Saturday, 13 July 2013

The Great Australian Investment Ponzi

The Australian listed investment company (LIC) sector has degenerated into outright fraud, with the LICs manipulating their share prices through a web of crossholdings and circular trading, in order to issue shares at inflated prices and create fake unrealized book profits.

  1. The LICs use funds under management to ramp their own share price and each other.
  2. The LICs pay dividends out of capital raisings, in a ponzi of new investors paying old.
  3. The LICs use fraudulent accounting to inflate assets, hide losses and create opacity.
  4. The LICs cooperate to ramp chosen illiquid shares and other manipulable assets.

The following presentation provides details of the longrunning Australian LIC scam:

http://s1144.photobucket.com/user/_DrBenway/library/The%20Great%20Australian%20Investment%20Ponzi

This blog will provide updates on the largest Australian scam ever. Usually scams can only be analyzed in the rearview mirror, but thanks to ASIC's truly astounding incompetence and impotence, this instance provides the opportunity to observe massive securities fraud as it unfolds in real-time.

16 comments:

  1. Doc,
    I'm slowly making my way through your previous articles and am learning a lot as I go. With regard to the stock ramping, I'm a little confused as to the motives. I understand the concept of window dressing but without the ability to exit these smaller cap stocks after the ramp, it seems pointless. Take WAM's CAF investment for example, there has been no change in position since the initial sub holder announcement back in January. I gather you are making the assumption that the LIC cartel ramped CAF on behalf of WAM (since WAM would need to update with additional sub holder anns) after they had established a position at 40c, but to what end? Even if they were able to report a unrealised profit in the short term, when the stock ceases to be supported it just retreats leaving WAM with an unrealised loss, effectively kicking the can into the next reporting period.  Anyway, I look forward to reading future articles. Keep up the good work

    ReplyDelete
    Replies
    1. Stock Me,
      Thank you for your comment. The reason for LICs inflating NTA (besides the obvious motive of higher fees chargeable) is to issue shares at the artificial price to granny investors. The LICs main business is issuing shares. The ramped holdings ARE sold, indirectly, packaged in the LIC shares. You are of course entirely correct in that this is shortsighted and ultimately unsustainable.

      Delete
    2. This comment has been removed by the author.

      Delete
    3. Hi Mal, I haven't written a post on TFS. It's a grotesque fraud scheme though. Cheers

      Delete
    4. outside of the LIC industry and TFS, did you have any other companies worth looking into?

      Delete
    5. In terms of fraudulent practices? Virtually all Australian IPOs are outright frauds at this stage, and any "profits" come from revaluations, accounting magic and "deals" - not true operations.

      Delete
    6. Hi Dr Benway, any way I can have a more private communication exchange with you? I have backup email of profjnf(a t)yahoo(d ot)com that you could send through some details to and I could respond? Keen to get your 2 cents on a few things. Chrs!

      Delete
    7. Sorry drift I've retired from trying to save the world. If you want to check out some atrocious frauds, look at aurora labs (A3D) and brain chip (BRN). Both blatant scams with openly manipulated share prices.

      Delete
    8. No probs, drop me a line if you ever wanted to catch up. I will take a look at A3D and BRN - always interested, feel free to pile them up if you find any more.

      Delete
    9. Dr Benway, by any chance have you considered becoming more active again? If not you've been missing some classic revaluation fraud of unlisted assets amongst some of the LICs. I've finally got a bit of spare time to do some work on some companies, got any non-LIC names I should be looking into? Thanks in advance and come back please.

      Delete
    10. Hey drift,

      Good to hear from you, and thanks for your comments, but I must admit I no longer feel the slightest motivation to even try to combat the grotesque scam Australia (and the world) has degenerated into. At this point EVERY single thing in Australia is in some way scammified: finance, healthcare, education, housing, energy, journalism, you name it. It's just too depressing to think/write about - better just stick your head in the sand and ignore society slowly crumbling into crap around you.

      What got me in the end was not the bleak prospect of success against the reigning criminals, but rather the realization that the victims are no better than the crooks. You see, in order to make an entire society a scam/ponzi, you NEED the complicity and cooperation of the average citizen. The average Australian is a smug self-interested little shit, willing to sacrifice his own children for the promise of debt-fuelled asset inflation, the slimiest weakling ever to crawl the earth. You can't cheat an honest man.

      This caused me to spiral into deep misanthropy. I just had to let it go.

      Delete
    11. A lot of that resonates with me, except I still have a little faith. Do yourself a favour, enter the Twitter sphere, there you will find, amongst other things, a growing crusade of activist shortsellers unmasking fraud, most operating under pseudonyms. Twitter is being used as a platform where these stories can be heard. There is a website that tracks a lot of the shortsellers (https://www.activistshorts.com/ and they are on twitter too) , some are good (Marc Cohodes), some are dickheads full of themselves (John Hempton) but you will enjoy. Even the dickheads like Hempton who is so desperately just trying to show everybody how smart he thinks he is, is a crusader and interesting. Muddy Waters, Glaucaus (the guys that took down TFS), viceroy research to name a few more. If you already know all of this... buggar! Chrs!

      Delete
    12. Thanks for the advice, drift, I'll check it out. Hey, maybe I could get a job with one of those companies, my writing would certainly have a bigger impact than it does here. And it would beat working for the Combine

      Delete
    13. Dr Benway - your track record of identifying and hunting down these scammers is impeccable. If you would be so inclined, a rewarding and fulfilling job in the activist short fund space awaits. In fact, I'd bet most of them have already trawled your blog looking for ideas.

      Delete
    14. Thanks for the encouragement, Kara, much appreciated. If you know of an opportunity of interest, please let me know through contactdrbenway(at)gmail.com

      Delete
  2. This comment has been removed by the author.

    ReplyDelete