Australian (ASX) Stock Market Forum

Opes Prime Bankruptcy

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Mofra said:
Felt ill reading about it this morning. The poor guy has to start all over again through no fault of his own.
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Yes, it's tough on him and the other clients. But - and not at all getting at you or your comment here, Mofra - he still has a home and a job.

Do you also feel ill when you consider the hundreds of thousands of homeless people in our affluent society, many also through no fault of their own.
Our financial press doesn't bring their plight to the headlines
 
Julia said:
Yes, it's tough on him and the other clients. But - and not at all getting at you or your comment here, Mofra - he still has a home and a job.

Do you also feel ill when you consider the hundreds of thousands of homeless people in our affluent society, many also through no fault of their own.
Our financial press doesn't bring their plight to the headlines
Click to expand...
I agree Julia, but I also feel that some people have several options and potential, while others don't. In this sense, I feel even sorrier for the person on the street, and less for the investor/broker who supposedly has the options and potential. In this sense, they deserve everything they get. Personally, I have had a privileged life, and I deserve everything that falls in my path, both good and bad, that's within my control. Obviously there's some judgements to be made in that regard, but the general principles may be sound. Maybe I'm agreeing with you here?
 
kennas said:
I agree Julia, but I also feel that some people have several options and potential, while others don't. In this sense, I feel even sorrier for the person on the street, and less for the investor/broker who supposedly has the options and potential. In this sense, they deserve everything they get. Personally, I have had a privileged life, and I deserve everything that falls in my path, both good and bad, that's within my control. Obviously there's some judgements to be made in that regard, but the general principles may be sound. Maybe I'm agreeing with you here?
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I guess we could have a whole thread devoted to this subject, Kennas.
But yes, what I was getting at is that the person under discussion here still has those options you speak of, the capacity to work (and his wife also if I remember correctly), so - awful though their predicament is - rebuilding is possible. From what I know of the Opes mess, the situation re the shares was apparently laid out in the fine print. Pretty hard to complain if the information was there and you've just chosen not to read it.

I could - as an opposite picture - lay out dozens of scenarios where the people concerned are in devastatingly awful circumstances through no fault of their own, but that would be beyond the scope of this thread.
It, sadly, probably would also engender little interest.
 
The story is sad, but I don't think the fact that there are people in worse circumstances makes it any less sad. Suffering is all relative and I'm sure the marginal anguish felt by these people is quite painful.
 
Julia said:
I guess we could have a whole thread devoted to this subject, Kennas.
But yes, what I was getting at is that the person under discussion here still has those options you speak of, the capacity to work (and his wife also if I remember correctly), so - awful though their predicament is - rebuilding is possible. From what I know of the Opes mess, the situation re the shares was apparently laid out in the fine print. Pretty hard to complain if the information was there and you've just chosen not to read it.

I could - as an opposite picture - lay out dozens of scenarios where the people concerned are in devastatingly awful circumstances through no fault of their own, but that would be beyond the scope of this thread.
It, sadly, probably would also engender little interest.
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Yep, each situation would be different, but I believe quite a few people caught up in the Opes thingy have probably been trying to make short cuts to wealth. And, when you try to make short cuts (such as leverage beyond sound reason) and you get caught out, then take the pain!

I find it hard to believe that anyone in the market with a brain would have been extending margin loans over the past 1-2 years. I mean really! ASF has been predicting the end of the world for the past 18 months, at least!

It's a bit like us feeling sorry for Alan Bond, or that dude in QLD who spent his final days in Majorca while the plebs suffered....
 
Crikey!
Am I right in thinking that maybe the ANZ has been selling shares that they DO NOT LEGALLY OWN ?


What a Mess!

Salute and Gods' speed
 
I think you may be right captain,

i could think of nothing better than for anz to have to buy up all the stock that they sold and give it back to the people they took it off!!
 
Julia said:
Yes, it's tough on him and the other clients. But - and not at all getting at you or your comment here, Mofra - he still has a home and a job.

Do you also feel ill when you consider the hundreds of thousands of homeless people in our affluent society, many also through no fault of their own.
Our financial press doesn't bring their plight to the headlines
Click to expand...

a. Actually, he doesn't have a home - the money from the sale of his home is now lost according to the article
b. Yes, and I do donate time & money towards these problems
 
Mofra said:
a. Actually, he doesn't have a home - the money from the sale of his home is now lost according to the article
b. Yes, and I do donate time & money towards these problems
Click to expand...
My apologies: I've re-read the article and you are right, the proceeds from his house sale appear to constitute his investment with Opes.
Still, as an energy consultant, presumably his earning capacity is fairly good, and his wife can also work. I was just trying to differentiate between someone like this who does have the capacity to generate income and start again, and someone who - also through no fault of their own - does not.
In retrospect, I should have shut up.
 
Look carefully! There are a lot of shares badly affected by margin calls due to Opes Prime, an opportunity.
 
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
Click to expand...

That is a sad sorry, it goes to show that no matter how good things appear ('safe bluechips' anyone?), we must always follow strict risk management guidelines. Never underestimate the effect that poor financial management can have on your family and friends. At least he can recover from this as mentioned in the previous posts. It also pays to read the fine print in agreements and prepare for worst case scenarios.

On a side note, there must have been some who were lucky and did indeed move from Opes just before it collapsed.
 
Based on the attached list from ANZ of what they now hold through the Opes mess has anyone an opinion on what % holding will cause a large fall versus a small fall on sell off by ANZ to the respective entities concerned? Ie less than a 10% stake v > 40% holding in others?
 

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RichKid said:
...On a side note, there must have been some who were lucky and did indeed move from Opes just before it collapsed...
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With most of my options trading in Trader Dealer,it was very fortunate that I had decided to quit trading Oz options a few weeks before the OP collapse.

Although we had decided not to use the OP margin lending or short selling facilities when opening the account and certainly never signed those relevant documents, we are still unsure how we might have been affected with a reasonable quantity of open option positons with Trader Dealer.

Obviously, it would have been difficult with all trading frozen for so long and without applying necessary adjustments, it could have easily created losses.

Also, should we have been unlucky enough to have short options assigned just prior to the collapse (leaving us long or short shares) is another question as to how close might have come to disaster.
 
ANZ ANN today

ANZ: Opes Prime Disclosure
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00829974

The attached schedule identifies those listed companies in which the ANZ Group held shares comprising 5% or more of the total issued voting shares, and the ANZ's shareholding in those companies, in each case as at end of trading on 4 April 2008 and as a result of transactions entered into pursuant to the Opes Prime AMSLAs. The details shown include On-sold Shares.

ANZ has commenced a disposal programme (Disposal Programme) with respect to shares in which it has an interest under the Opes Prime AMSLAs.

Company-----------------Code-ANZ Share-Tot Issued--% of Issued
ACRUX LIMITED-ORDINARY ACR 14,549,015 159,299,216 9.133%
ADELAIDE RESOUR-ORD SHS ADN 4,320,259 83,156,035 5.195%
ADMIRALTY RESOUORDINARY ADY 222,220,756 984,299,202 22.577%
AEQUS CAPITAL-ORD SHS AQE 4,021,272 36,115,976 11.134%
AINSWORTH GAMEORDINARY AGI 20,214,436 278,942,304 7.247%
ALCHEMY RES LTD-ORD SHS ALY 1,239,757 21,680,000 5.718%
ANSEARCH LTD - ORDINARY ANH 60,190,000 557,604,295 10.794%
ASTRO DIAMOND NL-ORD ARO 40,531,049 297,230,538 13.636%
AUSTEX OIL LTD - ORD SHS AOK 6,161,500 68,650,000 8.975%
AUSTIN GROUP -ORD SHS ATG 28,145,653 62,182,019 45.263%
AXG MINING LIMTORDINARY AXC 6,528,000 99,750,000 6.544%
AZUMAH RESOURCES LTD AZM 5,700,000 81,000,000 7.037%
BANNERMAN RESOUORDINARY BMN 13,960,591 144,925,036 9.633%
BATAVIA MINING-ORDINARY BTV 7,678,676 121,284,574 6.331%
BEYOND INTERNAT-ORD SHS BYI 5,988,653 59,711,968 10.029%
BIOPROSPECT LTDORDINARY BPO 124,484,003 487,040,944 25.559%
BISAN LIMITED-ORD SHS BSN 6,878,309 38,400,000 17.912%
BLUE CHIP FINANCIAL-ORD BCF 18,569,853 116,074,781 15.998%
BOSS ENERGY LTD-ORD SHS BOE 25.973% 10,411,743 40,086,853
BYTE POWER GRP LTD-ORD BPG 38,659,231 384,126,442 10.064%
CARDIA TECHNOLO-ORD SHS CNN 20,660,375 276,172,149 7.481%
CATALYST METALS-ORD SHS CYL 1,570,000 18,558,137 8.460%
CITADEL RES GRP-ORD SHS CGG 63,317,988 378,552,085 16.726%
CITADEL RES-PT PAID SHS CGGCA 12,230,552 57,084,957 21.425%
COMTEL CORP LTD-ORD SHS CMO 10,725,876 132,587,276 8.090%
CONQUEST MINING-ORD SHS CQT 27,717,044 271,749,181 10.199%
CONTACT RESOURCE -ORD CTS 5,242,593 95,749,856 5.475%
DESTRA CORPORATORDINARY DES 23,435,169 331,094,652 7.078%
DVM INTERNATIONAL-ORDS DVM 19,270,977 191,361,058 10.070%
EARLY LEARNING-ORD SHS ELY 2,685,800 34,000,000 7.899%
EBET LIMITED-ORD SHS EBT 56,122,852 217,806,111 25.767%
FAIRSTAR RESOURCES -ORD FAS 38,130,515 306,513,914 12.440%
FSA GROUP LTD-ORDINARY FSA 13,591,051 115,437,513 11.774%
FUTURE CORPORATORDINARY FUT 162,000,000 1,168,944,186 13.859%
GLOBAL NICKEL IN-ORD SHS GNI 2,050,000 18,735,001 10.942%
GOLDEN WEST-ORD FULLY GWR 16,484,931 110,165,763 14.964%
GOLDMINEX RES GMX 11.156% 4,361,265 39,094,223
HAWK RESOURCES - ORD SHS HFC 3,128,253 25,731,251 12.157%
HODGES RESOURCES-ORDS HDG 2,892,903 46,440,002 6.229%
HYRO LIMITED-ORDINARY HYO 49,472,965 531,078,797 9.316%
IMAGE RESOURCESORDINARY IMA 5,984,832 79,599,241 7.519%
INCITIVE LIMITED-ORD SHS ICV 4,250,400 29,000,000 14.657%
INTERMOCO LTD-ORDINARY INT 77,760,157 1,233,941,493 6.302%
INTRAPOWER LTD-ORD SH IPX 1,809,809 31,057,400 5.827%
JAMESON RES LTD-ORD SHS JAL 2,665,000 15,284,001 17.437%
JUMBUCK -ORD FULLY PAID JMB 3,559,447 48,484,670 7.341%
KAIRIKI ENERGY ORD SHS KIK 41,300,000 328,107,538 12.587%
KINGS MINERALS-ORD SHS KMN 20,742,418 394,286,498 5.261%
LATIN GOLD-ORD LAT 19,830,000 161,576,434 12.273%
LIVING AND LEISURE-ORD LLA 12,868,462 181,011,251 7.109%
MAGMA METALS-ORD SHS MMB 3,323,381 56,313,752 5.902%
MAMBA MINERALS - ORD SHS MAB 1,000,000 14,050,000 7.117%
MANTLE MINING CORPORORD MNM 2,830,714 45,498,214 6.222%
MATRIXVIEW LIMIORDINARY MVU 9,444,305 122,125,372 7.733%
METEX RESOURCES-ORD SHS MEE 36,500,000 276,785,383 13.187%
MILLEPEDE INTL LTD-ORD MPD 27,459,167 170,183,965 16.135%
MOBI LIMITED MBI 13,446,009 207,837,235 6.469%
MOOTER MEDIA-ORDINARY MMZ 5.689% 3,165,000 55,633,031
MOUNT BURGESS- ORD SHS MTB 14,092,604 280,257,000 5.028%
MXL LIMITED-ORDINARY MXL 62,829,358 780,903,649 8.046%
NEWERA URANIUM-ORD SHS NRU 9,350,183 42,155,674 22.180%
NKWE PLATINUM L-10C US C NKP 11,555,808 121,760,981 9.491%
NORTHERN -ORD FULLY PAID NEC 6,945,292 71,312,324 9.739%
NORWOOD ABBEY -ORD SHS NAL 17,603,704 329,305,957 5.346%
NSX LIMITED-ORDINARY NSX 4,982,174 74,460,003 6.691%
ODIN ENERGY LTD-ORD SHS ODN 4,720,300 61,390,005 7.689%
ORD RIVER RES.-ORDINARY ORD 12,500,000 168,045,411 7.438%
PHOTO-ME AUST - ORD SHS PTO 1,635,000 31,490,252 5.192%
PO VALLEY ENERGORDINARY PVE 8,079,961 90,415,633 8.936%
POWERLAN LIMITE-ORD SHS PWR 17,527,985 82,527,355 21.239%
PRAEMIUM-ORDINARY PPS 5,216,835 98,186,996 5.313%
PRIMA BIOMED LTD-ORD PRR 15,600,000 299,079,913 5.216%
PROPHECY INTERN-ORD SHS PRO 4,000,000 45,116,955 8.866%
Q LIMITED-ORD SHS QXQ 133,273,292 848,445,835 15.708%
RED FORK-ORDINARY RFE 12,868,068 87,366,282 14.729%
RENISON CONSOLID -ORD SH RSNCH 21,725,000 152,499,900 14.246%
RENISON CONSOLIDATEDORD RSN 83,749,103 784,958,095 10.669%
ROCKEBY BIOMED- RBY 5.714% ORDINARY 39,285,583 687,499,329
ROYALCO RESOURCES-ORD SH RCO 7,227,899 47,172,444 15.322%
SOLAGRAN LTD-ORDINARY SLA 56,129,515 131,816,545 42.582%
SOLAGRAN-DEF DEL SLACF 10,132,865 48,174,108 21.034%
SUNDANCE ENERGYORDINARY SEA 21,974,282 172,772,259 12.719%
SUNSET ENERGY LTD-ORD SEY 1,724,397 15,500,001 11.125%
SYRAH RESOURCES - ORD SH SYR 4,544,784 21,000,005 21.642%
TANDOU LIMITED-ORD SHS TAN 10,128,445 88,100,707 11.496%
TAWANA RESOURCES NLORD TAW 5,306,841 98,667,935 5.378%
TERRAIN MINERALS LTDORD TMX 12,463,888 77,319,748 16.120%
TNG LIMITED -ORDINARY TNG 16,587,937 192,683,314 8.609%
VIRAX HOLDINGS-ORD SHS VHL 6,212,785 107,352,940 5.787%
WATER WHEEL HOL -ORD SHS WWH 7,087,000 16,366,868 43.301%
 
Spaghetti said:
It had nothing to do with what they had bought except for Challenger shares of course.
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How do you work that out? I must have misunderstood. I thought that due to Opes lending against such a mediocre lot that when the market correction eventuated and caused the small caps end of the market deteriorate to an extent that Opes realised they couldnt regain their value and that they would have to pay for the money borrowed which they could not do.

They decided to prop up their larger clients within their base by inventing trades and reassigning share ownership within their client base (without consent) to protect their top clients against margin calls which subsequently enacted an enquiry by ASIC and exacerbated the Opes losses.

Thus admninistration here we come. The issue for the margin loan customers is documented elsewhere.
 
Re: Dryblower

Dryblower on Opes Prime’s fatal flaws

Monday, 7 April 2008
MINING NEWS

WHAT did they do with the money, and why did they want it? Those are the two questions Dryblower would like answered as the Opes Prime margin call crisis rumbles through the Australian mining sector and threatens the careers of senior executives and stockbrokers alike.


So far, all interest has been on who’s caught, and what’s being sold. That’s understandable because Opes Prime is one of the best (or worst?) scandals to hit the small end of the mining industry.

Without getting too technical, what really happened is that a stockbroker had a bright idea about extending the coverage of margin loans to include small, and illiquid stocks – and then pooling them into a bigger bundle.

It was a fatally flawed plan from day one for two reasons. Small stocks are unsuited to margin lending. Pooling is no different to the way United States banks pooled sub-prime mortgages to hide the duds in the package.

To explain: margin lending is nothing more than an exotic, short-term, debt facility. The way it works is that a client offers his shares to a bank in return for a loan.

In the case of high-quality shares the loan might be up to 70% of the value of the underlying asset. The weaker the shares offered, the smaller the proportion of the loan.

In essence, margin lending is only as good as the quality of the underlying asset, and the relationship between the bank and the customers. That’s why big banks only lend to their best clients on premium quality stocks such as BHP Billiton, Rio Tinto, or other top 100 listed stocks.

The reason for being so fussy is that in a correction these are the stocks which can be sold quickly, and easily.

Opes Prime seems to have bent quite a few rules. It made loans on small and illiquid stocks, it pooled the shares offered as security, and someone in the brokerage appears to have made decisions to protect favoured customers from calls from the banks to put up more security when share prices fell.

In the end it was the pooling that caused most of the trouble.

So far, so good; that’s Opes Prime from the banking side of the story.

What Dryblower is now asking is what did the customers do with the money loaned to them, and why did they want it in the first place?

Was a loan from Opes Prime used to buy more shares in the company against which the loan was made?

For example, did investors borrow money from Merrill Lynch or the ANZ Bank via an Opes Prime facility to buy more shares in their own company?

Or, given that many of the victims of Opes Prime live in Perth did they use their loans to “keep up with the Jones’ ” – a polite way of saying the debt went on funding lifestyle.

This is a real possibility because when you’re a director or senior executive of a small company you cannot be seen to be selling shares in your own company.

But, if those shares represent your biggest single asset, and everyone else in town is driving a Porsche Cayenne, or a BMW X5 then you want one too.

The problem, as mentioned above, is that it would be unacceptable to sell some of your shares, and banks will not lend against your portfolio – making an Opes Prime margin loan a tempting way to raise money to fund a high lifestyle.

What now? Opes Prime has gone. The shares you once owned have been sold. You might get back a small dividend from the receiver – and you still have to service the debt on the Porsche and/or the Beemer.

And, sometime soon, you will be asked to explain how you lost your shares, and whether you really are sufficiently competent to continue managing other people’s money in a public listed company.


:knightrid
 

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