All
Interesting comments in Jay Taylor's latest news letter.
Rick
COMMENTS ON VSE HALT OF GMD RESOURCES & LMX RESOURCES.
Trading has been halted on GMD Resources and LMX Resources by the
Vancouver Stock Exchange. The trading halt resulted when Don Farrell
reported to the Vancouver Exchange some non arms length loans made by
GMD to LMX amounting to some C$2 million. According to his obligation to
the VSE, Mr. Farrell was supposed to have sought approval for this
transaction before it took place.
For what ever it is worth, I will offer my opinion on the VSE halt and
its handling of this issue. I have known Don Farrell since about 1982
and in fact, this weekend I visited him in Vancouver. In my opinion, he
is as straight as they come in the sometimes slimy world of investment
banking. He looks out for his shareholders very well, with a good
conscience and he most certainly was not trying to deceive anyone
including the VSE when he failed to gain their approval. I believe the
VSE certainly has the right and obligation to enforce its regulations,
but it seems to me it is way out of line when it punishes the
shareholders of both companies by not allowing their shares to trade.
I suspect is that the VSE's motivation, is not so much the concern for
the shareholders of GMD and LMX as it is for its own members firms who
sell stock in Vancouver. These people are the same fellows who
underwrite public issues in Vancouver, then short those same shares
with a most destructive vengeance. In some instances it is widely
believed that some of these member firms elicit the help of a friendly
newspaper writer (who employs lies, half truths and innuendo), to fix
the market so that the shorts can cover after they have made a quick
buck by violating the well being of the firms they underwrote. This is
the seedy and unfair side of the VSE, but it is a way that some of these
firms have made big bucks for a long time. It is also the reason that
many companies that get their start in Vancouver, eventually go outside
the VSE to raise money and why many companies eventually list their
shares in the United States. It is this kind of treatment of companies
and their shareholders that has prompted many Vancouver based companies
to tell me over the years that this is why they have taken their shares
off the VSE. Most people acknowledge that Vancouver is a good place to
raise initial capital, but given the way companies are treated by the
member firms thereafter, it is a place you want to get out of if you
really intend to build a company.
What the VSE and its member firms seem to do is keep the local companies
dependent on them so they keep coming back for more financing, much as a
battered housewife keeps coming back to the abusive husband. Step out
of line a little and threaten the VSE/member firms with some financial
independence and "Whammo", they let you have it from both ends. The get
you on the IPO and then they rape you with short selling/market rigging
scheme. The VSE's unspoken modus operandi appears to this writer to be
"keep the listed companies dependent on financing so they can be
recycled through the IPO/Short selling cycle time and time again".
Don Farrell has, over the years proven he does not need to play that
game. He has demonstrated an ability to raise serious capital outside
the Vancouver network to the benefit of the shareholders. Perhaps that's
what this latest hurtful action against shareholders of GMD and LMX is
really all about. I suspect the exchange is punishing Don Farrell (and
as a result shareholders) not because he has short changed shareholders,
(they would be hard pressed to demonstrate how he has done that, nor do
I believe they care) but rather because he has not co-operated with the
Vancouver establishment's recycling schemes. |
