Tuesday, 17 June 2014

Morgan Stanley and the Galileo Japan Trust securities fraud

Galileo Japan Trust (GJT.AX) is an ASX-listed revaluation fraud masquerading as a Japanese real estate fund. Purportedly trading at a "market" price, in reality the share price of GJT is fixed by a cartel of fund managers consisting of Morgan Stanley, Macquarie Bank, Deutsche Bank and Allan Gray. After a "recapitalisation", this cartel deliberately ramped the "market" price of GJT, and then dumped the inflated shares on granny investors through various channels.

The criminals took $6m in direct fees from the "recapitalisation". They also charge real cash fees based on the unrealized "profit" they themselves engineered, with ramped GJT used as collateral for further fraud. This is not a matter of conjecture, it is a simple statement of fact. On June 12, Morgan Stanley received 4,791,489 shares of GJT as collateral. In the "recapitalisation", GJT raised money expressly for the purpose of reinstating distributions, since its held "assets" produce no actual cash flows whatsoever. There is a word for this too.

GJT was intentionally ramped until it was included in ASX300 index, allowing the criminals to unload some of the inflated shares on index funds mandated to blindly purchase such scams. This index inclusion fraud is now a common occurrence in Australia. The fund managers that pumped the price of GJT also dumped the shares on unwitting granny investors holding funds or life insurance products manufactured by the cartel. Given the immense arrogance of the criminals and tragicomical ineptitude of the regulators, it is highly likely the fund managers discussed their fraud in emails and recorded telephone conversations. They consider themselves untouchable.

The share price of GJT is openly manipulated by the cartel, to the point no reasonable person could even pretend a "market" determines its pricing. As a listed securities fraud, GJT follows the standard pattern of catastrophic long-term shareholder value destruction interspersed with ramps engineered to benefit insiders. Of course, according to ASIC this is just an inexplicable magical market mystery and not securities fraud at all.

This revaluation fraud  is just as criminal as a bag snatching, and there is certainly no moral difference. However, the scammed grannies have zero recourse to the law, since these criminals control the regulators, legal system and media.

No comments:

Post a Comment