Australian (ASX) Stock Market Forum

Opes Prime Bankruptcy

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Aussiejeff said:
ANZ Banking is still technically in breach of the Corporations Act in Australia, after failing to lodge significant shareholder notices. It is by its own admission the new owner of $A650m worth of scrip that debtor Opes Prime had held as collateral for margin loans to the failed stockbroker's clients.
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So who was the significant holder of all these shares before Opes collapsed?
Was it Opes or the individual investors or was it ANZ from the moment the shares came under the agreement with Opes (i.e. once the clients had opended their accounts with Opes)?
 
rub92me said:
So who was the significant holder of all these shares before Opes collapsed?
Was it Opes or the individual investors or was it ANZ from the moment the shares came under the agreement with Opes (i.e. once the clients had opended their accounts with Opes)?
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So, if it was ANZ, then I would suggest that their technical breach is very significant. And, they can't have it both ways. Claim the shares when it suits them but not declare them in the beginning! ANZ could be in serious trouble here. I go back to my point about the market being transparent. It looks to me like there might be a case for ASIC having a full on stoush with ANZ over this one.
 
a little off topic

Can this same thing happen if you have a mortgage through a broker? Afterall you do not hold title so what is the security a mortage broker has with the bank that funds it?
 
I think I would prefer to be ANZ than the sophisticated investors who had these shares geared via Opes Prime.

Possession is 9 tenths of the law.

ANZ will attempt to sell these shares down. If they succeed many of the people who thought they owned them will go bankrupt or close to it.

ANZ will have deeper pockets to defend any cases brought against it, plus the 600 or 700 mill from selling the shares.

gg
 
dregen said:
marklar,
you misunderstand what has happened here. this was no "investment vehicle" offering massive returns or such. clients signed with opes to trade "their" shares using margin loans as you would with any other broker like commsec or etrade. the only difference was the fine print which basically gave ANZ "ownership" of the shares. no big deal as when you buy a house, the bank owns the house regardless of what equity you have in it.

what wasn't disclosed to investors (in the fine print) was that the shares would be borrowed against by Opes to themsleves trade with. this is why the house of cards has collapsed with the bear market. the shares were effectively leveraged twice over in some cases.

anz now see fit to sell shares across all accounts even though a majority of these accounts were never in margin calls.

this wasn't a case of people "not reading the fine print" nor going into some dodgy investment vehicle. this was a case of some dodgy directors proping up some big clients accounts using equity associated with other client accounts.

dr
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Well explained dregen.

People should check out the application form from the Trader Dealer website ... obtaining a Margin Loan is just one of the options to tick ... with a bit of extra detail !!! ... not unlike you would probably do with Comsec and Etrade!

And refer to today's article on the resurrection of the Trader Dealer platform in http://www.investordaily.com.au/cps/rde/xchg/id/style/4153.htm?rdeCOQ=SID-3F579BCE-C1DA83D8

Online stockbroker Trader Dealer has been saved from embattled parent company Opes Prime, which is in receivership.

MDS Financial Group and Box Red will buy Trader Dealer's business assets, including operating systems and client base.

The deal was viable because most clients had accounts and stock held by Berndale Securities and cash management accounts held by Macquarie and Adelaide Bank.

The "lucky" clients of Trader Dealer not having margin loans will be able to re-commence trading early next week (from MDS correspondence).
 
This story is Gekko esque.

A sign of the times, and might possibly make it into the next movie.

Opes unravels
Leonie Wood
April 5, 2008

THE bizarre billion-dollar unravelling of Opes Prime has taken a dramatic twist. It appears the onus for a $146 million margin call against shares owned by high-profile Sydney criminal defence barrister Chris Murphy was shifted from Mr Murphy to an Opes Prime subsidiary just days before the stockbroking firm collapsed.

One week after Opes' shock collapse rocked the market, destroyed the fortunes of its clients, and triggered a $1 billion share-sale program by Opes' secured lenders, ANZ, Merrill Lynch and Dresdner Kleinwort, an affidavit released by the Federal Court has provided the first detailed insights into the desperate weeks and days before receivers took charge.
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The rest of the article is worth reading.

My commiserations to those unwittingly caught up in this ordeal.
 
Aussiejeff said:
Ahhh.. of course. But then I thought the Swannie, the New Boy On The Block - was going to be more in tune with the common man. More pro-active. More touchy-feely. More prone to calm the worrying battler and "sophisticated investor" alike?

We can rest assured he is watching over the shoulder of the schoolyard bullies (banks) as they carve up the weak (us) in the continuing brawl ... and will step in when He thinks the time is right.

Oh well. Back to the dream....

*
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Good heavens! Am I a prophet now? LOL...

--------------------------------------

"Market reforms on way, says Rudd

Michelle Grattan, London

April 5, 2008

EXTENSIVE reforms to give greater protection for Australia's 7.3 million "mum and dad" shareholders and make Australia's financial market more attractive to international investors will be introduced, Prime Minister Kevin Rudd has announced.

He said the measures, which would improve the transparency of Australia's financial markets, were part of the Government's push to make the country a "key global financial centre".

The Government will have Treasury review current disclosure requirements for equity derivatives and introduce laws to strengthen disclosure regulations covering short-selling of stocks.

Derivatives are traded securities such as futures and options that are priced according to the value of an underlying asset such as a company share.

Holders of equity derivatives have rights over shares owned by other people - which means a speculator or hedge fund can get control of a large portion of a company's stock without actually owning the stock.

When investors "short-sell", they are betting on the value of the stock falling. Small investors can be caught up in market moves set off by short-selling and suffer severe reductions in the value of their share portfolios.

Fulfilling an election promise, the Government would also halve the withholding tax on distributions from Australian managed funds to investors who are not residents, Mr Rudd said.

As well, there would be increased Australian participation in multilateral efforts to improve financial market stability.

Financial market transparency and protection have been a theme of Mr Rudd's talks abroad - against the background of the current international financial market crisis.

Mr Rudd said that with 46% of adults owning shares directly or through managed funds, Australia had one of the highest rates of share ownership in the world.

Mr Rudd, who gave a major economic speech immediately on arriving in London from Bucharest last night, said the Government would work with the world's principal financial regulators to identify reforms to make Australian markets more transparent.

"In a time of global financial market volatility, Australian shareholders expect their Government to act to provide more transparent financial markets to help protect their hard-earned investments," he said.

Withhold ing tax will be reduced from 30% to 15% on certain distributions that Australian managed funds make to non-resident investors.

Mr Rudd said that as markets became more global and assets were traded more quickly between nations, regulation and supervision had to become more internationally uniform.

Treasurer Wayne Swan would be working with other countries at next week's International Monetary Fund meetings in Washington to consider measures to deal with the instability in global financial markets.

---------------------------------

In a perverse way, I wonder whether disclosure of banks and financial insto's ACTUAL derivatives positions might have the inadvertent effect of spooking the markets even further, if those positions are seen to be "at real risk".

Hmmm.... interesting months ahead.
 
Roll up, roll up!! Who's gonna be the next "well known" casualty on the list?

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"Track legend faces $20m Opes loss

By Kevin Andrusiak

April 05, 2008 02:58am

OLYMPIC hero Herb Elliott faces the loss of half of his $40 million fortune, becoming the highest-profile casualty of the Opes Prime collapse.

The Weekend Australian understands Mr Elliott has lost control of about half of his 5.5million shares in would-be iron ore producer Fortescue Metals Group, founded by Australia's richest man, Andrew Forrest.

The shares, worth about $20 million, are now in the hands of the banks behind stockbroker Opes. The banks are liquidating a $1.3 billion portfolio of about 600 stocks to recover their loans to Opes.

Mr Elliott, the former Olympian who is now chairman of Fortescue, could not be contacted for comment yesterday but it is believed he offered the shares to Opes as collateral for a loan he used to exercise options over Fortescue stock.

Fellow Fortescue board member and chief operating officer Graeme Rowley has also been caught up in the Opes collapse.

However, Mr Rowley faces the prospect of losing a much smaller portion of his stake in the company. He is understood to have used 720,000 Fortescue shares - worth $5million - as collateral for a loan with Opes.

Opes went into receivership on Thursday last week amid allegations of financial irregularities, with ANZ and investment bank Merrill Lynch taking control of shares Opes clients had bought with margin loans offered by the firm. ANZ and Merrill are selling the stock to recoup their combined $1billion-plus loan to Opes, the first Australian broker to collapse in more than a decade.

Mr Rowley and Mr Elliott have been left in the dark as to whether the shares have already been sold, but are believed to be prepared to use any avenue to get them back.

The Weekend Australian also understands Mr Forrest has no exposure to Opes through his personal stake of 1billion shares in Fortescue, worth $7billion.

Sydney lawyer-turned-investor Chris Murphy has reportedly lost most of his $140million share fortune in the Opes collapse.

It is a cruel blow for Mr Rowley and Mr Elliott, who have been at the forefront of building Fortescue into a $20billion mining house, which is on the verge of breaking the iron ore duopoly in the West Australian Pilbara held by BHP Billiton and Rio Tinto.

The company is weeks away from delivering its first iron ore shipment to Chinese customers.

But their exposure also confirms that very few in the mining industry are not in some way connected to the Opes collapse.

There are fears the sellers of the shares seized by ANZ have targeted rival mining companies to sell the stock.

Melbourne-based Copper Strike said attempts to contact ANZ and the receiver of Opes, Deloitte, to find out how many of its shares were potentially up for sale have been unsuccessful. "We have been advised to submit our request by email, which we have done several times, and this has bounced," company director David Ogg said."

-----------------------------------

So, ASIC - stand up and be counted you toothless bunch of wunderkinds. ANZ and Deloitte should be stomped on from a great height for consciously keeping information about these shares secret from those companies affected... obviously, they have something worthwhile (or very worrying) to hide.


AJ
 
Bill M said:
Some terrible, painful stories there and it needs to get sorted out by the regulators. People losing their life savings through no fault of their own, it is just so pathetic that we don't have laws and systems to protect these people. Where are the regulators and what are they doing about it?
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Before I have to buy a new box of tissues please remember that the persons who lost out in Opes were by and large not "mum and dad" investors, rather they were high worth individuals who had become high wealth by investing in a bull market.

Just as their wealth went up, so it has come down.

Are there any ASF posters who were clients of Opes, and if so were they "margined" or whatever Opes called their gearing model?

gg
 
"All your share are belong to us" - ANZ spokesperson.
 
Spaghetti said:
a little off topic

Can this same thing happen if you have a mortgage through a broker? Afterall you do not hold title so what is the security a mortage broker has with the bank that funds it?
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Mortgage brokers don't offer loans, the mortgage manager is providing the funding, brokers organise your application for you after consulting which loan isbest for you/pays them the best commission. Your name is still on the title, the manager has a mortgage stamped on your certificate of title. In practice, if a lender defaults they will sell their loan book to a new lender so there will be little practical difference in you loan arrangement.

The Opes Prime arrangement was a little different in that what were "your" shares were no longer in your name once held as security, which basically meant the lender had first right to security in the event of default.
 
Garpal Gumnut said:
This poor bastard sounds as if he is just an ordinary punter/investor.

http://www.news.com.au/heraldsun/story/0,21985,23486620-661,00.html

gg
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The ban is of little comfort to Mr Regenspurger, whose situation was revealed in a letter to stockbroker Marcus Padley.

"I had spent the last two hours rocking my crying wife to sleep," reads the letter.
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Felt ill reading about it this morning. The poor guy has to start all over again through no fault of his own.
 
Brian Toohey in AFR posed the question....How can private investors claim for the interest on their margin loans thru their income tax.....when the shares are ,it seems,owned by the ANZ bank?
 
robert toms said:
Brian Toohey in AFR posed the question....How can private investors claim for the interest on their margin loans thru their income tax.....when the shares are ,it seems,owned by the ANZ bank?
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no diif than claiming interest cost on an investment property when mortgaged through ANZ.
 
robert toms said:
Brian Toohey in AFR posed the question....How can private investors claim for the interest on their margin loans thru their income tax.....when the shares are ,it seems,owned by the ANZ bank?
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I see why a beneficial owner can claim interest paid on a mortgage against a property for eg. However the loan these clients had was not a secured loan against a security. So it would be more like someone claiming interest payments from a non margin loan for share purchases...personal loan or equity loan for eg. I guess if you can prove the loan was for this investment, even though not secured, then you can claim deductions. Who got the dividends? Whoever gets the income can claim related expenes. The CGT is the one I cannot understand...at all. Seems beneficial ownership can change by the day so would be logical for the legal owner to be liable for CGT. Doesn;t seem the case though.

Just do not understand why the ANZ bank lent money to a mob with no assets at all. ANZ bank owned the stock it seems but had no control over what was bought or sold or who by. I would think a legal owner would be expected to have some input in disposal or purchase of assets.? Would want to know exactly it's worth during such volatile times at least. I guess much we do not know or maybe do not want to know because the deal sounds shonky. If Opes had gone broke in a less than spectactular fashion, just some bad luck or poor management then what did they have to lose? Nothing, totally nothing. They had nothing to lose.

I also wonder with a mortgage from non-bank lender if they have borrowed money against something other than my home? If my lender went broke they still owe money to the finance supplier so how will they get back their money? I do not have title.

I guess I just simply assumed that when someone borrowed vast amounts of money they had to put up security against that loan. All Opes had was a plan to try and rope people in for a fee so that Opes could put the clients assets up as security for their loan.??

I mean will the bank let me do that?
 

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