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.

10 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

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    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.

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

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

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    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.

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    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!

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    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.

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    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.

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