BCS - BrisConnections Unit Trusts

[JAB_Charity]

Remember MAFCA - the Multiplex Prime Property Fund - which this thread predicted would become the next Brisconnections?

...Nick Bolton has come in and brought 6% of MAFCA. He just brought $16 million shares for $17,000, and got a liability of over $6 million. link

Nick Bolton acquired more MAFCA:

http://www.asx.com.au/asxpdf/20090707/pdf/31jgf22b4qnztp.pdf

And then yet more:

http://www.asx.com.au/asxpdf/20090710/pdf/31jhyh24tcr3zw.pdf

Taking his holdings to 9.31%.


Enzyme and others -- what is Nicholas Bolton doing?


The similarities to BrisConnections are not obvious beyond the mere contributing (with-recourse) nature of the coming $0.40 instalment call, on-market trading at $0.001, and perhaps the fact that the holding companies of both units share a freakish family-resembance with respect to their preferred abbreviations:

• 
  BRISCONNECTIONS MANAGEMENT COMPANY LTD (“BCMCL”) (ACN 128 614 291)
  as responsible entity for the BrisConnections Investment Trust (ARSN 131 124 813) and the BrisConnections Holding Trust (ARSN 131 125 025)

• 
  Brookfield Multiplex Capital Management limited ("BMCML") as responsible entity for Multiplex Prime Property Fund (ASX Code: MAFCA)

In short, Nicholas Bolton is playing with his BCMCL and BMCML (alphabet) soup. Why would he do that? And will he make a mess?

Regards,
David

 

[cuttlefish]

I would have posted a comment in this thread but apparently it is impossible to make a useful post in less than one hundred characters (pronounced "ONE MILLION CHARACTERS" in Dr Evil style) so I won't bother.

I'd be curious to know what happened here though.

 

[cuttlefish]

Ok. I've been reading through the Storm thread. Apparently we should feel sympathy towards people that borrowed hundreds of thousands of dollars that they had no hope of ever paying back because they had no incomes. The reason we should feel sympathy is because the banks lent them this money in spite of the fact that they were incapable of ever paying it back, and if the banks were proper responsible corporate citizens they would never have given out such illogical loans.

Well as far as I can see, there is no difference between that situation and the BCS situation (in fact as far as I can tell the BCS situation is far more unscrupulous).

With BCS - people were effectively given a loan without even signing a form. They didn't have to prove any assets, show any income or even sign a loan application form. Yet many of the individuals that bought this stock incurred debts of not just a few hundred thousand dollars or even a million dollars but many millions of dollars - just through the simple act of hitting 'confirm' on a buy order for stock.

So if we can have a parliamentary inquiry into why banks lent hundreds of thousands to people who DID have to sign loan application documents, were required to provide income and asset details, and were certainly made aware of the amounts they were borrowing - why is there so little noise in relation to people being able to legally incur debts of multi-millions of dollars without even having to sign a form, show any assets or income statements?

And why is this thread so quiet - what happened to everybody - did they all manage of offload to JAB or Byrnes? I saw some poor contractor on TV the other day that had bought some BCS and was now facing the loss of everything - all for the sake of what they thought was a $500 'investment'.

Or is everything ok - did Macquarie agree to not pursue the debts and let the small investors off the hook?

 

[cuttlefish]

And also just a little side note - why was it that the chairman of the company (BCS) was also able to serve as a director of the ASX (the exchange the company BCS is listed on) and also was able to be chairman of the investment fund, QIC which was one of the major shareholders in BCS.

 

[cuttlefish]

So the ASX is regulated by ... well pretty much the ASX - its largely "self regulating" - i.e. the ASX is the regulator of companies that list on the ASX but the ASX is itself a company listed on the ASX. Well that apparently doesn't matter too much, because the chairman of BCS, another company that is listed on the ASX is also a director of the ASX.

Maybe the CBA chief could get a job as the head of ASIC and then the banks wouldn't have to worry about all these pesky Storm clients or anybody else for that matter.

 

[prawn_86]

I agree Cuttlefish, its a total rort, but once again the boys club will prevail and nothing will be done about it...

 

[JAB_Charity]

Hello Cuttlefish,

The Julie Anne Barrow Charitable Trust [JAB] ended up with 5,609,666 BCSCA units by way of donations by 22 July 2009.

Unitholders seemed quite desperate to get out of their BCSCA positions -- it was like the fall of Saigon on that last day of transfer.

We received no management fee or transfer fee for these donations, as that would be improper in our view.

We also did not then meet the 29 April 2009 $1 call on any of the units.


On 9 June 2009 BrisCon served us with a Statutory Demands to pay $5.6m.

We are contesting this in the Federal Court (matter VID486/2009) by way of an application to set aside the Statutory Demands.

The hearing on the substantive issue is set down for 14 Sep 2009 in the Victorian Federal Court.

I have leave of the court to carrying on proceedings as a non-solicitor for the charitable corporation [an unusual situation] until 8 Sep 2009 -- at which time Justice Finkelstein will hear my application for leave to continue carrying on proceedings as a non-solicitor representing a corporation in the Federal Court under Order 4 rule 14 of the Federal Court Rules.

This is a Test case of access to justice for an individual to represent a corporation in a superior court of Australia.

Regards,
David

 

[JAB_Charity]

On the matter of the Test case of an individual to represent a corporation in a superior court of Australia in relation to BrisCon I am reviewing the following authorities [listed by date] for an outline of submission to be filed on or before 1 Sep 2009:


Julie Anne Barrow Charitable Trust (ABN 91 975 681 079) v BrisConnections Management Company Ltd (ACN 128 614 291) (2009) 71 ACSR 288

Garage Wholesalers Pty Ltd v Engineering Software Solutions Pty Ltd [2009] FCA 361

Sharples v Australian Electoral Commission [2007] FCA 2102

Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949

Industrial Mutual Liability Pty Ltd & Ors v International Vineyards Pty Ltd (No 1) [2005] SASC 153

Re Hoffman (2004) 51 ACSR 314

Slack v Bottoms English Solicitors & Ors [2003] FCA 1337

State v Khan [2003] FJHC 55

Checked-Out Pty Ltd v Eagle Eye Inspections Pty Ltd [2002] FCA 1002

Pacific Air Freighters (QLD) Pty Ltd v Toller & Ors (2000) 171 ALR 519

Australian Communications Authority v Viper Communications Pty Ltd (ACN 067 892 308) [2000] FCA 982

The Proprietors – Units Plan No 95/38 & Ors v Jiniess Pty Ltd & Ors [2000] NTSC 1

Eastern Metropolitan Regional Council v Four Seasons Constructions Pty Ltd [2000] WASC 178

Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241

Floods of Queensferry Ltd, David Charles Flood v Shand Constructions Ltd & Ors (1994) ORB 826

ACT General Cleaning Co Pty Ltd v Naoum (1996) 67 FCR 361

VN International Video Pty Ltd v West End HK TVB Video & Ors (1996) 14 ACLC 1308

Grimwaide v Meagher & Ors [1995] 1 VR 446

Simto Resources Ltd v Normandy Capital Lit & Ors (1993) 10 ACSR 776

Arbuthnot Leasing International Ltd v Havelet Leasing Ltd (1991) 1 All ER 591

Adampolous v Trans Atlantic Freight Services Pty Ltd & Ors (1990) 2 ACSR 591

Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 11 ACLR 326

Peters v Australian Institute of Food Science & Technology Ltd (1986) 10 ACLR 547

Abse v Smith [1986] 1 All ER 350

Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68

Hubbard Associations of Scientologists International v Anderson and Just (No 2) [1972] VR 340

Alice Springs Abattoirs Pty Ltd v Northern Territory of Australia (1966) 111 NTR 9

Federated Engine-Drivers & Firemen's Association of Australasia v Broken Hill Pty Co Ltd [1913] HCA 71; (1913) 16 CLR 245

 

[cuttlefish]

Cheers for the update David. I'd say that the efforts of JAB Charity in taking donations of the units has probably helped many people out of an extremely scary and daunting situation - effectively being a life saver for many people I'm sure. The fact that this unusual solution was necessary to stop these people facing litigation and potential bankruptcy for simply purchasing a few hundred dollars of stock is to me a disgrace.

The unfortunate truth is that there are likely still a reasonable number of people that did not become aware of JAB Charity, or were unsure whether to trust taking that route, and thus continued to hold their units after the instalment date, and who are now in the situation of being pursued for all of their wealth and more. The number of people affected is likely relatively small - not enough to get a 'movement' going or for the community to stand up and take notice - yet these people would still be facing what seems to me to be a nightmare.

Good luck with your ongoing litigation efforts David.

 

[cuttlefish]

I also note that my first post in this series above may seem a bit flippant towards the affected Storm clients. While I'm sure some Storm clients were well aware of the risks they were taking and should have known better I have also read a lot of the submissions to the inquiry and it seems obvious that a lot of individuals trusted Storm to adequately manage their money, and that both Storm and the banks behaved very poorly and unethically in many of those situations.

 

[stocksontheblock]

Ok. I've been reading through the Storm thread. Apparently we should feel sympathy towards people that borrowed hundreds of thousands of dollars that they had no hope of ever paying back because they had no incomes. The reason we should feel sympathy is because the banks lent them this money in spite of the fact that they were incapable of ever paying it back, and if the banks were proper responsible corporate citizens they would never have given out such illogical loans.

Well as far as I can see, there is no difference between that situation and the BCS situation (in fact as far as I can tell the BCS situation is far more unscrupulous).

With BCS - people were effectively given a loan without even signing a form. They didn't have to prove any assets, show any income or even sign a loan application form. Yet many of the individuals that bought this stock incurred debts of not just a few hundred thousand dollars or even a million dollars but many millions of dollars - just through the simple act of hitting 'confirm' on a buy order for stock.

So if we can have a parliamentary inquiry into why banks lent hundreds of thousands to people who DID have to sign loan application documents, were required to provide income and asset details, and were certainly made aware of the amounts they were borrowing - why is there so little noise in relation to people being able to legally incur debts of multi-millions of dollars without even having to sign a form, show any assets or income statements?

And why is this thread so quiet - what happened to everybody - did they all manage of offload to JAB or Byrnes? I saw some poor contractor on TV the other day that had bought some BCS and was now facing the loss of everything - all for the sake of what they thought was a $500 'investment'.

Or is everything ok - did Macquarie agree to not pursue the debts and let the small investors off the hook?

There are sum 1800+ posts to this, and I can’t possibly read them all. However, I find the idea of not signing anything to authorise a transaction to be, well honest, somewhat pointless. If I recall you have in other posts on other threads suggested the market should be allowed to work, so how would it function if every transaction had to first be done with a signed piece of paper? You never be able to make a trade.

As for the poor bloke on the TV, I cant comment because I didn’t see it, or know him, yet I am sure he was like many millions of people who thought, wow I can own millions of these shares for only $500 and they just have to go from 0.001 to 0.002 and I double my money - how hard could it be????

I am all for paying taxes to put in place the Idiot Police, yet when do people start taking responsibility for their own actions?

I use commsec, and they ask about 4 times if I want to place the order, so its not like you accidently hit the button and ohhh sh*t I now own them.

Also the common sense part would suggest to me, that there is no one buying, yet everyone is selling, as I did look at them and there was 000's on the sell side for hundreds of millions of shares and no one on the buy. I would have thought that this would be a pretty dam good hint not to buy. Ohhh, and not to forget the daily headlines in almost all newspapers, and the business and finance shows on TV. Even the announcements from BCS said please be aware if you own these it is your responsibility to pay the next instalment.

I do not suggest for a min this has or was handled well, or that the 'funny business' and 'funny handshakes' did not band together to make this an unwinnable position for many, yet to have gotten into the problem in the first place you must have - or SHOULD have - at least read the fine print and been aware of your obligations.

 

[stocksontheblock]

And also just a little side note - why was it that the chairman of the company (BCS) was also able to serve as a director of the ASX (the exchange the company BCS is listed on) and also was able to be chairman of the investment fund, QIC which was one of the major shareholders in BCS.

Because its in Queensland?????? Apart from the ASX, yet who's looking!

(sorry have to put more words in to post the above, this should do it)

 

[prawn_86]

at least read the fine print and been aware of your obligations.

While i agree with your sentiment the whole point here is that ordinary people were able to take on mulit million dollar liabilities with just the click of the button and a few hundred dollars down.

If i went to the bank and said "Here's $500, can can i please have a mortage no questions asked?" what do you think their answer would be?

 

[cuttlefish]

There are sum 1800+ posts to this, and I can’t possibly read them all. However, I find the idea of not signing anything to authorise a transaction to be, well honest, somewhat pointless. If I recall you have in other posts on other threads suggested the market should be allowed to work, so how would it function if every transaction had to first be done with a signed piece of paper? You never be able to make a trade.

Well if you did bother to read the thread you'd see that the counter argument to your point has been presented ad infinitum so not much point going around in circles. The only way an investor would have known that the product incurred a mandatory liability is to have read the entire PDS in detail. The product also had a very different set of obligations attached to it when compared to other similarly named historical products (e.g. TLSCA and NL company contributing shares). Any other investment product that incurs a mandatory liability of this size has a signing page, requires witnessing and has a clearly spelt out description of the exact liability being incurred by the individual. That did not occur here either in print form or in electronic form.

Its not about the electronic nature of the transaction, its about the lack of clarity surrounding the attached liability. Its about why this product continued to be kept available when the price hit low levels, in spite of it being obvious that a minimum $500 parcel would be unaffordable to the vast majority of retail investors.

If it is necessary to go back and sift through the entire Prospectus/PDS for every stock you purchase to make sure there are no hidden time bomb liabilities attached to it because you can't trust the ASX to regulate the types of products it puts on offer in its market that will be far more hindering towards market efficiency and transparency than any requirement for a signature.

I'm not advocating that a signature be required, I'm advocating that the full and complete individual liability be spelt out as one of the steps in executing the transaction - which it wasn't.

 

[stocksontheblock]

I'm not advocating that a signature be required, I'm advocating that the full and complete individual liability be spelt out as one of the steps in executing the transaction - which it wasn't.

Well I'm not going to bother arguing about whether or not I should read the 1890 odd posts, as it’s irrelevant.

However, if a stock - which if you advocate should be removed, or place on a halt - not sure if you do mean something like this, yet I am assuming this is what you mean by a stock falling to such low levels (price), and therefore incurring such an enormous liability should you purchase them, should be available.

If the stock is to remain available, and it can be purchased via an electronic means yet a signature is not required then how can you regulate this sort of thing?

The only ways I can see are:

1. Halt the stock so it can’t be purchased, yet that would mean no one could get rid of it, if there were any buyers;
2. A signature would be time consuming and doesn’t guarantee that people understand it any more than by a click of the button online;
3. Hold the stock so that it becomes a manual buy and sell where a contract is signed, saying the liability is understood. Like a bank loan, yet who will pay for this?

Any other ways?

Once again it comes back to personal responsibility for me. Sites such as Commsec ask if you understand what you are doing. Do you confirm the prices? Etc. So by clicking the button it is taking that you have read anything available and purchase it with full knowledge.
As for the example of a bank by prawn_86, I agree, the bank will make you jump through hoops and ensure you can cover your liabilities with your revenue/income. However, as for the fine print they also assume you have gone away, discussed it, read it, and understood it. I guess there is an additional option, to ask the bank manager some more questions, yet isn’t that what financial planners etc are for? Sure they might not be any good, yet your bank might not be either.

I think what BSC has been allowed to get away with is disgusting and possibly verges on being illegal in some respects. However, while - as Cuttlefish said: So the ASX is regulated by ... well pretty much the ASX - its largely "self regulating" - i.e. the ASX is the regulator of companies that list on the ASX but the ASX is itself a company listed on the ASX. Well that apparently doesn't matter too much, because the chairman of BCS, another company that is listed on the ASX is also a director of the ASX.

Maybe the CBA chief could get a job as the head of ASIC and then the banks wouldn't have to worry about all these pesky Storm clients or anybody else for that matter.

I guess there will be no change if those breaking, bending, or just playing with the rules also regulate them.

 

[JAB_Charity]

Cheers for the update David. I'd say that the efforts of JAB Charity in taking donations of the units has probably helped many people out of an extremely scary and daunting situation - effectively being a life saver for many people I'm sure.

Thanks for your thoughts Cuttlefish, but in fairness to the truth we have to say that we were actually focused on the long-term value of the BCSCA investment rather than any indirect benefit to unitholders looking for an exit. This being a similar situation it seems for the value sought by Nicholas Bolton in his maneuvers (which indirectly helped many unitholders looking to exit) and also the actions of Jim Byrnes (again helping many unitholders).

I'm not sure about Jim Byrnes' past but his actions in BrisCon are at times noble, in my opinion. Some may even say that Jim Byrnes has the complexities of Macbeth, Hamlet, Othello, Iago, Darth Vadar... and others great characters that give the world a dramatic truth.

I'm also not sure of Nick Bolton's laissez-faire (jungle) future -- though I wish him all the best.

Regards,
David

 

[drsmith]

Dont forget Mr Bear. IIRC he bailed when Macquarie made it's offer to unitholders with less than 50000 units.

I'm also not sure of Nick Bolton's laissez-faire (jungle) future -- though I wish him all the best.

John William's cat has been sighted.

 

[drsmith]

On matters more serious I note that a few "quotation of additional securities" notices are dribbling in.

Is this late payers getting issued with BCSCB's ?

 

[cuttlefish]

Well I'm not going to bother arguing about whether or not I should read the 1890 odd posts, as it’s irrelevant.

However, if a stock - which if you advocate should be removed, or place on a halt - not sure if you do mean something like this, yet I am assuming this is what you mean by a stock falling to such low levels (price), and therefore incurring such an enormous liability should you purchase them, should be available.

If the stock is to remain available, and it can be purchased via an electronic means yet a signature is not required then how can you regulate this sort of thing?

The only ways I can see are:

1. Halt the stock so it can’t be purchased, yet that would mean no one could get rid of it, if there were any buyers;
2. A signature would be time consuming and doesn’t guarantee that people understand it any more than by a click of the button online;
3. Hold the stock so that it becomes a manual buy and sell where a contract is signed, saying the liability is understood. Like a bank loan, yet who will pay for this?

Any other ways?

There's plenty of other ways - this is not a new concept - one way would be to make the investor lodge margin against the future instalment payment - exactly as happens for other highly leveraged and high risk products like written options positions. This would immediately flag warning bells.

The other way is to simply implement a statement of the full liability being incurred at the time of purchase. Its not rocket science.

i.e. "click OK to confirm your order for 1,000,000 XYZCA at .1c total cost $1,000 with $1,000,000 additional instalment due and payable on 15th May 2022".

And if the asx and broker systems aren't equipped to handle issuing a statement like this at the time of purchase, then don't make products like this available to retail investors until such time that the systems are capable of it.

 

[stocksontheblock]

i.e. "click OK to confirm your order for 1,000,000 XYZCA at .1c total cost $1,000 with $1,000,000 additional instalment due and payable on 15th May 2022".

Hey, I have got to say I like this option!!! Maybe if people can see the flashing lights warning instead of the 'massive' potential for gains (from their Excel calculations) it might make this sort of 'loss' a little less common amongst novice (maybe not so novice) investors.

I might ask CommSec (where I do my day trading) why they don’t have something like this, and see what comes back.

I wont take credit for the idea , just see what their response is.