Saturday 28 June 2014

The Independent Investment Research scam

Independent Investment Research Pty Ltd is a new scam backed by the Australian listed investment company cartel and its associates. Having chosen a deliberately misleading and deceptive brand name, the company provides commissioned research reports for listed and unlisted fraud schemes. After paying IIR to pump their scheme, criminals can quote "Independent Investment Research", while burying disclaimers in small print. This obviously sounds better than quoting "Commissioned Investment Research". IIR has intentionally and semantically sidestepped legal requirements to clearly disclose the nature of commissioned reports.

According to the Australian Competition and Consumer Commision (ACCC), it is illegal for businesses to make claims that are "likely to create a false impression". According to ACCC, businesses need to assess the "overall impression" of their claims, and "can't rely on small print and disclaimers as an excuse for a misleading overall message". ACCC has explicitly stated that “manufacturers cannot hide misleading claims in their brand names” in regards to water branding. However, consumer protection does not apply to financial products, the domain of the congenitally tardy ASIC. Due to the regulator's zero enforcement policy, most types of financial crime have effectively been legalized in Australia, including pump-and-dump schemes and price fixing. Ignoring the law, ASIC has unilaterally decided to allow fraud and the perversion of free markets.

IIR is used by various revaluation and pump-and-dump schemes that are so fraudulent they are usually avoided even by the moron mainstream media. These include previously exposed ponzi US Masters Residential Property Fund (URF.AX), revaluation frauds Sunbridge Group Limited (SBB.AX) and Disruptive Investment Group Limited (DVI.AX), as well as the criminal Australian listed investment company cartel. Managed Account Holdings Limited (MGP.AX) is one of the most recent cartel revaluation frauds covered by this "independent" investment research. Cartel member Argo Investments Limited (ARG.AX) recently bought a 9.25% stake in MGP for $0.12 per share. The loss-making MGP was then listed and immediately ramped to $0.25 by ARG and other related parties of MGP. ARG can now claim unrealized profits of 108% on its investment, that it created itself, based on which its criminal directors can charge real cash fees.

http://www.managedaccounts.com.au/Portals/0/Forms/IIR_Report_MGP_May14.pdf

The commissioned cartel research report for MGP mentions "independence" 53 times. Before even admitting to be a commissioned report in small print, "independence" is mentioned 13 times. Later in the Independent Investment Research report, the disclaimers start getting downright humorous. On the last page, IIR reveals it may:

  • Receive payment for the report
  • Have a direct or indirect interest in recommended securities
  • Buy or sell recommended securities
  • Effect transactions that are "inconsistent" with its recommendations
  • Infect your computer with viruses

Showing true panache, IIR caps this off by huffily proclaiming that its recommendations are "under no circumstances" ever influenced by any of this. Well, OK then.

Friday 27 June 2014

The Wilson Foundation's "charitable" fraud

The Wilson Foundation marks a new nadir even for the sociopathic criminals running the Wilson Asset Management (WAM.AX) scam. Although the WAM criminals have stolen millions from granny investors through revaluation and accounting fraud, they have now sunk to a new unforgivable low point. In a despicable bid to reach new victims, the WAM criminals are starting a fraudulent "charity" designed to further their self-interest. Fraud is bad enough, but fraud in the name of charity is truly vile.

The Wilson criminals have taken over the defunct Australian Infrastructure Fund Limited (AIX.AX), planning to repurpose it and perform yet another one of their never-ending capital raisings. The key point (as always) is that this will increase funds under management for WAM and its associates. Jimmy Savile engaged in ostensibly "charitable" acts that allowed him access to new victims. In exactly the same way, the WAM sociopaths are attempting to lure new victims to the fraudulent and inflated listed investment company sector, by making claims of "charity".

WAM claims their new scam involves no self-interest, and that no fees will be charged by participants. This is an outright lie. WAM will own a significant stake in the proposed "charitable" fund. Subsequent upward revaluation of the fund will create unrealized profit for WAM, from which the sociopaths will charge real cash fees. The WAM directors stand to personally make millions from their "charity". They conveniently omit to disclose this.

Moreover, money entrusted by gullible victims to the "charitable" fund will increase funds under management of the cartel. Higher funds under management increases the investment cartel's ability to ramp chosen assets, creating yet more unrealized profits to charge fees from. There is absolutely nothing "charitable" about this fraud. If the Wilson sociopaths really wanted to give to charity, they could very easily do so in a way that would not financially benefit themselves. But these sociopaths cannot even understand the concept of charity without self-interest, cannot comprehend selflessness or love. Pity them, for they are not fully human.

How can the Wilson fraudsters even be allowed to use the word "charity" in their scam? Simple. There is no regulation of the word "charity", just as there is no regulation of "investment". A scheme can literally have fees of 100%, and still legally call itself an "investment". Customers of sausage enjoy more consumer protection. To use the word "sausage", there are set limits on how much canine feces the manufacturer can use. But in Australian financial crime, there are no limits and everything is permitted.

Thursday 26 June 2014

ClearView Wealth abuses share buybacks to distort market pricing

In theory, share buybacks create value for shareholders by reducing number of shares outstanding and thus increasing cash flows, earnings and dividends per share. Such a theoretical value-adding buyback involves companies buying their shares at the lowest price attainable to achieve a long-term reduction in shares outstanding. In reality, this is almost never the case. "Increased EPS" is instead used a flimsy pretense to justify buybacks that are performed to directly move share prices. As an entirely accepted commonplace occurrence, criminal directors ramp "market" prices on which executive bonuses and options are awarded.

In Australia, companies have predictably taken this to ludicrous lengths. Criminal directors use share buybacks to ramp their price to predetermined and preannounced levels, breaching fiduciary duty by not seeking the lowest price possible. Companies alternate share issuing with share buybacks, with no reduction in shares outstanding achieved, or issue even more shares than they buy back. Companies will even perform share buybacks and share issuance at the same time, unequivocally admitting they are attempting securities fraud. Euphemisms such as "supporting the share" and "capital management" are commonly used for this securities fraud. In one of the most blatant cases of such fraud, ClearView Wealth Limited (CVW.AX) revealed a capital raising and buyback in the very same ASX announcement.


ClearView openly admitted it was going to attempt securities fraud, in a public announcement, and then proceeded to do so. ASIC of course did nothing whatsoever about this, in line with its zero enforcement policy. When companies perform buybacks explicitly to move market prices, due to the directors' "belief" that the share is undervalued, there is absolutely no justification for this in economic theory, it is open fraud. According to standard finance textbooks, what ClearView did is known as "share manipulation".

But how can Australian regulators, financial media and analysts condone companies explicitly admitting the deliberate distortion of market pricing? Simple. The dregulators, presstitutes and analysts simple assume market efficiency, that prices by definition are unramped and fair, and that higher prices thus always are better. According to ASIC, due to market efficiency share prices cannot be ramped, and so ASIC needs take no action when share prices are ramped.

Criminal listed investment companies commonly announce buybacks explicitly to ramp share prices to parity with NTA (or even beyond). Due to costs, the fair going concern value of listed investment vehicles is lower than NTA, and there is zero justification in economic theory for such vehicles to move their share price above their fair market value. Every director that has performed such a share buyback has not only breached their fiduciary duty to shareholders, but has also demonstrably distorted market prices and committed share manipulation.

If companies are allowed to set their own "market" prices with fraudulent buybacks, they no longer can be considered legitimate listed enterprises priced by a market, but are instead correctly referred to as listed securities frauds. The success of a company that sets its own "market" price is not determined by operational performance or fundamentals. Instead, the longevity of such a scam depends solely on the company's continual ability to raise capital to fund its price fixing. A listed company that sets its own "market" price is a ponzi.

Wednesday 18 June 2014

The Queensland Bauxite Limited pump-and-dump

Queensland Bauxite Limited (QBL.AX) is a pump-and-dump scheme masquerading as a bauxite explorer. This blog first mentioned the QBL pump-and-dump two weeks ago in a post detailing various ramps orchestrated by Wholesale Investors and Proactive Investors. Since then, the cartel has continued roping in victims with ASIC's blessing and complicity, aided by the homunculi of Australian financial media. No matter how openly manipulated a share is, no matter how obviously ramped by criminals, Australian "journalists" are willing to spruik it. There is literally no scheme too fraudulent. On 13 June, The Motley Fool published a despicable "article" pumping the scam, claiming QBL was "set to soar".

http://www.fool.com.au/2014/06/13/queensland-bauxite-ltd-shares-set-to-soar/

The porcine shill who wrote this "article" should be ashamed of himself. At best, he is a complete moron, and at worst he is a criminal associate of pump-and-dumpers. The Queensland Bauxite securities fraud is operated by veteran share manipulators associated with Merlin Diamonds and the mysterious Gleneagle Securities. Before attaching his name to this pump-and-dump scam forever, The Motley Fool shill should have done some basic due diligence. The cartel ramped QBL from $0.010 to $0.059 in a couple of weeks, performing a complex array of leveraged transactions.

http://www.asx.com.au/asxpdf/20140617/pdf/42q89yzhxz0kdj.pdf

On June 18 QBL then collapsed by 58%. This had absolutely nothing to do with a "market" outcome. The price of QBL had been deliberately ramped by a cartel. Small investors got suckered in as an effect of the ramp, but were not the cause of it. Of course, such small investors can expect zero recourse to the law, because ASIC has effectively legalized pump-and-dump schemes and other revaluation frauds in Australia.

 

The QBL criminals pulled this exact same scam as recently as 2010. Guess Motley Fools have short memories as well as zero accountability. According to ASIC and the Motley Fool, these are just inexplicable magical market mysteries, and not deliberate ramps at all.

Tuesday 17 June 2014

The AMP Capital China Growth Fund fraud

AMP Capital China Growth Fund (AGF.AX) is an ASX-listed securities fraud masquerading as a Chinese bluechip fund. Using related party intermediaries, AMP has structured this scam so the fund manager absorbs almost all cash flows from held assets, leaving next to nothing for investor victims. Rigging the price of AGF with cartel associates including Select Investment Partners, AMP intermittently ramps AGF to create unrealized "profits". In the standard pattern of manipulated shares, AGF displays long-term catastrophic shareholder value destruction interspersed with ramps engineered to benefit insiders. This has absolutely nothing to do with a "market" outcome.


According to its annual report, AGF collects around $6.8m in dividends from its stock holdings in China A shares, of which it burns $6.4m, mostly as fees to the criminal managers. Given these ongoing costs, the going concern fair value of AGF to a small investor is around 7% of NTA. It is impossible for a director of such a scam to fulfil their fiduciary duty to investors, since this would mandate recommending they go elsewhere and avoid the swindle. Rather than get 7% of cash flows, investors could easily get 100%, and the sociopathic scum running these scams have a fiduciary duty to warn their investor victims about this.

AGF now functions as a listed securities fraud. By buying and then ramping AGF shares, criminal associate Select Investment Partners has created millions in unrealized "profits", fraudulently inflating its management fees and then dumping the deliberately bloated shares on granny investors through various funds. In the last month alone, Select Investment Partners has devoted millions to this fraud.

AMP and Select Investment Partners are perfectly aware of the fraudulence of their scheme. Since they deliberately engage in fraud, AMP and Select Investment Partners are criminal organizations. This is a simple statement of fact.

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.

Friday 13 June 2014

Fund intermediaries and credit creation

If fund intermediaries are allowed to disregard costs and fix their unit price at NTA, this will introduce a systemic source of overvaluation. The ongoing fair value of a fund to a non-controlling investor is equal to the NTA less costs as proportion of asset cash flows. For example, a fund that every year burns 20% of the cashflows generated by its assets has a fair value of 80% of NTA. Funds that set prices above this fair value during times of net investor inflows are deliberately defrauding their investors, as they could not support this price were there sustained net investor outflows. On an aggregate level, such fund intermediaries engage in a completely unregulated and unrecognized credit creation process.

Assume Fund A invests in Asset X, and has management costs equalling 20% of the cash flows generated by this investment each year. Since 80% of the cash flows reach the owners of Fund A, the fair value of the fund would as noted be 80% of NTA. Now assume instead Fund A invests in Fund B that invests in Fund C that invests in Asset X, with each fund manager taking 20% of received cash flows. Since 51% of the cash flows now reach the owners of Fund A, the fair value of Fund A is 51% of NTA. The remaining 49% of cash flows from Asset X are absorbed by the fund managers.

Fund A Fund B Fund C Asset X
Cashflow to owner 51% 64% 80% 100%
Cashflow to fund manager 13% 16% 20%

Despite the funds having fair values ranging from 51% to 80% of NTA, all three can fix their price and issue units at NTA, with all three claiming the full right to the same cash flow. In effect, this means the cash flows from Asset X are rehypothecated into 149%, since 100% of the cash flows are promised to investors and 49% absorbed by the fund managers in aggregate.

In aggregate, fund intermediaries and their price-fixing are a form of shadow banking and contribute to the credit creation process, since they create "assets" that can then be used as collateral for lending. In the example above, if Asset X was worth $1bn, the intermediaries have created a further $490m through deliberate fraud, conjuring $490m worth of collateral from thin air into the economy. If all fund intermediaries in an economy fix their unit price at NTA, the aggregate amount of credit creation this entails is equal to aggregate intermediary costs. In Australia, given the high total cost of fund intermediaries, this synthetic leverage has a significant - and entirely ignored - impact on credit creation.

Wednesday 11 June 2014

Lionhub Group Limited launches new revaluation fraud

International criminals increasingly use the Australian stock exchange to perpetrate revaluation frauds, creating phantom collateral they can borrow against, with the loan proceeds used for further fraud. Most recently, Singaporean criminals backdoor listed LionHub Group Limited (LHB.AX) on the ASX, taking over a dormant shell company in order to create a fake "market" price. After various sham related party transactions and a fraudulent capital raising, LionHub now has 757m shares outstanding and $6.5m cash in the bank. Although LionHub issued less than 5% of shares in the capital raising, the issue price of $0.20 implied a "market" value of $151m for the company.

Magically, the $6.5m in cash has been revalued to a $151m ASX-listed asset, guaranteed by ASIC to be unmanipulated. This fraudulent asset can then be used as collateral for debt, or be dumped on unwitting grannies by associated criminal fund managers. The top 20 shareholders own 95% of LHB, and after reinstatement to listing on June 12 the share price will be controlled by this cartel, creating a fake "market" value.

Shell companies for revaluation frauds are openly marketed in Australia by criminal enterprises such as Wholesale Investors, which also offer to ramp share prices and supply local sham directors and company secretaries. LionHub has connections to Sino Australia Oil & Gas (SAO.AX) and other related party frauds, sharing the same criminal associates. These manipulated frauds follow the standard pattern of long-term shareholder value destruction interspersed with sharp ramps engineered to benefit insiders.

ASIC and media alike regard the fraudulent ramps as magical market mysteries, enigmatic and wonderful occurrences for which there just can be no explanation. New revaluation fraud Fifth Element Resources (FTH.AX) issued 21m shares at $0.20 in a fraudulent capital raising, after which the share price was ramped to $0.95 in a month. Prior to the capital raising and ramp, an insider had purchased 20m shares at $0.01.


According to ASIC, this is not a ramp and FTH is not an openly manipulated share, because if it were ASIC would have done something. According to ASIC, this is all just a magical market mystery, and so ASIC lets it continue trading freely and attract more victims.

Tuesday 3 June 2014

Axstra Capital and Wholesale Investors pump-and-dump

Axstra Capital and Wholesale Investors run a pump-and-dump operation and investment cartel, not to be confused with Avestra Capital and Next Investors, artificially inflating the share prices of small caps for a fee. The Wholesale Investors criminals target small investors, using handy relief helpfully provided by the complicit regulator. As a service to criminals, ASIC regularly provides exemptions that produce loopholes and results diametrically opposite to what the law actually intended. The exemption in question removes disclosure requirements for business introduction services, subject to conditions. Names and logos can only be available on subscription, and acknowledgement of disclaimers is required beforehand. However, Wholesale Investors openly flouts these requirements and makes names and logos available straight away, with additional spruiking available on subscription. For example, one of the Austalian [sic] Investment Opportunities spruiked by the cartel is named Westlake Funding Ltd, as can be seen below by non-subscribers.

http://www.wholesaleinvestor.com.au/companies/

The Wholesale Investors website is rife with listed and unlisted securities frauds, with rigged "market" values. The criminals recently took an interest in Qanda Technologies (QNA.AX) and immediately ramped the stock from $0.03 to $0.11. Sharp ramps such as these provide profits for insiders, allows unrealized profits to be booked by fund managers, and increases the value of securities used for further cartel leverage.


In the long term, such manipulated companies inevitably display catastrophic shareholder value destruction. Qanda Technologies illustrates this beautifully, with sequential manufactured ramps interrupting steady decline. This is because QNA is a listed securities fraud.


ASIC protects pump-and-dump cartels instead of protecting the victims, displaying what must now be regarded as treasonous rather than incompetent behaviour. As a result, the Australian share market is now so infested with manipulation it is hard to pinpoint where the fraud ends. By the same token, mainstream financial reporting and pump-and-dump articles are becoming indistinguishable, sometimes written or commissioned by the same criminals. The Wholesale Investors criminals are also associated with the pump-and-dump site Proactive Investors. On 3 June, Queensland Bauxite Limited (QBL.AX) was the subject of a Proactive Investors "article" and 115% share ramp.


According to ASIC these are not ramps but rather magical market mysteries. If fund managers package and dump such ramped shares on granny investors, it is a magical market mystery when the grannies lose all their money. It is not ASIC's fault, since market manipulation does not exist.