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Kyune
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June 30, 2013, 06:42:03 AM |
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My understanding is that AMC and VMC are two separate companies, with contractual agreements between each other.
Eh, I do not see how it can be accurate to call them separate companies. I'll post the same info here that I posted in the main AMC thread. AMC is described as a wholly-owned subsidiary of VMC in the listing that they themselves prepared for both both Bitfunder and BTCT. From the "Details" tab on BTCT for the passthrough shares: Active Mining Corporation (AMC) is a Belize International Business Company DBA Active Mining Cooperative and
is a wholly owned subsidiary of Virtual Mining Corporation (VMC) a Delaware Corporation.
And from the "Private Placement Memorandum" on Bitfunder ( https://bitfunder.com/asset/AMC#pane_profile, which is only presented as a jpg, so I have to retype the content): PPM, page 2: "AMC is a business unit of VMC" PPM, page 6: "Shares of AMC on Bitfunder do not represent real world shares of the company. The shares are solely a distribution mechanism for rights to profits." |
BTC: 1K4VpdQXQhgmTmq68rbWhybvoRcyNHKyVP
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In order to get the maximum amount of activity points possible, you just need to post once per day on average. Skipping days is OK as long as you maintain the average.
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furuknap
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June 30, 2013, 06:48:33 AM |
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There doesn't appear to have been any oversight on this pricing, which really seems silly. How can your moderators vote on an asset when they don't even know the valuation the security will come to market at?
Mods do not evaluate the profitability of an asset, or at least shouldn't. Ask yourself, however, why should they _not_ vote in favor of something that will give them lots of money? The listing fee, the trade fee, whether loss or profit; all of that goes straight into the pocket of those voters. Of course they want that money! That's why they bought the LTC-G shares! .b |
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burnside
Legendary
 Offline
Activity: 1106
Merit: 1004
Lead Blockchain Developer
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June 30, 2013, 06:58:57 AM |
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My understanding is that AMC and VMC are two separate companies, with contractual agreements between each other.
Eh, I do not see how it can be accurate to call them separate companies. I'll post the same info here that I posted in the main AMC thread. AMC is described as a wholly-owned subsidiary of VMC in the listing that they themselves prepared for both both Bitfunder and BTCT. From the "Details" tab on BTCT for the passthrough shares: Active Mining Corporation (AMC) is a Belize International Business Company DBA Active Mining Cooperative and
is a wholly owned subsidiary of Virtual Mining Corporation (VMC) a Delaware Corporation.
And from the "Private Placement Memorandum" on Bitfunder ( https://bitfunder.com/asset/AMC#pane_profile, which is only presented as a jpg, so I have to retype the content): PPM, page 2: "AMC is a business unit of VMC" PPM, page 6: "Shares of AMC on Bitfunder do not represent real world shares of the company. The shares are solely a distribution mechanism for rights to profits." That makes the shares essentially a PT issued by Ken connecting the "BTC-TC Virtual Exchange Game" and his real world company. I'm not sure how else you can connect a real world company based in the US. I don't think you can buy real, direct, legal shares in one on an exchange outside the US. You have to connect up the virtual company in the game to the performance of the real company in a way that emulates it's successes and failures. This is not unlike how EA scales and emulates the stats of the various players and teams in it's annual releases of Madden Football or how many of the NYSE/NASDAQ stock trading games out there emulate the successes and failures of the real underlying companies. BitFunder may have a different take on things, but BTC-TC does not trade real shares of real US companies. Period. This is part of the risk you assume and you agreed to when you registered on BTC-TC. Cheers. |
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Entropy-uc (OP)
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June 30, 2013, 07:01:52 AM |
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There doesn't appear to have been any oversight on this pricing, which really seems silly. How can your moderators vote on an asset when they don't even know the valuation the security will come to market at?
Mods do not evaluate the profitability of an asset, or at least shouldn't. Ask yourself, however, why should they _not_ vote in favor of something that will give them lots of money? The listing fee, the trade fee, whether loss or profit; all of that goes straight into the pocket of those voters. Of course they want that money! That's why they bought the LTC-G shares! .b Such a cynical view might be appropriate for a mature and established exchange. But for a startup trying to establish itself, such an approach would be self defeating. An exchange exists to provide startup capital to businesses. If the investors in those businesses are not rewarded with dividends and capital gains appropriate for the risks taken, there will be no new capital available, and the exchange will die. The history of bitcoin securities is one of lost investor capital, and ASICMINER as the exception that proves the rule. Until there are numerous examples to contradict that statement, any investor or operator of an exchange is likely to lose all of their capital as well. |
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burnside
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June 30, 2013, 07:02:07 AM |
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There doesn't appear to have been any oversight on this pricing, which really seems silly. How can your moderators vote on an asset when they don't even know the valuation the security will come to market at?
Mods do not evaluate the profitability of an asset, or at least shouldn't. Ask yourself, however, why should they _not_ vote in favor of something that will give them lots of money? The listing fee, the trade fee, whether loss or profit; all of that goes straight into the pocket of those voters. Of course they want that money! That's why they bought the LTC-G shares! .b IF they are smart, they will see the mountain of BTC in the distance that comes from building a trustworthy platform, over the mole-hill of BTC that comes out of a few days of trading. (I hope some are reading this?) |
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burnside
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June 30, 2013, 07:06:36 AM |
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Thanks for sharing your views burnside.
I am heading off to bed, so I will think about what you have said and respond tomorrow sometime.
Before I go, I want to make one point.
A share issue that trades below it's offering price in the first few days of trading is considered a broken IPO. It is always a disaster for the stock and investors, and a black mark for the exchange and the syndicate that brought the offering. In this case, not only did the price break but the issuing shares were only 25% subscribed. That is a huge failure.
On the ~512k shares that did sell, folks on your site are now eating a 870 BTC loss. All of that loss is a result of Ken pumping up the price arbitrarily in the offering to 0.0025 from the 0.0008 it was trading around before listing on your site.
There doesn't appear to have been any oversight on this pricing, which really seems silly. How can your moderators vote on an asset when they don't even know the valuation the security will come to market at?
I agree that there needs to be an IPO plan that gets evaluated as part of each issue. This IPO makes that fairly obvious. We'll add to the issuers template some text around this. It's definitely not going to prevent it 100% of the time though. I don't think you can prevent failed IPO's entirely. It's such a guessing game in terms of demand. I think that's partly why the MPEx tranched IPO worked so well, but you still have to be careful to issue in manageable increments that make sense. Cheers. |
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burnside
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June 30, 2013, 07:18:03 AM |
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An exchange exists to provide startup capital to businesses. If the investors in those businesses are not rewarded with dividends and capital gains appropriate for the risks taken, there will be no new capital available, and the exchange will die.
The history of bitcoin securities is one of lost investor capital, and ASICMINER as the exception that proves the rule. Until there are numerous examples to contradict that statement, any investor or operator of an exchange is likely to lose all of their capital as well.
I do tend to disagree with this. There are a lot more successes out there than just ASICMINER. Just none with such fantastic returns.  There are also a good sized subset of issues that are setup to hedge against a cryptocoin drop, such as the gold and silver assets, or the fixed fiat return ones like esecurity. |
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burnside
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June 30, 2013, 07:22:48 AM |
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In the real world there is a syndicate of investment banks that take on filling the IPO. They spend a few months getting interest from large customers and determining a reasonable valuation. On the IPO date the first trades are all filling earlier commitments to buy at the price finally set by the banks. All of the banks have money on the line themselves and are expecting to support the share price.
Maybe if mods voting yes were required to hold some amount of stock for 30 days or so you would both get better reviews, and have a clear signal of investors appetite for a particular issue.
That's a great idea. Maybe when investors vote they could plug in the number of shares they'd be willing to commit. Their vote wouldn't be tied to it, but it could be used as a weighing mechanism, and whatever they plug in they would be bound to. (site would reserve it and auto-execute somehow at ipo.) Maybe even better would be to allow ALL users to pre-commit on pending assets. The amounts designated would go in reserve before the IPO, and the shares purchased would be locked after IPO for some specific time frame. Then IPO's would be limited to some percentage of the pre-commitments. IE, an IPO would not be allowed to release more than 150% or 200% of the pre-committed share count. It'd also be a great way to prevent the situations where an issuer needs XXX amount to get started, then only raises 50% of that in the IPO. Lots to think about. |
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lysr
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June 30, 2013, 07:28:40 AM |
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Hey Burnside, since you are reading this thread, would you please look into this issue for us? Darin Carolus, one of the managing members of AMC/VMC was involved in scamming before, we have yet received any answer or confirmation from AMC or Ken. I think it is within your power to force an explanation or answer from them and protect all investors from potential scam. |
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Deprived
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June 30, 2013, 07:43:19 AM |
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In the real world there is a syndicate of investment banks that take on filling the IPO. They spend a few months getting interest from large customers and determining a reasonable valuation. On the IPO date the first trades are all filling earlier commitments to buy at the price finally set by the banks. All of the banks have money on the line themselves and are expecting to support the share price.
Maybe if mods voting yes were required to hold some amount of stock for 30 days or so you would both get better reviews, and have a clear signal of investors appetite for a particular issue.
That's a great idea. Maybe when investors vote they could plug in the number of shares they'd be willing to commit. Their vote wouldn't be tied to it, but it could be used as a weighing mechanism, and whatever they plug in they would be bound to. (site would reserve it and auto-execute somehow at ipo.) Maybe even better would be to allow ALL users to pre-commit on pending assets. The amounts designated would go in reserve before the IPO, and the shares purchased would be locked after IPO for some specific time frame. Then IPO's would be limited to some percentage of the pre-commitments. IE, an IPO would not be allowed to release more than 150% or 200% of the pre-committed share count. It'd also be a great way to prevent the situations where an issuer needs XXX amount to get started, then only raises 50% of that in the IPO. Lots to think about. For IPOs where the issuer needs XXX amount you could apply two simple rules: 1. The funds raised from sales are escrowed by the site until XXX is raised - or reversed to all shares (and the IPO closed) if XXX isn't raised in Y days/weeks. 2. Issuer account is locked against transferring shares or selling at below a declared IPO price until 1. is met. Number 2 is a problem (as happened in the past with Ken) where the issuer gets impatient and starts selling cheap. Number 1 would only apply where there was a minimum needed to achieve their goals. If they fail to reach that in a reasonable time period (weeks not months) then the IPO has failed - so just return the cash, delist it and move on. You have to lock a lot of account functionality to do that - otherwise issuer an just transfer funds to an alt account and reuse it to buy more shares inflating the count of what was actually sold. I think you're still not clearly understanding the main problem with AMC btw. The problem is that its structure so that even if it DOES make profit from hardware sales under 5% of it ends up with investors. How much less than 5% depends on a definition of 'profit' imposed by VMC (which shareholders have no say in or oversight of) - which makes the 'no salary' clause of AMC worthless (as Ken can give whatever he wants as salary to himself/friends/family before profit comes anywhere near AMC) and on how much profit is made. To get 2.5% return on capital requires $2 million profit on sales to be made - that's sales of ASICs that won't even be out until end of this year/early next by KEN's estimate. |
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burnside
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June 30, 2013, 08:18:13 AM |
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Hey Burnside, since you are reading this thread, would you please look into this issue for us? Darin Carolus, one of the managing members of AMC/VMC was involved in scamming before, we have yet received any answer or confirmation from AMC or Ken. I think it is within your power to force an explanation or answer from them and protect all investors from potential scam. I read through all of the references. It all seems to mesh. We'll definitely seek clarity with Ken, though I suspect he'll respond in the original thread when he sees it. For IPOs where the issuer needs XXX amount you could apply two simple rules:
1. The funds raised from sales are escrowed by the site until XXX is raised - or reversed to all shares (and the IPO closed) if XXX isn't raised in Y days/weeks.
2. Issuer account is locked against transferring shares or selling at below a declared IPO price until 1. is met.
Number 2 is a problem (as happened in the past with Ken) where the issuer gets impatient and starts selling cheap.
Number 1 would only apply where there was a minimum needed to achieve their goals. If they fail to reach that in a reasonable time period (weeks not months) then the IPO has failed - so just return the cash, delist it and move on. You have to lock a lot of account functionality to do that - otherwise issuer an just transfer funds to an alt account and reuse it to buy more shares inflating the count of what was actually sold.
1) Definitely makes sense in the situations that fit. 2) In this case I suspect he'd just plug in a "minimum share value" of 0.0005 on the form, then sell at 0.0025 anyway. That's essentially what he's done contractually with BitFunder. So it would seem a maximum is required as well. And ultimately you realize as you're plugging all this code in that you're just trying to get around the issue that you don't trust the issuer to make good decisions. I'm starting to lean toward asking new issuers to seek guidance from consultants prior to IPO. Maybe even develop a list of trusted consultants, then require all issues to be represented by a consultant on the list. I think you're still not clearly understanding the main problem with AMC btw. The problem is that its structure so that even if it DOES make profit from hardware sales under 5% of it ends up with investors. How much less than 5% depends on a definition of 'profit' imposed by VMC (which shareholders have no say in or oversight of) - which makes the 'no salary' clause of AMC worthless (as Ken can give whatever he wants as salary to himself/friends/family before profit comes anywhere near AMC) and on how much profit is made. To get 2.5% return on capital requires $2 million profit on sales to be made - that's sales of ASICs that won't even be out until end of this year/early next by KEN's estimate.
Definitely does not sound good for investors. Though my understanding was that most of their returns would come from the mining that AMC would be doing. Either way, a return seems a long, long way off. |
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ryantw
Newbie
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June 30, 2013, 08:25:08 AM |
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Very true. Having a poorly run investment exchange is just welcoming government problems. Look at what happened to mtgox. Obviously that is a different scenario, but it shows that you have to run a tight ship. Having a bitcoin securities exchange that is irresponsible as far as assets it allows is asking for problems. The concept of wild west investing when using bitcoin should be abandoned when it is obvious that the asset is a delusion investment.
Bitfunder/BTCTC/others: please be responsible in what you allow to be listed. Fancy spreadsheets, "estimates" and big promises should be considered worthless. At least have a warning on specific assets that (a) do not have hardware in hand (b) are heavily based on research/development before profit occurs (c) cashflow will not occur for over 3 months.
I keep seeing these assets being listed that are basically "Ordered asic chips from xyc. They are expected to be here in 3-6 months. Pay off my initial cost, believe my estimates and share in the mined bitcoin". Its awful.
To me it is definitely important to maintain the integrity of the exchange. If you look through the AMC thread, (if it hasn't been self-moderated out?) you'll see that myself and many of those involved with BTC-TC have been asking questions and pointing out problems. We tend to get drowned out in the excitement, and as you can see by how quickly the asset was approved, it's obvious to me that at least some of the (there are 20+ now) mods were also excited. I'm not sure yet how this will ultimately pan out. Ken seems to be putting in the man hours, trying to get things together. I really don't feel like this is an outright Pirateat40 kind of deal. Does that mean I think it will succeed? I'm not sure. I believe they already hash, I believe they will make a chip, I believe they'll probably even get their unit out the door. What I'm not sure of is if they can do it before everyone else does, or if they can do it in sufficient volume. This is undeniably extremely high risk to be investing in. When I bought my first 100 ASICMINER shares on GLBSE I was almost certain I was going to lose it. When I bought my first 100 shares of NYAN.B I was almost certain I would not lose it. So go figure. Those 100 ASICMINER shares have made up for all my GLBSE losses. AMC isn't even a company, it is only a unit under VMC. How could it be approved for public trading?
Most sites just charge a fee and you are listed. Your contract could say that you will use the money to 'Kill Whitey' and you could still be trading. I had thought BTCT.co would be different as they do have a review process, but they failed miserably in this instance. It looks like buyers there lost 750 BTC in the last 2 days so maybe changes will be made. More likely not though. My understanding is that AMC and VMC are two separate companies, with contractual agreements between each other. This structure is not unlike the ASICMINER arrangement, though I have not picked apart all the details. (read Deprived's posts on this, they are fairly informative.) I'm not sure yet this is a complete failure. What the investors paid 0.0025 per share for has not fundamentally changed, so what they wanted when they paid that they got. There is no loss unless you sell, at which point you no longer have whatever it is you wanted at 0.0025. Ken definitely seems to have misjudged the market around the IPO, but SDICE did the same thing, and many other issues have had the same problem. I think the mods that approved it believe that Ken will do his best to fulfill his contract and the obligations he has laid out. Unfortunately after that there is no "IPO management" behind the process, so Ken was free to post the shares at whatever he wanted. What I really don't get is: Why did people think 2 days ago that 0.0025 was a great deal? And now, two days later, with minimal changes to the underlying issue, think it's not a great deal? On an asset that per stated plans, will take months to deliver? The market really doesn't make any sense to me sometimes and trying to make sense of it really hurts my brain. If there are changes to be made it's going to require more manpower to help filter better and to help the issuers plan their IPO's better. I've been discussing getting more people involved lately, I will continue to pursue those avenues. Cheers. Good to know you take exchange integrity seriously. There are lots of people watching bitcoin. There is the general public, private sector and governments. If you don't run a tight ship and protect the average investor, certain entities will find a way to cause your business to suffer. Regardless of what country you live in, their reach is far and wide. Perhaps your list of questions and problems that you pointed out must be directly addressed by the asset and posted before it is listed. A sort of exchange owner Q&A for each individual asset that investors can read before making a decision. For instance, if a question or concern you had, you being the exchange, was lost in the excitement it should at least be addressed in full regardless of excitement or moderator approval. There are so many holes in the business structure for AMC that it invites theories/accusations/negativity, which is obviously occurring now. Then the exchanges face public discontent as having listed the asset. The business structure of AMC is the main reason why it should never have been allowed as an asset. Hopefully everyone will learn from this particular issue an avoid such problems in the future. |
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EskimoBob
Legendary
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Activity: 910
Merit: 1000
Quality Printing Services by Federal Reserve Bank
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June 30, 2013, 08:52:59 AM |
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Treasury: 0.12 BTC ? What is that? He pays dividends to unsold shares, so they go back to the company on top of the 'reinvestment shares'. I know, both concepts are ridiculous, and would never pass muster with an accountant. It's just another mechanism to bleed the shareholders. Seriously? Only that is enough to never list stuff like that. You are correct it ridiculous and you do not have to be accountant to understand this. Is it possible, he has no idea wtf treasury stock is and just used a fancy word?  Every share bought back by the Co becomes treasury stock - no divs, no voting. Period! Those share can be later canceled. When shares are bought back - number of outstanding shares must be reduced (btc-tc supports that) and there is also reduction of company assets (_cash_ used to buy the shares). This is usually done when Co shares are undervalued for what ever reason and it actually makes sense to buy them back. If Co has 1000 outstanding shares and 1000 coins Co buys back 100 shares for 100 coins, they are left with 900 shares outstanding and 900 coins as cash. Now, if that same Co makes 50 in profit and has 900 shares outstanding and 100 in treasury, 50 gets divided by 900 shares and NOT by 1000 (900+100) "reinvestment share"? I hope they mean the % of profits reinvested. Nothing wrong with that because the coin stays in the Co as an asset. I do not have enough LTC shares to be part of the official voting process. Regardless, we need to do everything to keep scams like this off the exchange(s). Now, this scam has happened. Guy has the coin and it's probably all transferred to his wallet. Only way to fix this mess is if he fixes the contract so shareholders do not get ripped off. Ken, are you willing to do that? |
While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
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kslaughter
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June 30, 2013, 03:19:53 PM |
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Treasury: 0.12 BTC ? What is that? He pays dividends to unsold shares, so they go back to the company on top of the 'reinvestment shares'. I know, both concepts are ridiculous, and would never pass muster with an accountant. It's just another mechanism to bleed the shareholders. Seriously? Only that is enough to never list stuff like that. You are correct it ridiculous and you do not have to be accountant to understand this. Is it possible, he has no idea wtf treasury stock is and just used a fancy word? Every share bought back by the Co becomes treasury stock - no divs, no voting. Period! Those share can be later canceled. When shares are bought back - number of outstanding shares must be reduced (btc-tc supports that) and there is also reduction of company assets (_cash_ used to buy the shares). This is usually done when Co shares are undervalued for what ever reason and it actually makes sense to buy them back. If Co has 1000 outstanding shares and 1000 coins Co buys back 100 shares for 100 coins, they are left with 900 shares outstanding and 900 coins as cash. Now, if that same Co makes 50 in profit and has 900 shares outstanding and 100 in treasury, 50 gets divided by 900 shares and NOT by 1000 (900+100) "reinvestment share"? I hope they mean the % of profits reinvested. Nothing wrong with that because the coin stays in the Co as an asset. I do not have enough LTC shares to be part of the official voting process. Regardless, we need to do everything to keep scams like this off the exchange(s). Now, this scam has happened. Guy has the coin and it's probably all transferred to his wallet. Only way to fix this mess is if he fixes the contract so shareholders do not get ripped off. Ken, are you willing to do that? Yes, I understand some of the raised issues could have been better formulated in the original contract. My intention is not to rip off anyone, but to build value for AMC's shareholders. I am open to any thoughtful changes on how to proceed for making any necessary adjustments. |
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Birdy
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June 30, 2013, 03:27:38 PM |
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Yes, I understand some of the raised issues could have been better formulated in the original contract. My intention is not to rip off anyone, but to build value for AMC's shareholders. I am open to any thoughtful changes on how to proceed for making any necessary adjustments.
Okey, here is my suggestion: Give shareholders at least 40-50% of the possible overall profit for all the risk they take, not like ~8%. |
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kslaughter
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June 30, 2013, 03:39:44 PM |
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Yes, I understand some of the raised issues could have been better formulated in the original contract. My intention is not to rip off anyone, but to build value for AMC's shareholders. I am open to any thoughtful changes on how to proceed for making any necessary adjustments.
Okey, here is my suggestion: Give shareholders at least 40-50% of the possible overall profit for all the risk they take, not like ~8%. At the momeent shareholder are getting 50% of the profit. |
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Deprived
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June 30, 2013, 04:31:00 PM |
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Yes, I understand some of the raised issues could have been better formulated in the original contract. My intention is not to rip off anyone, but to build value for AMC's shareholders. I am open to any thoughtful changes on how to proceed for making any necessary adjustments.
Okey, here is my suggestion: Give shareholders at least 40-50% of the possible overall profit for all the risk they take, not like ~8%. At the momeent shareholder are getting 50% of the profit. No, they're only getting a share of the 10% of profits that VML passes to AMC. 90% of the profit made using their capital is syphoned off to VML - they take the risk (or has VML got $1 million in assets to repay even if sales of hardware doesn't make enough?) and only get a portion of 10% of profits. To add insult to injury on the first $1 million of profit AMC's 10% is counted as being repayment of principal - reducing the effective royalties percentage to anywhere from 0-10%. VML only exists to enrich you rather than those putting up the cash. Everyone knows it now. Unless that's fixed there's no hope of any decent return for investors - certainly not enough to justify risking the capital on joining the ASIC manufacturers club late. |
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ajk
Donator
Sr. Member
Offline
Activity: 447
Merit: 250
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June 30, 2013, 04:38:44 PM |
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as someone who was a share holder the dividends went
20million to reinvestment
15million Kens possession
5million were fighting for the small bit of dividends,
Im sorry to say it but I got rid of the rest of what I had yesterday after s_stylez P.I. - like post, dhenson's post of the virtual office box and Ken's absolutely horrible way of handling the current situation mostly by staying quiet or when answering giving only mediocre answers and more promise I had enough,
I like to give people the benefit of the doubt but in this case I was blinded mostly in the huge raise in share price, I am just thankful that I got out in the green but the people who bought in out of the large wall are the ones who are really suffering right now,
Ken until everything is changed from the bottom up everyone in this thread who was calling pump and dump was on point, some handled it way more professionally and like adults than others but the point was brought to surface, I wish you the best but things are definitely in need of changing,
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auto2nr1
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June 30, 2013, 04:45:27 PM |
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Yes, I understand some of the raised issues could have been better formulated in the original contract. My intention is not to rip off anyone, but to build value for AMC's shareholders. I am open to any thoughtful changes on how to proceed for making any necessary adjustments.
This is definitely the right attitude and some changes should be made. |
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Minor Miner
Legendary
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Merit: 1012
Be A Digital Miner
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June 30, 2013, 04:54:20 PM |
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In the real world there is a syndicate of investment banks that take on filling the IPO. They spend a few months getting interest from large customers and determining a reasonable valuation. On the IPO date the first trades are all filling earlier commitments to buy at the price finally set by the banks. All of the banks have money on the line themselves and are expecting to support the share price.
Maybe if mods voting yes were required to hold some amount of stock for 30 days or so you would both get better reviews, and have a clear signal of investors appetite for a particular issue.
That's a great idea. Maybe when investors vote they could plug in the number of shares they'd be willing to commit. Their vote wouldn't be tied to it, but it could be used as a weighing mechanism, and whatever they plug in they would be bound to. (site would reserve it and auto-execute somehow at ipo.) Maybe even better would be to allow ALL users to pre-commit on pending assets. The amounts designated would go in reserve before the IPO, and the shares purchased would be locked after IPO for some specific time frame. Then IPO's would be limited to some percentage of the pre-commitments. IE, an IPO would not be allowed to release more than 150% or 200% of the pre-committed share count. It'd also be a great way to prevent the situations where an issuer needs XXX amount to get started, then only raises 50% of that in the IPO. Lots to think about. there are also rules that the issuer and syndicate CANNOT break. One of them is buying shares above the issue price for a certain period. While you sell 15% more shares than the offering, these shares (the greenshoe) are either a short to protect the bid at and ONLY at IPO price or in the case of the successful IPO, the greenshoe is exercised and more shares are issued. the reason you CANNOT buy above the offering price is because that is what pump n dumpers do. And as I posted, I think that is what was (admitted to in thread) happening here. This is illegal for a good reason. |
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