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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (26670)	9/10/2001 3:31:42 AM
From: Bilow	Respond to of 30051

Hi mishedlo; A link: re the under priced tender offer scam: Tender-offer scam making the rounds Jeff O'Quinn, TheBusinessJournal, February 19, 1999 Q: I've received several offers recently to buy my shares of stock below market value. Why would I want to sell at such low prices? -- R.M. A: You wouldn't. That's why these schemes are so deceptive. In spite of that, however, there appears to be little that the Securities and Exchange Commission can do at the present time. A number of modern-day con artists have realized that some investors respond to any type of tender offer. In fact, some such offers are legitimate, but that's certainly not the case with the below-market tenders that have been cropped up recently. The scam works like this: You receive a letter in the mail offering you $10 a share for a stock that's currently trading at $13 a share. The offer is only valid for a short period of time, so you must act quickly. In your haste, you don't even bother to check the current market value of the stock. You simply mail in your shares as instructed. The huckster receiving those shares, meanwhile, sells them at a 30 percent premium to the price he's paying you and pocketing the difference without ever investing a penny of his own money. The Securities and Exchange Commission has been unable to stop this trickery because the size of these tender offers is normally so small as to make formal filings unnecessary. And since there are no fraudulent statements in the offer, technically no laws are being violated. However, the spirit of the law is certainly at stake, and I have to believe that the SEC will figure out some method of shutting these scams down. triangle.bcentral.com The one I got came on a stock that already had a tender offer on it. It was the kind of stock that widows and orphans buy, so they probably got some tenders. I had either already tendered my shares to the real bidder, or was about to do so. It really pissed me off that the SEC couldn't do anything about scams like that. In my case, their tender offer was for a limited number of shares, maybe 1/4 of the float, and at about a 25~40% discount to both the market value and the legitimate tender offer. Basically, people who can't make money honestly do stuff like that to get by. Another version of the scam, this one with above market price tender offers: Bay Area firms tough on Texan's tender offers Jon Rhine, Business Times, May 26, 2000 ... What has executives at Geoworks and other targeted companies in a lather is what they call the one-sided and poorly understood nature of mini-tenders. Growth Capital Corp. typically offers to buy up to 5 percent of a company at a slight premium to the market price. Investors who accept are locked into the offer price for the duration of the mini-tender: If the stock rockets up in that time, shareholders must sell at the agreed price, but if the stock drops, the offeror isn't obligated to ever actually buy any shares. While the SEC has taken no action against Halter or Growth Capital Corp., last year the agency issued a consumer bulletin on mini-tender offers at below the market price. Such deals, it said, "depend on the offeror's ability to catch investors off-guard." Unlike the offers criticized by the SEC, all of Growth Capital Corp.'s mini-tenders have been above the market price of the stock. Still, that hasn't made its offers any more welcome at the companies it has targeted. ... sanfrancisco.bcentral.com Another good article: For Investors, Minitender Offers Are a Maximum Nuisance David Dietz, TheStreet.com, October 23, 2000 thestreet.com -- Carl