E Two Takeovers

The big news is first that Barron's has almost resumed publishing tables showing net-asset values for closed-end funds, with a few gaps still. The other big news is that my account which was supposed to be moved on Friday to Interactive Brokers remains firmly lock up in E-trade Financial which will cease all non-US trading on July 9. I am now in week 9 of trying to move my account and the brokerage seems to be deliberately blocking the transfer by coming up with new excuses, the most recent saying that my margin account was in deficit. I do not have a margin account. The deficits incurred latterly totaling about $750 so far were the result of e-trade charging me "reorganization" fees for transferring many foreign holdings into pink sheet ADRs. Some however, remain stubbornly offshore because they have no ADRs, which means it will take longer than July 7 to move the whole account.

The brickwork has taken longer but even moving my brokerage account is something like the labors of Sisyphus or the negotiation of an Iranian nuclear deal--or perhaps just the talks about debt at the country where Sisyphus was invented, Greece. It is all supposed to be fully automated, and therein lies the rub. The last time I transferred accounts it took 72 hours. Now it is the 10th week with no end in sight.

Two Takeovers: Allana Potash, Portugal Telecom
There are two sales (actually takeovers) this week. One is at a modest discount of 18% from what we bought at, not too awful for a speculative stock in Ethiopian potash. It is Canadian, Allana Potash (ALLRF). The other, Portugal Telecom (PT) is a disaster of the first order from of all places, Portugal, the very country whose beaches I will hit between lecturing next month. Or to quote our son the certified financial analyst, "Portugal is Africa's last colony in Europe."

What happened here to an NYSE-listed American Depository Receipt is beyond belief. Our Lusitanian (the Roman name for Portugal) was sunk. The share was simply looted by all comers, starting with management which shipped its spare cash of about $1 bn to buy short-term commercial paper from a Luxembourg sub of the bank which underwrote Portugal Telecom's privatization, Banco Espirito Santo. The transfer was arranged by a member of the board representing the bank without the CEO knowing about it. The CEO, by the way, was himself African, Zainal Mohammed Bava, not exactly a member of the Portuguese ruling caste. Six weeks later the BES sub in Luxembourg could not repay and filed for "protection against its creditors". The Portugese BES parent was nationalized in distress to save depositors and the central bank from the impact of this, which would have been worse that what now faces Greece.

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John Fitch 5 years ago Member's comment

This is an amazing story of fraud and compliments to you for digging it out. Is there no way you can give it to the papers as a warning to investors who believe that EU countries are safely regulated?

This is the sort of stuff that one expected (and got) from Greek politicians, with Brussels (and Luxembourg) bureaucrats turning a blind eye, and for which the citizens of Greece now are being asked to pay. Just like the shareholders of Portugal Telcom. Bon voyage and give 'em hell in Portugal.