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Microcap & Penny Stocks : Bid.com International (BIDS) -- Ignore unavailable to you. Want to Upgrade?

To: mccowaner who wrote (25116)	4/23/1999 6:15:00 PM
From: Lola	Read Replies (3) \| Respond to of 37507

Since I don't know all the details of what they did, I can't tell you what rules they violated. But I do know from seeing what has been happening to the investors in this stock that there are rules in place at least in Ontario that are set up to protect investors against these types of losses. The rules I'm referring to only apply in Ontario. I think you're probably screwed if you're in another province like BC or Alberta because their regulations are not very tight at all. When you open an account with a brokerage in Ontario I believe most companies are required to have the customer do a questionaire about his risk tolerance. And they are extremely careful about this, especially in the first few months of the customer opening the account. Let's say investor A says that he wants his portfolio to contain 80% value investments and 20% high risk. If he calls in to a trader and places an order on a stock that would normally be called a 100% high risk investment (like putting all your money into BIDS @20 Cdn. for example), the trader normally would be required to inform the customer that the investment is not in line with his profile. If the investor insists on placing the trade that's fine, but I think the trader is supposed to advise him not to. These conversations are ALWAYS recorded by the brokerage houses so you can prove exactly what was said during the phone call. They will give you a hard time about getting the tapes though because of course they don't want to give out evidence that could incriminate them. The tapes are designed to protect them not you. I had a situation where I missed out on making a $2000 (60%) profit in 15 minutes because the trader shorted the stock instead of buying it (I had placed a buy order). Not only did I lose the $2000 profit but the brokerage had to cover the shares out of their own pocket. So they actually lost $2000 on the transaction as well. I was still pissed. Their answer to me was "well we try to do the best we can but you just trade too fast." That's the blanking idea, I'm a trader! The recorded tape clearly had me telling the trader to BUY not to sell or to short sell. He shorted a stock that was flying and it kept flying! It would also help if they had traders who can speak English! If investor B (say that's me Miss Lola 100% high risk) calls in and places a high risk order on a stock, my profile would automatically show that I am a high risk trader and I do not need to be informed that I may lose all my money. I already know that. Alot of the Canadians who got stuck in the stock at high prices may be thinking that they've been had. I would tend to agree with them if they were in fact not given a stern warning that this was an extremely high risk investment at certain price levels. Since the money most investors lost was probably borrowed, I would try to make the case that I wasn't going to pay off the loan because the brokerage did not act in good faith to protect the investor and pulled the plug at the worst possible time. If the banks pulled the plug too soon or did not abide by the Ontario rules for that sort of thing, they would have to answer to an authority. I imagine there will be alot of very angry customers lined up to argue about the brokerage's practices. If there are enough people complaining, you may be able to find that the bank/brokerage house did something which wasn't quite right. Of course the bank can argue that they didn't know it was such a high risk investment at the high prices and might blame the TSE for giving BIDS too much credibility too fast by making it part of whatever index they have over there (I forget which it was). A stupid argument in my opinion but you will see alot of people trying to cover their butts on this one. But remember the way our system in Ontario is designed it is very different from the rest of Canada and completely different from the US. Ontario is very much on the side of the investor in these types of situations. If there is any kind of funny business going on, our regulators will sniff them out and take action immediately. They're alot like the Mounties, they always get their man. Also off topic, stock scams like the ones so prevalent on the Nasdaq and especially on the BBs almost never survive in Ontario because the penalties are so high for that sort of thing. BC and Alberta are a different story altogether. Ontario believes very strongly that the stock market is for investors, not criminals (unlike the Nasdaq). I can see that alot of heads are going to roll at the brokerage houses and maybe the TSE as well. But you must all be proactive and file the complaints in writing as much as possible. Don't wait for someone else to do it. You do it. BIDS is a great company and it has done nothing wrong. The only fault BIDS may have is that it is becoming too successful, too fast and our system is not designed to handle the kind of problems that are everyday stuff for the Nasdaq (like extremely high volatility in stocks). Good luck to all and don't let this get you down. Learn as much as you can from this experience and you will be come a better investor. Protect yourself through education. The Internet is a wonderful learning tool of which the message boards are usually the least useful of what is available. Lola:)

To: mccowaner who wrote (25116)	4/23/1999 6:18:00 PM
From: Cameron	Read Replies (1) \| Respond to of 37507

As a Greenline client.. let me step in here. Greenline cut the margin value on bid.com to $0.00 with no notice. As a result, a large number of Canadians got unexpected margin calls. Not just to cover for the share price reduction on bid.com but to cover the whole outstanding amount. So, let's say you bought 1000 shares of bid.com at $28.00 (=$28,000) and put in $14,000 cash (this is a hypothetical examples). When the price dropped to $14.00 you would expect that you'd have to cover the margin difference. The shares would be worth $14,000, so you'd have to put in $7,000. By setting the loan value to zero, they were calling up and asking for $14,000 (which is just what the shares are now worth). So people were forced to sell off their entire holdings and were still left out the original $14,000 they'd put in. Because the shares had been sold they had no hope of recouping if they were fully extended into bid.com. I can understand why they did this. With this degree of volatility they were trying to protect both themselves and their clients. Furthermore, with Yorkton setting a price of $2.00 to $3.00 at the same time, they could end up in a situation where their clients were wiped out and they were left holding the bag completely. The problem is in how they did it... no notice and all in one fell swoop. Let me tell you... I was not fully extended, still somewhat diversified and I was still hopping to get my act together to cover my position... I didn't want to sell any of my holdings. By contrast, I have a friend who is with Investorline. They never extended the same loan value on bid.com as Greenline did in the first place. While they were making margin calls, these were only linked to the price decline. They maintained the loan value at prior levels for existing positions and only further restricted the loan value on new positions. In my mind, this is a much more reasonable way to deal with the situation. I don't think that Greenline "broke any rules"... although I am not certain of this. I think they over-reacted and behavioured in an unprofessional manner however. I have had a number of complaints about Greenline in the past in terms of their technology... to the point where I really was just about to move my account. They finally seem to have that straightened out. Things have been working well enough recently that I was seriously thinking of moving all my business to them and now they pull this. I don't know if they broke any rules but they sure created a lot anxiety. All you have to do is look at their house position yesterday to see the impact it had on a large number of Canadian investors. Why they didn't provide some notice or phase in the loan value reduction I don't know, but I will be asking at some point next week.