Wednesday, 20 November 2013

CDM comes bearing "bonus options"

The success of a listed investment company is predicated on its success at issuing shares. Operating performance is utterly irrelevant and can be misrepresented at will. ASIC doesn't even bother maintaining a semblance of regulation of NTA disclosures, allowing funds to materially overstate assets and commit revaluation fraud with related parties. Since share issuing and asset misrepresentation is the life-blood and raison d'ĂȘtre of fraudulent investment companies, they continually invent new ways to issue shares and misrepresent assets. Having already quadrupled shares outstanding in 2013, Cadence Capital (CDM.AX) announced it had "resolved" to issue "bonus options" to its granny investors in January 2014.

Any value the option will have to shareholders will be taken directly from the shareholders themselves. The bonus options are a "free" gift to shareholders, from shareholders, with zero net value for shareholders. Given administrative costs, the "bonus option" offer is objectively of net negative value to shareholders, a scheme only benefiting management hoping to issue shares, and a clear breach of  fiduciary duty. In net tangible asset disclosure documents, CDM now fraudulently claim these "bonus options" have a value of $0.075-$0.11 to shareholders, hoping to fool granny investors that expect such disclosure documents to be regulated. CDM management has conjured $0.075-$0.11 per share out of thin air, using the magic of accounting fraud.

This net tangible asset disclosure is blatantly and intentionally fraudulent, and lodging it was a criminal act. It is an indictment on ASIC that it does absolutely nothing when funds deliberately falsify the most basic metric of all.

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