Forum Archive Index - February 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

Readers: Previous items of the " irreverent " series were dated Feb.10, Jan. 3 and Dec. 31. Any names in this episode bear no resemblance to those of any living persons or to any mentioned professions or institutions ( in the broadest sense ). 

 

G: Say, dr. Crash ( C ) is just coming in. As you know he comes from Wonderland.

 

We were talking about a Philipa Bungle, a friend of mine.

Anyway, it is good to see you again, dr. Crash.

 

C: I am once again visiting your country Cloud Cuckoo Land; our stockexchange has directed me to discuss certain items with yours.

H: I am glad that our exchange can help you, dr. C.

 

C: We have some big institutions who want priority in everything: members of our exchange also want to make a bob or two as they act for them!

 

The problem is: How to reconcile these needs without upsetting the small investor too much. Now, after talking to your exchange, I think I have the answers:

 

1. We shall use their constitution but make it even tighter. That should please the average investor.

2. We shall also use their concept of " spotters " These are people who keep a lookout for any " irregular trading ".

    

Re (1), we shall employ an " Independent surveillance panel ", their job is to look at every full or partial takeover and to ensure that everything is fair.

 

Now, don't ask me " fair to whom ", I won't answer that! Don't you like the word " Independent "?

 

Members of this panel can only partake if their interest in any relevant company is below 5%. 

 

G: But 5% is too high, I think that a member should have no interest in such a company at all!

 

H: I like the idea of using " spotters ": Either these people are too busy as brokers to worry about these things or perhaps they could be involved in " irregular trading " themselves.

Who is checking the " spotters " and why don't you use electronic checking systems?

 

C: Come on now, do you really think that we want the system to work? You must admit it all sounds good!

 

G: But you said that you will have a very tight constitution, what about any problems which may arise?

 

C: Whenever there is a problem, this Panel will very likely waive the rules!

 

G: It sounds that the institutions are going to be the winners, how about the smaller shareholder?

 

C: What about them? The exchange told us that most of the time they had no problems with these waivers; in the rare cases when the shareholder objected, they claimed that they " had no idea " that the outcome was so unexpected!

 

When it gets bad enough, we could claim that " the panel is incompetent. Obviously, we can't claim to be " negligent " as our members could be sued perhaps.

 

H: Sounds like a great scheme: what qualifications do I need to become a director of your exchange?

 

C: None, my boy. Just go with the flow and look after our institutions and the brokerage firms who deal with them!

 

Gerry