Warning… Watch Out for the Share Offer Scams – Please Read On
Recently, I was talking with a relative who asked me what I thought they should do with a letter they received relating to an offer to buy their shares that they had with a well known company.
AND before I go on as always, I’m not offering financial advice; you should always get qualified professional advice when making financial decisions. What I am doing is letting you know what has worked for me and giving you the opportunity to check it out for yourself.
Thank god for them, for having enough intelligence to firstly, slow down their game “so to speak” and to seek counseling from not just anyone who may be able to have an opinion, however, wisely enough to speak with someone who has some intelligence when it come to investing; by simply applying these two acts…
- Slow down your game and
- Being aware from whom to get your counseling from…
more than likely saved them from potential major financial losses.
So what’s this all about George, some of you maybe asking… well simply, some individuals apply a strategy of manipulating ill informed and the average “ma and pa” investors, by offering them to buy back their shares at a way below market price… at the end of the day it’s a numbers game…how do they do this, simply they gain access to a company register of CHESS Depositary Interest (CDI’s) through provisions in the ASTC Settlement Rules, which require the respective company to provide a copy of the register for inspection on request.
Then they contact as many on the register as possible and by applying the law of statistics and averages, they convert as many as they can before the people they have preyed upon realise the have been duped, if at all.
If you and/or any family member or friend are ever in this position, make sure you at the very least seek some counseling from people who have your best interest at heart.
Remember always apply the following:
- Make it a must to ensure that you are aware of the terms and conditions of the offer
- Check the current market conditions of any offer
- Seek independent advice from a qualified advisor if you haven’t already built a great relationship with one.
See, what many don’t realize that while accepting a low-ball offer for shares is ill-advised, it is not illegal. That is why, as you all know by now I am an avid supporter of keeping yourself constantly educated; as this is not only of paramount importance in accumulating wealth, but also, as the famous Warren Buffet has been quoted… “My Two Rules for Wealth are
- number one rule for wealth is capital preservation… and
- My number 2 rule is always remember rule number 1.
So simple yet profound…Unless you are worth in the billions of $$$ don’t even bother to have an opinion on Mr Buffet philosophy OK!
Once again, although it is not against the law to make an unsolicited offer to buy someone’s shares, it is illegal to mislead or deceive shareholders into accepting an offer. The offer must also comply with strict legal requirements, including the prohibition against misleading or deceptive or unconscionable conduct.
In April 2003, the Federal Government introduced regulations governing these types of off-market offers to provide consumers with more protection. Under the regulations a person who makes an unsolicited offer to buy shares off market for a certain price must provide:
- a written statement setting out the market value of those shares on the day the offer is made; and
- a minimum of one month in which to accept the offer.
AND before I go on as always, I’m not offering financial advice; you should always get qualified professional advice when making financial decisions. What I am doing is letting you know what has worked for me and giving you the opportunity to check it out for yourself.
Remember… Live with Passion & Take Massive Action… or go and build an ant farm… either way, I dare you!
With Ethics and Passion – George Mihos
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