ABS a.b.c. learning centres limited

... but wait ... it gets worse...

  1. 9,101 Posts.
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    "Conflict: margin lender lends to a long buyer, takes their shares and lends them to a short seller. One wants them to rise, the other to sell. The party that should be "supporting" the long position is actually undermining it."

    ...but wait ... it gets far worse than that!
    In this case the shorter not only knows the number of shares the directors were holding (long) they also know those shares were held on margin. (I suppose someone in the bank must have leaked that out.) They also leaked out the fact that the directors were close to a margin call and they (the shorter) would make a killing if they shake the tree a bit on a bad news day.

    ...but wait ... it gets far far worse than that!
    Supposedly the shorter tells his mate, who has a substantial holding in the company and has an interest to one day control it, to get ready to load up. So the bad news comes out, the shorter ramps the sp down, the directors get forced to sell their shares and the substantial holder loads up with heaps and heaps of cheap shares.

    ...but wait - it gets far far far worse than that!
    Now asx and asic come into the picture and force the directors to disclose just how many of their remaining shares are held on margin and how many of those are secured and unsecured. So the directors do that and now the shorter and the substantial holder know just what they will get when they repeat the shakeout when the stock comes out of suspension! So they do that and load up with heaps more shares.

    ...but wait - it gets far far far far worse than that!
    After so much disruption, the directors go bankrupt and have nervous breakdowns, the company collapses and gets bought out by the substantial holder. Who happens to be someone in Singapore, linked to the Singapore government. He just happens to knows that childcare is a hot political topic in Australia and if you control the price of childcare you control the government too! ... etc ... etc ... etc ...

    Somehow I dont think it would be a good idea if asic forces all directors to disclose their ML shares. But they have done more stupid things in the past!
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