Rsv Shareholder's Action Group

JakNife,

I was testing you only insofar as I wanted to establish a starting point for my response to your fairly predictable posting.

My position is that I am not a debater. I am an investor managing my own portfolio of close to 7 figures under my own control over the last ten years and showing a substantial profit. I did invest in Marconi (George was at one time an acquaintance and colleague) but it has not previously occurred to me that my losses were down to anything but bad judgement, mine as well as his. (though you prompt me to reconsider). Companies like RSV (which I had never heard of) get at most 2 or 3% of my funds collectively. They have in fact shown average or slightly better than average returns recently. I find the idea of trading in an environment where the number of shares available for trade is unknown to be completely unacceptable because common sense tells me the value of shares must be distorted. I have no objection to covered shorting and sometimes trade short in cfds.

I probably trade at least once or twice a month on average. According to the FSAs own definition of a regular user no qualifications or knowledge whatsoever is required to achieve that distinction beyond what is picked up in the course of using the market regularly, that is trading. There is no requirement to look at, let alone read and understand LSE or FSA rules and in fact there is no requirement to be able to read or write at all. I consider that I would certainly qualify

The FSA definition of market abuse is quite simple (incredibly simple): It is ANY action which a regular user might reasonably consider an abuse. ANY action cannot mean just those actions which break some rule or other which the regular user is not required to know anyway.
In these circumstance it must mean ANY action within or outside of the rules
Therefore if a significant number of regular users consider naked shorting an abuse it is an abuse Full Stop.

You have chosen not to answer either of my questions but have instead attempted to imply that the majority of bulletin board users are embittered by loss, ignorant of the business practices and law, obviously ripe for fleecing


I’d expect MikeDP that the vast majority of the posters would express concern, just like here, and just as with Marconi where shareholders still complain that “they’ve been cheated”. People always complain when they lose money and human nature apparently automatically causes them to seek to blame others rather than accept responsibility for their own actions.

There are embittered posters, no doubt, but I find it incredible that you suggest they are a majority or even a significant proportion.

So far as ignorance or innocence is concerned I can only say that if true it is absolutely no bar to being a regular user as defined and approved by the FSA so that their opinions of what constitute Market Abuse count for as much as anyone else who is a regular user.

But what if you were to ask the exact same poll to the debt holders? There would be an obvious conflict of opinion. Whose opinion is the more relevant?

The law is clear that shareholders rank behind debt holders. Every time that there is a debt for equity swap there are a bunch of shareholders complaining. Yet the entire point of the stock market is to syndicate equity risk – to share profits AND LOSSES. If a company makes a loss then shareholders SHARE in that loss. In your example it’s even more clear – the debt for equity swap has been announced, people are fully aware of what’s happening to the company. They have a choice to buy OR to NOT BUY. Nobody’s hiding the facts from them that there’s about to be a materially dilutive D4E swap and nobody is forcing them to buy share, they exercise their own free will. It’s their choice.

My suggested poll does not refer to RSV in particular. Are you suggesting that the pre-selling that occurred is somehow the necessary result of the D4E swap, that the D4E could not have succeeded with out it or that such arrangements may legitimately and deliberately be made in advance to allow debt holders to gain in a way that they would not have done had the shares been issued in accordance with normal protocol after listing? Or are you suggesting this pre-selling IS the normal protocol in D4E issues.
Do explain please how the debt-holders will gain legitimately by the pre-selling of shares in the company.
Put another way Why would debt-holders oppose a ban on pre-selling of D4E shares as you seem to suggest they would? Is that what you think the LSE means by Market Efficiency.

You have referred to a consultative process to resolve the recognised conflict between the regular users and the objective of LSE for improved market efficiency.
If there had been a circular or notice to investors via their brokers that such a process was to take place I might believe the consultation was being treated seriously and openly but as I learned about it from a press reference in one of the reports on the RSV affair I'm afraid I have no confidence that any such consultation will be meaningful.

I am frankly outraged at the practice of trading vast quantities of unissued shares and even more outraged at the way the FSA is responding to its consequences.
To persuade me that ANY Naked shorting is justifiable I would need to have sensible evidence quantifying the gain to capital investment in the business of this country as a whole and demonstrating that the market has measures in place which properly compensate any individual investor who suffers as a result of the practice and I dont just mean in terms of material loss. Words like market efficiency cut no ice at all with regular market users. Does market efficiency mean subsidising those who take on equity for debt as I might infer from your earlier remarks. (Repetitive Sorry)

Someone told me that the practice is simply barred in Australia, so they are prepared to accept whatever the penalty may be. It might be worthwhile to investigate practices in the European and US exchanges, what rules the new OFEX with Market Makers will apply but as I have said to you before perhaps the best solution may simply be to hand the job of regulation over to a group not tarnished with and biased by the traditions and cultural attitudes of the past and make the LSE pay through taxation instead of through so called "self regulation".

Finally, you have previously shown an interest in debating the calculation of losses.
It is already perfectly clear that the exchange/FSA is willing to buy-off this affair at a premium otherwise they would have simply let the claims run. They have made an offer which has been rejected.
If the RSV group can cover their claims with an acceptable technical veneer they will certainly do far better financially by negotiation than they would do in the courts. Personally I would welcome the publicity and action court cases might bring, but while RSV is negotiating I'm sure they dont want to debate anything and I see no point in it.