*Help* $46,800 Application Fee?

[adam010289]

Hello,
I'm fairly new to share trading and it looks like I have made a big mistake that is going to cost me.

Can someone help me to understand the following. I don't understand what this application money is and how liable I am now. I can say I don't have enough money in my account to clear such a transaction. Will the purchase just dishonour tomorrow and go away with a small fee.

I have attached an extract of the confirmation I got this morning.

If anyone can help me understand this a bit, I will be very gratefull.

I'm using CommSec.

 

[CanOz]

Mate, I'm guessing you have subscribed to some kind of rights issue with the underlying Company. This may have happened automatically. How long have you owned the underlying?

CanOz

 

[Trembling Hand]

You should be able to sell them back to market. But you only have until close of trade tomorrow I think. Call Commsec immediately and talk to them.

Don't waste any time on here asking people when the broker will be able to tell exactly what has to be done.

EDIT: more info here,

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=NFK

and the attachment

 

[motorway]

Appear to be Rights to a new issue of shares ( company is raising money )

You have a Right .. I don't think an obligation to take up the rights ( APPLICATION MONEY )
But you have to pay the amount for the rights the .01 whatever cents x 65000


But you can re sell them
On the depth now there is a buyers for @ .02
So be quick and sell them for .02

I have not looked at the terms and conditions or the dates for this offering
So that is just generic overview as I undertand it

I would ring broker and see about selling them
The bids at .02 are being FILLED

RING IMMEDIATELY NOW


The above in this instance could be incorrect




Motorway

 

[skyQuake]

Looks like you made a bit of a profit if you sell at 2c.

NFK rights issue, you bought the 'Rights' which give u the right not obligation to purchase NFK shares at 72c (thus 65000 * $0.72 = $46,800 if you take up all your rights) Its pretty much an option.

Just dump the rights on market. At worst it'll expire worthless; and you lose your original investment.
Hopefully you will have learned not to buy the cheastest thing you can lay your hands on (See BCS)

 

[adam010289]

Thanks alot for all the replies so fast.

I just got off the phone with the bank and they explained the rights to me. I obviously decided not to exercise those rights and they stated they will reverse it for me.

Once again, thanks. I'm sorry I had to meet you all on bad circumstances.

I have learnt three things today:
- You guys know alot
- Don't touch anything with more than 3 letters
- Ring the broker if in doubt

 

[Julia]

I have learnt three things today:
- You guys know alot
- Don't touch anything with more than 3 letters
- Ring the broker if in doubt

Adam, your lesson learned to 'not touch anything with more than 3 letters' reminded me of one of the most fascinating (though not for the investors) sagas in recent years where investors did just that, buying at, I think, .001cent.

Here is the thread:
https://www.aussiestockforums.com/forums/showthread.php?t=13547&highlight=Brisconnections

It would make quite a movie!

I'm glad your lesson in this instance has been pretty painless.

 

[skyQuake]

I obviously decided not to exercise those rights and they stated they will reverse it for me.

So commsec is reversing your transaction? (and brokerage!)

Or did you manage to sell out.

Just curious as to never hearing about commsec reversing trades.

 

[swm79]

they'd be keen to reverse it, then sell on market and take his profit AND two charges of brokerage

 

[Trembling Hand]

Just curious as to never hearing about commsec reversing trades.

Unless they can profit from it

But yeah surely you mean close rather than reverse?

 

[vincent191]

I don't think Adam is too concerned about Commsec making double brokerage or making a profit re-selling those options. His is relieved just to get the monkey off his back.

I wonder how many others are in the same situation, buying those options without reading the prospectus.

 

[gooner]

These are still trading until tomorrow with money not due until Friday next week. Once you buy the rights you can trade them, exercise them or let them lapse.

Can only assume you exercised the rights, perhaps by hitting the apply button on Comsec?

Otherwise, Comsec had no right to take the application money off you. Mind you, that is one way for Comsec to avoid being stuck with the stock as underwriter..........

 

[adobee]

at least there is buyers around for this one.. maybe even at a profit of $400

how or why did you decide to purchase this ?

 

[adam010289]

Thought I would update all of you. The application money has been reversed and I have sold the lot.

I did make a profit in the end but the fast few hours have been very stressfull. I learnt so much today and appreciate all the advice. It took an extra call to CommSec as they weren't showing up in my portfolio but it worked out.

Hopefully this thread will give someone else help one day.