by taking up the offer
3. The Macquarie shareholders who are going to have to stump up?
4. The poor people who are doing the right thing by holding onto their shares (or listing them on the open market, trying to sell to genuine buyers), hoping they can work out something with Brisconnections?

Two of those deserve sympathy, but we're not talking about those are we? It seems most people are cheering on Robin Hood.

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