By: DownrightUgly $$
Reply To: None Wednesday, 29 Nov 2000 at 7:54 PM EST
Post # of 336
Anatomy of a `Chop-Stock' Deal
Stock of XYZ Corporation is trading at $9.60 bid, $10 asked.
1 THE STOCK PROMOTER obtains 100,000 shares of ``cheap stock''
--either issued overseas under Regulation S of the securities
laws, or issued to insiders under Rule 144. The price: 25
cents a share, or $25,000.
2 STOCK PROMOTER sells the stock to the CHOP HOUSE at $9.60 a
share, or $960,000.
3 COLD-CALLERS at the CHOP HOUSE sell the stock to the CUSTOMERS
at $10 a share, or $1,000,000.4 CUSTOMERS deliver $1,000,000 to CHOP HOUSE.
5 CHOP HOUSE delivers $960,000 to STOCK PROMOTER.
6 STOCK PROMOTER delivers the stock to CHOP HOUSE.
7 CHOP HOUSE delivers stock to CUSTOMER's account.
8 STOCK PROMOTER'S profits--$960,000 minus $25,000, or $935,000
--are wired to an OFFSHORE BANK.
9 OFFSHORE BANK wires half the profits-- $467,000--to CHOP
HOUSE's OFFSHORE BANK, or STOCK PROMOTER gives CHOP HOUSE
its split of the profits in cash.
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