opes situation deepens

  1. cya
    3,836 Posts.

    Opes fiasco deepens

    * Michael West
    * April 2, 2008
    * Page 1 of 2

    As two ANZ executives were put on gardening leave last night for being caught up in Opes's trading before receivers were appointed to the imploding prime broker last week, the troubled broker Tricom failed to rescue its portfolio from Opes.

    Meanwhile, Opes's client Chris Murphy told this column that it appeared Opes had destroyed him by lending his stock to hedge fund short sellers.

    "I've been called a babe in the woods," said Murphy. "And I would be stunned and it would be against everything which I've been told … but my stock had been used to destroy me."

    The prominent Sydney lawyer had had paper wealth of $190 million in Challenger shares alone, at their peak of $6.41 last November. It is believed Murphy had 20 million Challenger shares on his own book and another 10 million in a partnership with Opes's principal, Laurie Emini.

    "The 70 per cent collapse in the price of Challenger has destroyed my valuable portfolio. I just can't believe that there has been such a betrayal," Murphy said.

    "I don't know what's happening to my Challenger shares but I have cause to believe they have been murdered at $2 a share."

    Besides Opes clients shorting other clients' stocks, sources said Emini also shorted client shares.

    Under the securities lending arrangements struck with his customers, Emini had the legal right to short client shares.

    Following yesterday's revelations in this column that Tricom transferred a large portfolio of shares from Opes to itself last Friday after receivers had frozen the $1 billion portfolio, the ASX announced yesterday the transactions had been cancelled. Nearly $40 million of securities, dominated by Babcock & Brown satellite shares, are in limbo.

    Tricom said last night that it had had the stock transferred by the Opes receivers from Deloitte. However, Deloittes said it had not transferred the stock. No shares had been transferred since its appointment last Thursday evening, Deloitte said, and the Tricom transfers had been made on Friday morning.

    Ferrier Hodgson, the administrators of Opes, professed not to know what the situation was regarding the Tricom stock. One of the Opes banks - which include ANZ, Merrills and Dresdner Bank - confided that Tricom was trying to pull off a last-minute deal to save itself from lining up with Opes's unsecured creditors.

    "In terms of the transactions between Opes and Tricom, ANZ has no knowledge or involvement in them at all," said a spokesperson for ANZ. In contrast, Tricom put out a late statement still claiming to have the shares.

    f Tricom cannot get the stock back it faces insolvency as its $40 million in shares would be pooled with Opes stock, which is being sold down by the banks. That would leave Tricom as an unsecured creditor.

    Meanwhile, two executives of ANZ - which is the major secured creditor to Opes with a loan exposure of $650 million - are under a cloud for participating in trading with Opes before the receiver was appointed.

    "They were in custody and securities lending," said a bank spokesperson. "And they have been asked to take some leave and that's while we determine what's happening with Opes Prime."

    Elsewhere, extravagant reports have emerged of money laundering through Opes and participation in shady transactions and trading by the Melbourne mafia.

    Mayhem prevails in the small caps. Goldman Sachs has a mandate to sell a rash of small company holdings from the Opes loan book and these are said to cover 650 companies, many in the speculative end of the market. That Opes lent at all, let alone so prolifically, over speculative companies with no earnings track record, beggars belief.
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