Rsv Shareholder's Action Group

Hello MikeDP,

“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”

I haven’t read the FSA’s definition of a “regular user”; I’ll take your definition at face value. But you surely can’t be suggesting that people with absolutely no knowledge or understanding should start trading shares? Part of the problem here is that complete novices have been sucked into RSV by a bunch of rampers, they’ve lost money and now are seeking recompense from somebody/anybody because they think that the capitalist economic system within which we live should protect them. That’s not capitalism, that’s not how the free economy functions and is at complete odds with the whole purpose of the stock market – FREEDOM WITH INFORMATION.

Why should these people be compensated? The company told people in advance that there was going to be a massively dilutive debt for equity swap, which would value its shares at 1p, this wasn’t hidden from investors, it was public information disclosed and available to one and all. Investors should have known that it was complete madness to buy shares at the price that they paid because they should have done some basic research. Society can’t go round compensating people for their own failure to research, investors have to take responsibility for this. If investors couldn’t understand the implications of the debt for equity swap then they shouldn’t have been purchasing shares to begin with, they alone are responsible for their investment decisions. If these investors are compensated for their poor investment judgement then where do we stop? Should investors in Marconi be compensated?

Take a look, for example, at TD Waterhouse’s terms and conditions for its share dealing service. Clause 4.1 states:

4.1 The Broker will provide an execution only dealing service, it will not provide investment advice to you. Accordingly, when giving orders or instructions to the Broker, you must rely upon your own judgement.

From:

When these people signed up to their stock-broking service they agreed that they were responsible for making their investment decisions. People have admitted on these boards that (a) they didn’t know what they were doing when they bought the shares, and (b) they only bought the number of shares that they did so that they could get their “name in lights” because they would hold 3%+ of RSV. The vast majority of the people posting on these boards around the time of the AGM showed no inclination or understanding of the consequences of the AGM and were disinterested entirely. The whole idea of voting down the resolutions proposed at the AGM appears to have been made up as an after thought for the vast majority of these people.


“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”

My suggestion is NOT that they are “ripe for fleecing” and I do not condone such action. My suggestion is simply that they have to take responsibility for their own actions and if they are not prepared to then they shouldn’t even be buying shares to begin with until they’ve understood what it is that they are buying.

There is nothing worse at this time of the year than playing a Christmas game of monopoly and somebody doing something that upsets somebody else: “It’s not fair, I didn’t know that you could do that.” Such childish shouts are what we can now hear from buyers of RSV.


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.

Yes, this is the normal standard, it happens in probably every major debt for equity swap as well as in pretty much every rights issue (including UU’s). It doesn’t always happen in the particular manner that happened with RSV but the example of RSV does not strike me as unique in the AIM market – which specifically carries heavier “wealth warnings” than for the main market because it is specifically more lightly regulated.


“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.”

Much of this activity is undertaken by hedge-funds, they buy the debt, borrow shares, sell them short and then wait for the debt to be converted into equity so that they can then redeliver it under their stock-loan. By doing this they effectively provide a service to struggling companies because they have placed the new issue stock in the market in advance. Without this then (a) the new equity would flood onto the market on one day, and (b) debt holders would be less interested in helping out struggling companies as they would not be able to obtain the certainty of pricing that debt providers require.


“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.”

My point is simple. Share purchasers contracted to buy shares for settlement on a particular date. If the MMs can obtain sufficient stock to deliver then there is no loss (other than potentially interest). Settlement has been slightly delayed but there was no consequential loss as a result of that delay.