BCS - BrisConnections Unit Trusts

[rocket12]

Re: Brisconnections shareholders - financial ruin

I didn't buy BCSCA through the Fin Review. I doubt you did either.

I have a feeling there are more people investing in the market than you and I...

 

[prawn_86]

Re: Brisconnections shareholders - financial ruin

While i can see both sides of the story on this my question is:

Why would anyone buy a stock (contributing or not) that is .001 with a heap of sellers in the queue already....

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

While i can see both sides of the story on this my question is:

Why would anyone buy a stock (contributing or not) that is .001 with a heap of sellers in the queue already....

I bought them at .001 but lots of people bought them at .002, .003 etc.

Speaking for myself I had no problems punting on this one, obviously thinking it was a fully paid share perfectly aware that I may very well lose my 2k investment. I jumped back into the market early november mainly on blue chippers but a small percentage of my money was put on a spread of penny dreadfuls. Again it was just a small amount of money that I didn't care if I lost. Not everyones cup of tea but I was cool with it.

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Brisconnections spreading Christmas cheer with a letter to shareholders: link

Basically it says "pay up by April 16 or we'll come and get you, and there is no way out other than to sell your shares".

Doesn't mention off-market transfers at all.

 

[Enzyme]

Re: Brisconnections shareholders - financial ruin

Hey Rocket,

Do you know what you are going to do yet?

What does your accountant say? Can you set up a company and transfer the shares into it and then let it fold when the debt collectors come knocking?

 

[awg]

Re: Brisconnections shareholders - financial ruin

interesting solution options posted, re Off-market tx.

1) SMSF...would fall foul of "Sole purpose test".

2) set up company...would this possibly breach various Corporate regulations designed to stop people getting out of debts, acting in good faith etc?

3) transfer to "Streetperson"...whilst morally questionable, funnily enough, I think that may be legally the safest option...if you could find a broken down sick old alcoholic, I feel sure they would welcome a couple thousand$ to do the deed, there would be virtually no chance that the transaction could be reversed. Especially if they signed a stat dec, and were aware Macquarie would pursue the debt later!

all discussion strictly theoretical...not advice...me asking some questions

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

Hey Rocket,

Do you know what you are going to do yet?

What does your accountant say? Can you set up a company and transfer the shares into it and then let it fold when the debt collectors come knocking?

I dont have any assets or money so I am OK. whilst I would love to give them $4 million when they pop over all I will be able to offer them is my shares back a cup off coffee and a chat...

I did talk to some lawers though and seems the best course of action is for as many of the investors to get together and have a joint action. Slater and Gordon arent doing anything along these lines...

 

[Sunder]

Re: Brisconnections shareholders - financial ruin

I have a feeling there are more people investing in the market than you and I...

I can gaurantee you that exactly 0 people bought through Fin Review then? As far as I know, they don't broker shares.

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

I can gaurantee you that exactly 0 people bought through Fin Review then? As far as I know, they don't broker shares.

I thought you were banging on about people not doing enough research.

 

[thermalmonster]

Re: Brisconnections shareholders - financial ruin

Hi
I bought a few shares $500 worth when they were 0.037, so thankfully my Liability with the two installments is $26,000 a drop in the ocean compared to some people.
However it may as well be $10,0000 because I dont have that kind of cash.
I have never invested in shares before. Its only because I work for Thiess who are involved in the project I thought I would chuck $500 at it.

I am so annoyed !!!

 

[cuttlefish]

Re: Brisconnections shareholders - financial ruin

Thermal - since you say you've never invested in share before I'm curious - did you buy the shares yourself through an online broker (e.g. comsec, etrade etc.) or did you use a broking service to buy them?

If you used an advisory broker then they should have warned you that you were taking on a liability, and if they didn't you might have recourse in that direction.

 

[rocket12]

Re: Brisconnections shareholders - financial ruin

Thermal - since you say you've never invested in share before I'm curious - did you buy the shares yourself through an online broker (e.g. comsec, etrade etc.) or did you use a broking service to buy them?

If you used an advisory broker then they should have warned you that you were taking on a liability, and if they didn't you might have recourse in that direction.

If he did go down the track your asking him about (your second senario) then he needs to get in touch with S & G, they are taking care of people who went down that road.

 

[cuttlefish]

Re: Brisconnections shareholders - financial ruin

Doing some research into a gold mining spec - I noticed they at one stage they had contributing shares (CA) and when the calls weren't paid on these the shares were simply forfeited and then auctioned as fully paid shares via public auction.

So these shares behaved a lot like an option (which was always my understanding of this class of shares which is why I can see how easily people fell into this hole).

Doing some reading I found that one of the features of NL companies ("No Liability") was that investors that held contributing shares were not obliged to pay the amount when called and the only penalty for non-payment was forteiture of the stock. The company I was researching was an NL company.

As I understand it the NL category for companies has been made obsolete and new companies formed today are all LTD (Limited liability), but there are still a few spec mining companies formed from before the removal of this class that are still trading and active today.

I found this interesting because it shows that there were a lot of CA class shares issued by NL companies where the calls, when made, weren't a mandatory payment. Its possible there were investors out there, unaware of the difference between NL and LTD companies, that may have assumed the same applied to the BCSCA class shares.

 

[lesm]

Re: Brisconnections shareholders - financial ruin

If he did go down the track your asking him about (your second senario) then he needs to get in touch with S & G, they are taking care of people who went down that road.

Interesting...looks like S&G are taking on the easier of two potential case scenarios.

Sunder,

I think that you will find that one of the points rocket12 has been trying to highlight was that the online brokers should have made it more explict that $2.00 still remained unpaid, so that it was clearer to buyers that there was an outstanding amount still remaining to be paid.
-------------------------------------------------------------------------

An interesting aspect of this situation is that except for the IPO and the intial share offering to institutional and retail investors all subsequent transactions have been between buyers and sellers via online or full service brokers and not by BSC or its underwriters. Where the sellers have effectively transferred their rights, obligations and liabilities to the buyers.

Neither BSC itself or its underwriters have been a party to these transactions. If people understand the above paragraph then whose obligation do people consider it should be to advise the buyers of the inherent liability. Put the research and 'caveat emptor' questions aside for the moment.

The brokers are effectively an intermediary bringing two parties together together to effect a transaction. Consider the above in the context of an online (no frills) broker as opposed to a full service (advisory) broker.

 

[Gundini]

Re: Brisconnections shareholders - financial ruin

interesting solution options posted, re Off-market tx.

3) transfer to "Streetperson"...whilst morally questionable, funnily enough, I think that may be legally the safest option...if you could find a broken down sick old alcoholic, I feel sure they would welcome a couple thousand$ to do the deed, there would be virtually no chance that the transaction could be reversed. Especially if they signed a stat dec, and were aware Macquarie would pursue the debt later!

all discussion strictly theoretical...not advice...me asking some questions

This is a good suggestion, I would look further into this one.

 

[Sunder]

Re: Brisconnections shareholders - financial ruin

Interesting...looks like S&G are taking on the easier of two potential case scenarios.

Sunder,

I think that you will find that one of the points rocket12 has been trying to highlight was that the online brokers should have made it more explict that $2.00 still remained unpaid, so that it was clearer to buyers that there was an outstanding amount still remaining to be paid.

I understand Rocket's point, I simply don't agree. This is not a single party transaction, such as a speeding fine, where a judge can easily say "Honest mistake, we'll let you off." This is a two party transaction where someone else loses money, if the person who made a mistake - as honest as it has been, is not held to their obligation.

Everyone is saying try to be sympathetic to these buyers. And they probably do deserve some sympathy. But why does nobody feel sympathetic to the people who are hurt if these guys default on their obligations?

I remember during the Thailand riots, there were a whole lot of Australians, who said they were not going to pay their extended hotel bill, since "none of this is our fault". That's "fair enough" from their point of view, but it's not the fault of the hotel either, and they have real costs. Is it fair that they should wear the hotel bill?

Likewise, Macquarie did this one by the book, even if they did charge an exorbitant fee to do it. The brokers did it by the book as well, even if they system "failed" the buyers.

When "nobody" is at fault, sometimes liability just has to lay where it falls. With the final mistake maker.

 

[Struzball]

Re: Brisconnections shareholders - financial ruin

Why doesn't K Rudd buy all the shares?

How much money are we looking at for the entire lot x $1?

 

[sails]

Re: Brisconnections shareholders - financial ruin

I can see both sides of the argument here and understand that when one makes a mistake one has to accept the consequenses. But surely this is really over the top.

I don't understand why the issuers don't create a market for these people to sell - because if they had known this liability existed they wouldn't never have purchased in the first place. So bcsca, Macquarie and whoever else would not be any worse off. Instead they are going to throw more money after bad with debt collectors to try and collect from people who can least afford it - probably destroy the lives and families in the process and run the risk of not even getting their debt collection fees returned. It doesn't make sense.

Even with instalment warrants which are similar in so far as there is more money to be paid at some time in the future. If that warrant becomes deeply out of the money (explanation : the warrant strike price becomes far above where the share price is trading) and the next instalment is almost due, it appears that the issuers make a market for at least at one tenth of a cent to allow the purchaser to close the position and subsequently dispose of the liability.

So surely it would be better for the underwriters to make a market for these people who have been caught to sell for the minimum price OR allow them to be transferred back to them at no extra cost. I'm sure most of these hurting bcsca shareholders would be grateful if they only lose their initial investment and be relieved of any further mega liabilities that are totally out of their reach.

As it's been said before, one has to sign some serious documentation stating they fully understand the risks BEFORE being able to trade options or warrants online. You have to say you have read all the relevant ASX booklets, etc. And yet they allow this five letter share with far worse liability than one might lose on warrants, long options and option spreads. Many Oz brokers simply don't allow the selling of uncovered options due to the potential excessive risks.

While the bcsca liability isn't a threat to the broker as in the case of uncovered sold options, surely they still have some duty of care to not allow online trades especially when there are unsufficent funds in the trading account to finance the debt incurred as a result of that trade. In that case, perhaps a phone trade should be required so that the potential buyer can speak with a broker to ensure that their client has the necessary information. Or online brokers could add a warning sign stating that there may be further payments and to read and fully understand the relevant PDS before the purchase is committed.

Perhaps there needs to be more investor/trader training before being allowed to trade codes with more than three letters online as currently is the ASX insists on with options and warrants.

I sincerely hope there is a favourable outcome for those caught in this trap ..

My

 

[Prospector]

Re: Brisconnections shareholders - financial ruin

I can see both sides of the argument here and understand that when one makes a mistake one has to accept the consequenses. But surely this is really over the top. I sincerely hope there is a favourable outcome for those caught in this trap ..

My

Yes, you summed it up beautifully. The penalty for ignorance, and a small outlay (even as little as $2000) should never bring with it a 2 million $ penalty.

 

[thermalmonster]

Re: Brisconnections shareholders - financial ruin

I bought them through Comsec.

As soon as I found out about the 2 further installments I of course Listed them for sale, with the other investors.
I agree with Sail on this.
If there was a market for them we would all sell them

Surley any judge in his right mind will serve the correct justice in this matter.
Obviously if so many people have fell foul of this then proper documentation was not in place.
I also cant understand how you can enter a financial binding arrangement in excess of $1million dollas without signing a single document or having a credit check to see if you are worthy. Talk about Risky Lending!!!!! Isnt this why the Global Financial crisis is upon us??
I wouldnt be able to borrow 10 bucks from commonwealth bank witout at least signing somthing

The whole thing Stinks and its about time someone in the Government stepped up to this and sorted it out.