Comments on: Stopping David Tweed http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/ Fri, 19 Mar 2010 12:16:22 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Bingo Bango Boingo http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323542 Bingo Bango Boingo Sun, 12 Oct 2008 12:26:48 +0000 http://clubtroppo.com.au/?p=6040#comment-323542 Tel_ Perhaps this is a case where legal jargon is getting in the way. "On the application of [*]" simply refers to person [*] who is able to sue for the prohibition order. It does not refer to any recommendation or other process under which any court is a rubber stamp. As for the legislative criteria, I said: "The criteria for prohibition would be relatively straightforward to formulate. They would rely on fairly simple inferences about past behaviour, both of the offeror and the many offerees (again, based on an objective analysis of the offer price and prevailing market prices)." The criteria would really have to include inferences about bad faith and the market value of things. But because we are not trying to get at every single transaction out there, we can be a little more relaxed about the drafting issues (hence "relatively straightforward"). Courts deal with market value as a concept routinely. Inferences about bad faith are bread and butter (denningesque is overstating the difficulties here). Even still, it'll end up complex. My hastily-put-together proposal simply seeks to quarantine the complex value judgments to cases where the offeror is a person who has already been judged (by a court) to have acted in bad faith in their acquisition of property at below market rates. Without this step, the results of any attempt to prohibit "uncommercial" transactions would be catastrophic. Anyway, I'm sure that as the discussion goes on my sarcastic "no holes, I'm sure" remark will be proved prescient. The overarching point is that a disclosure-only regime has been proved ineffective, for the reasons Nick has already pointed out. We need something else if we want to stamp this stuff out entirely. Of course, some of the responses here suggest that we, as a society, may not want that. BBB Tel_

Perhaps this is a case where legal jargon is getting in the way. “On the application of [*]” simply refers to person [*] who is able to sue for the prohibition order. It does not refer to any recommendation or other process under which any court is a rubber stamp.

As for the legislative criteria, I said:

“The criteria for prohibition would be relatively straightforward to formulate. They would rely on fairly simple inferences about past behaviour, both of the offeror and the many offerees (again, based on an objective analysis of the offer price and prevailing market prices).”

The criteria would really have to include inferences about bad faith and the market value of things. But because we are not trying to get at every single transaction out there, we can be a little more relaxed about the drafting issues (hence “relatively straightforward”). Courts deal with market value as a concept routinely. Inferences about bad faith are bread and butter (denningesque is overstating the difficulties here). Even still, it’ll end up complex. My hastily-put-together proposal simply seeks to quarantine the complex value judgments to cases where the offeror is a person who has already been judged (by a court) to have acted in bad faith in their acquisition of property at below market rates. Without this step, the results of any attempt to prohibit “uncommercial” transactions would be catastrophic. Anyway, I’m sure that as the discussion goes on my sarcastic “no holes, I’m sure” remark will be proved prescient.

The overarching point is that a disclosure-only regime has been proved ineffective, for the reasons Nick has already pointed out. We need something else if we want to stamp this stuff out entirely. Of course, some of the responses here suggest that we, as a society, may not want that.

BBB

]]> By: Tel_ http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323536 Tel_ Sun, 12 Oct 2008 11:34:57 +0000 http://clubtroppo.com.au/?p=6040#comment-323536 <blockquote>The prohibition would have to be imposed by a court, ideally on the application of ASIC </blockquote> I would hope that the court would have some decision-making basis upon which to apply this penalty (and yes it is a penalty), something a bit more concrete than "we don't like you". If the court always follows the ASIC recommendation then might as well skip the court and just let ASIC write the list of "good guys" and "bad guys" which is a guaranteed path to corruption (not a risk, a guarantee). If you want the court to seriously review the ASIC recommendation then you have to give the court something to work with, like a criteria or something where there is a plausible chance that the accused can defend themselves. Presumably your criteria is going to relate to the transaction somehow (what else can it relate to) and we are back to the same problem.

The prohibition would have to be imposed by a court, ideally on the application of ASIC

I would hope that the court would have some decision-making basis upon which to apply this penalty (and yes it is a penalty), something a bit more concrete than “we don’t like you”. If the court always follows the ASIC recommendation then might as well skip the court and just let ASIC write the list of “good guys” and “bad guys” which is a guaranteed path to corruption (not a risk, a guarantee). If you want the court to seriously review the ASIC recommendation then you have to give the court something to work with, like a criteria or something where there is a plausible chance that the accused can defend themselves. Presumably your criteria is going to relate to the transaction somehow (what else can it relate to) and we are back to the same problem.

]]> By: Bingo Bango Boingo http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323526 Bingo Bango Boingo Sun, 12 Oct 2008 07:40:04 +0000 http://clubtroppo.com.au/?p=6040#comment-323526 denningesque, I tend to agree with your later comments. The drafting issues are pretty diabolical if the main thrust is to prohibit certain transactions. The solution is to do no such thing. Rather, we ought to prohibit certain persons from participating in the market without jumping over a further administrative hurdle that takes account of existing market prices. The criteria for prohibition would be relatively straightforward to formulate. They would rely on fairly simple inferences about past behaviour, both of the offeror and the many offerees (again, based on an objective analysis of the offer price and prevailing market prices). Since it would only be a conditional prohibition, not an outright suspension of economic rights, we should be less worried about catching the good guys in our net. The prohibition would have to be imposed by a court, ideally on the application of ASIC (and not each and every allegedly shafted investor, or commercial competitor). BBB denningesque, I tend to agree with your later comments. The drafting issues are pretty diabolical if the main thrust is to prohibit certain transactions. The solution is to do no such thing. Rather, we ought to prohibit certain persons from participating in the market without jumping over a further administrative hurdle that takes account of existing market prices. The criteria for prohibition would be relatively straightforward to formulate. They would rely on fairly simple inferences about past behaviour, both of the offeror and the many offerees (again, based on an objective analysis of the offer price and prevailing market prices). Since it would only be a conditional prohibition, not an outright suspension of economic rights, we should be less worried about catching the good guys in our net. The prohibition would have to be imposed by a court, ideally on the application of ASIC (and not each and every allegedly shafted investor, or commercial competitor).

BBB

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323525 denningesque Sun, 12 Oct 2008 06:51:17 +0000 http://clubtroppo.com.au/?p=6040#comment-323525 TH, it is always possible to legislate in detail what is a prohibited transaction. That could entail setting out in detail the elements of each sort of transaction. The legislation becomes more like a code. Parliaments tend to avoid this because the more you proscribe particular transactions which are set out in detail the more likely the malefactor will tweak his offering to avoid it. For every tweak the legislature amends. That is exactly what happened in the late 70s and early 80s with the tax legislation. It still happens to a degree. It really becomes a cost benefit analysis. Running this jerk to ground runs risks of causing "collateral damage." Or at least that is how I see it. TH, it is always possible to legislate in detail what is a prohibited transaction. That could entail setting out in detail the elements of each sort of transaction. The legislation becomes more like a code. Parliaments tend to avoid this because the more you proscribe particular transactions which are set out in detail the more likely the malefactor will tweak his offering to avoid it. For every tweak the legislature amends. That is exactly what happened in the late 70s and early 80s with the tax legislation. It still happens to a degree. It really becomes a cost benefit analysis. Running this jerk to ground runs risks of causing “collateral damage.” Or at least that is how I see it.

]]> By: TH http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323523 TH Sun, 12 Oct 2008 04:49:35 +0000 http://clubtroppo.com.au/?p=6040#comment-323523 Denny, You seem to be exaggerating the administrative costs this would impose. I may be misinterpreting you, but you seem to be saying ASIC has to stop these offers up front. It doesn't, it just has to have surveillance in place so it can punish them when they occur. Nonetheless, I admit that if the test is unclear, it may still be an impediment to trade. The real issue is the test - if the trickery test is sound, it won't be any more difficult to enforce than existing provisions. The problem is that in a lot of cases, it may not be so clear. Fair enough, but the test could be more objective: no below market offerings, unless some additional benefit is provided. As you say, it then becomes about defining benefit. As I noted in my previous post, Tweedesque could provide convenience. They also provide cash for something that might otherwise just be a bit of paper. I suppose you could also argue that some of the discounted price relates to the cost of posting these offers or the risk that prices will fall. However, as far I can see, the definition of benefit only becomes problematic where somebody is given a below market offer without any else attached. So how common are these sorts of offers? How important are they? Couldn't you make a case that the benefit of saving pensioners from being scammed is worth banning these sorts of offers outright? Having said all that, on further consideration I think it all falls down in the end becyase Tweed could just start offering something non-standard in addition to the below market offer, like a 'free' investment seminar, or 'chance' to win a holiday. He could even offer a couple of shares in another company. Could we legislate against these sorts of transactions without catching a whole range of legitimate activity? Denny,

You seem to be exaggerating the administrative costs this would impose. I may be misinterpreting you, but you seem to be saying ASIC has to stop these offers up front. It doesn’t, it just has to have surveillance in place so it can punish them when they occur. Nonetheless, I admit that if the test is unclear, it may still be an impediment to trade. The real issue is the test – if the trickery test is sound, it won’t be any more difficult to enforce than existing provisions.

The problem is that in a lot of cases, it may not be so clear. Fair enough, but the test could be more objective: no below market offerings, unless some additional benefit is provided.

As you say, it then becomes about defining benefit. As I noted in my previous post, Tweedesque could provide convenience. They also provide cash for something that might otherwise just be a bit of paper. I suppose you could also argue that some of the discounted price relates to the cost of posting these offers or the risk that prices will fall.

However, as far I can see, the definition of benefit only becomes problematic where somebody is given a below market offer without any else attached. So how common are these sorts of offers? How important are they? Couldn’t you make a case that the benefit of saving pensioners from being scammed is worth banning these sorts of offers outright?

Having said all that, on further consideration I think it all falls down in the end becyase Tweed could just start offering something non-standard in addition to the below market offer, like a ‘free’ investment seminar, or ‘chance’ to win a holiday. He could even offer a couple of shares in another company. Could we legislate against these sorts of transactions without catching a whole range of legitimate activity?

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323518 denningesque Sun, 12 Oct 2008 04:09:02 +0000 http://clubtroppo.com.au/?p=6040#comment-323518 Fair 'nuf. I think we are both arguing from legitimate positions. I think there are a lot of reasons why governments have not stepped to regulate to date. I think at least some of the issues I raised are part of that reasoning. Interesting issues though. ....and yes this is all a dream. Fair ‘nuf. I think we are both arguing from legitimate positions. I think there are a lot of reasons why governments have not stepped to regulate to date. I think at least some of the issues I raised are part of that reasoning.
Interesting issues though.
….and yes this is all a dream.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323493 Nicholas Gruen Sun, 12 Oct 2008 03:36:27 +0000 http://clubtroppo.com.au/?p=6040#comment-323493 I think enough's been said D. I expect you think this is genuine argument. It is in my opinion a kind of tendentiousness in which you could pretty much argue anything you like. We could for instance all be dreaming. People draw the kinds of inferences that the proposal calls to be made all the time. They're completely routine in administration and in judicial decision making. I can't think of a more straightforward inference for anyone to make than the one I've proposed - that Tweed making a living out of offering to buy people's shares at half their value - is relying on trickery (his full disclosure notwithstanding). If you think that raises difficult issues of administration, or interpretation bully for you. Maybe we are all dreaming. I think enough’s been said D. I expect you think this is genuine argument. It is in my opinion a kind of tendentiousness in which you could pretty much argue anything you like. We could for instance all be dreaming.

People draw the kinds of inferences that the proposal calls to be made all the time. They’re completely routine in administration and in judicial decision making.

I can’t think of a more straightforward inference for anyone to make than the one I’ve proposed – that Tweed making a living out of offering to buy people’s shares at half their value – is relying on trickery (his full disclosure notwithstanding).

If you think that raises difficult issues of administration, or interpretation bully for you. Maybe we are all dreaming.

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323461 denningesque Sun, 12 Oct 2008 02:11:10 +0000 http://clubtroppo.com.au/?p=6040#comment-323461 All this talk of "trickery" begs the question: what is "trickery". The OED defines trickery as "the practice or an instance of deception." That is already covered in the Fair Trading Act of each state and the Commonwealth Trade Practices Act. NG defines the offending act as being "..making an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it." (Apologies for abbreviated quoting). That looks to me like another way of rewording section 52 of the Trade Practices Act. The only problem is to prove the act or acts of trickery. TH says "Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldnt a court (or tribunal) be equally capable?" What is morally reprehensible is hardly a good test for what is illegal. It assumes that everyone is of equal mind and moral outlook. A legal test has to be a little more than "the vibe." There is no shortage of people who loath Tweed but also think that people should be responsible for their own affairs and that a bad bargain is not something to invite a wave of regulation. The other problem is defining "benefits". As I said earlier there are no shortage of transactions arranged whereby the offeree receives what appears to be a bad bargain. There may be, and usually are, all sorts of good reasons for accepting the offer. They may (read will) be caught up in this regulatory tar pit. The reality is that oferees get a payment for their shares. It is a fraction of their listed price but it is something. So any argument that the oferee gets nothing from the contract is wrong. So ASIC vets an offer which it deems unacceptable and, no surprises here, its decision is challenged in the Federal Court (or maybe the AAT). And again the issues of trickery and benefit come into play. What will a court look at, the letter of offer and ASIC's reasons for refusing to release it into the market. NPOV says "David Tweed must have known that they only people that were going to take up his offer were those that werent capable of fully comprehending the extent to which they were getting an extremely poor deal." Really? How must he have known that the only people who would have taken up the deal were those incapable of adequate comprehension (paraprashing). That is an inference. You can only draw an inference when there are facts to support that conclusion. Otherwise it is an assertion (which I suepect it is). It may be that some offers were taken up for a range of reasons including someone acted in a moment of stupidity (but are otherwise capable). Tweed makes an offer to all those on the share register and waits. The net effect of trying to stop this bottom feeder is that ASIC will take on more functions (at more expense) and the speed in all sorts of share trades will slow. All this talk of “trickery” begs the question: what is “trickery”. The OED defines trickery as “the practice or an instance of deception.” That is already covered in the Fair Trading Act of each state and the Commonwealth Trade Practices Act. NG defines the offending act as being “..making an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it.” (Apologies for abbreviated quoting). That looks to me like another way of rewording section 52 of the Trade Practices Act. The only problem is to prove the act or acts of trickery. TH says “Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldnt a court (or tribunal) be equally capable?” What is morally reprehensible is hardly a good test for what is illegal. It assumes that everyone is of equal mind and moral outlook. A legal test has to be a little more than “the vibe.” There is no shortage of people who loath Tweed but also think that people should be responsible for their own affairs and that a bad bargain is not something to invite a wave of regulation.
The other problem is defining “benefits”. As I said earlier there are no shortage of transactions arranged whereby the offeree receives what appears to be a bad bargain. There may be, and usually are, all sorts of good reasons for accepting the offer. They may (read will) be caught up in this regulatory tar pit. The reality is that oferees get a payment for their shares. It is a fraction of their listed price but it is something. So any argument that the oferee gets nothing from the contract is wrong.
So ASIC vets an offer which it deems unacceptable and, no surprises here, its decision is challenged in the Federal Court (or maybe the AAT). And again the issues of trickery and benefit come into play. What will a court look at, the letter of offer and ASIC’s reasons for refusing to release it into the market. NPOV says “David Tweed must have known that they only people that were going to take up his offer were those that werent capable of fully comprehending the extent to which they were getting an extremely poor deal.” Really? How must he have known that the only people who would have taken up the deal were those incapable of adequate comprehension (paraprashing). That is an inference. You can only draw an inference when there are facts to support that conclusion. Otherwise it is an assertion (which I suepect it is). It may be that some offers were taken up for a range of reasons including someone acted in a moment of stupidity (but are otherwise capable). Tweed makes an offer to all those on the share register and waits.
The net effect of trying to stop this bottom feeder is that ASIC will take on more functions (at more expense) and the speed in all sorts of share trades will slow.

]]> By: TH http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323400 TH Sat, 11 Oct 2008 22:44:22 +0000 http://clubtroppo.com.au/?p=6040#comment-323400 Firstly, all this talk of banning misses the point. As Denny points out, the logistics associated with banning these offers outright would be unworkable. This doesn't mean there couldn't be a substantial penalty were these sorts of offers are identified. Does it? ASIC wouldn't need to be a gatekeeper, they could just extend their surveillance and enforcements activities. The real issue is just whether 'an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it' is a workable legal test. Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldn't a court (or tribunal) be equally capable? Nic may have mentioned this already, but I think a key criteria would be that there is no chance of making money for the offeree - it's not taking a risk, it's literally giving money away. On the other hand (I'm thinking this through as I go), I guess I could still endorse such a transaction where there are barriers to the offeree selling their shares in other ways. So I guess you could argue that Tweed is providing a convenience, or that many of these would never have received any money for their holding without Tweed's offer. You could argue that people do benefit in some instances from selling shares for below market value. I'm not saying Tweed was providing such a service, but it does make things murky. How would you make a distinction here, or would you just bite the bullet and outlaw all below market offerings? Firstly, all this talk of banning misses the point. As Denny points out, the logistics associated with banning these offers outright would be unworkable. This doesn’t mean there couldn’t be a substantial penalty were these sorts of offers are identified. Does it? ASIC wouldn’t need to be a gatekeeper, they could just extend their surveillance and enforcements activities.

The real issue is just whether ‘an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it’ is a workable legal test. Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldn’t a court (or tribunal) be equally capable?

Nic may have mentioned this already, but I think a key criteria would be that there is no chance of making money for the offeree – it’s not taking a risk, it’s literally giving money away.

On the other hand (I’m thinking this through as I go), I guess I could still endorse such a transaction where there are barriers to the offeree selling their shares in other ways. So I guess you could argue that Tweed is providing a convenience, or that many of these would never have received any money for their holding without Tweed’s offer. You could argue that people do benefit in some instances from selling shares for below market value. I’m not saying Tweed was providing such a service, but it does make things murky. How would you make a distinction here, or would you just bite the bullet and outlaw all below market offerings?

]]> By: TH http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323399 TH Sat, 11 Oct 2008 22:43:52 +0000 http://clubtroppo.com.au/?p=6040#comment-323399 Firstly, all this talk of banning misses the point. As Denny points out, the logistics associated with banning these offers outright would be unworkable. This doesn't mean there couldn't be a substantial penalty were these sorts of offers are identified. Does it? ASIC wouldn't need to be a gatekeeper, they could just extend there surveillance and enforcements activities. The real issue is just whether 'an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it' is a workable legal test. Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldn't a court (or tribunal) be equally capable? Nic may have mentioned this already, but I think a key criteria would be that there is no chance of making money for the offeree - it's not taking a risk, it's literally giving money away. On the other hand (I'm thinking this through as I go), I guess I could still endorse such a transaction where there are barriers to the offeree selling their shares in other ways. So I guess you could argue that Tweed is providing a convenience, or that many of these would never have received any money for their holding without Tweed's offer. You could argue that people do benefit in some instances from selling shares for below market value. I'm not saying Tweed was providing such a service, but it does make things murky. How would you make a distinction here, or would you just bite the bullet and outlaw all below market offerings? Firstly, all this talk of banning misses the point. As Denny points out, the logistics associated with banning these offers outright would be unworkable. This doesn’t mean there couldn’t be a substantial penalty were these sorts of offers are identified. Does it? ASIC wouldn’t need to be a gatekeeper, they could just extend there surveillance and enforcements activities.

The real issue is just whether ‘an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it’ is a workable legal test. Now it seems to me that we can all identify Tweeds behavior as reprehensible, so shouldn’t a court (or tribunal) be equally capable?

Nic may have mentioned this already, but I think a key criteria would be that there is no chance of making money for the offeree – it’s not taking a risk, it’s literally giving money away.

On the other hand (I’m thinking this through as I go), I guess I could still endorse such a transaction where there are barriers to the offeree selling their shares in other ways. So I guess you could argue that Tweed is providing a convenience, or that many of these would never have received any money for their holding without Tweed’s offer. You could argue that people do benefit in some instances from selling shares for below market value. I’m not saying Tweed was providing such a service, but it does make things murky. How would you make a distinction here, or would you just bite the bullet and outlaw all below market offerings?

]]> By: Tel_ http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323397 Tel_ Sat, 11 Oct 2008 21:38:04 +0000 http://clubtroppo.com.au/?p=6040#comment-323397 <blockquote>The intention of a scratchy is not deception. It is targeted those able to make informed decisions.</blockquote> Their advertising shows trucks of cash, bags of gold, bright colours, grinning happy people taking long holidays in luxury hotels, and they take special trouble to ensure that players must be over 8 years old (in NSW). The lottery pool is zero-sum, and we know that a substantial chunk of cash gets pulled out in tax. The only possible outcome is wealth transfer from the players to the government, but I've yet to see those expected return calculations printed on each ticket. Someone once tried to explain to me that for most people, buying a lottery ticket is rational because it gives them a small but finite chance of great wealth, while working for a living gives them a zero chance at great wealth. Maybe that's an informed decision... I don't buy it, and I don't buy the tickets either. If you want to add up the poker machines, club keno, TAB and all the rest, and you want to look into the large number of known cases of gambling addiction, makes our friend Tweed look like a very small fish in comparison.

The intention of a scratchy is not deception. It is targeted those able to make informed decisions.

Their advertising shows trucks of cash, bags of gold, bright colours, grinning happy people taking long holidays in luxury hotels, and they take special trouble to ensure that players must be over 8 years old (in NSW). The lottery pool is zero-sum, and we know that a substantial chunk of cash gets pulled out in tax. The only possible outcome is wealth transfer from the players to the government, but I’ve yet to see those expected return calculations printed on each ticket.

Someone once tried to explain to me that for most people, buying a lottery ticket is rational because it gives them a small but finite chance of great wealth, while working for a living gives them a zero chance at great wealth. Maybe that’s an informed decision… I don’t buy it, and I don’t buy the tickets either.

If you want to add up the poker machines, club keno, TAB and all the rest, and you want to look into the large number of known cases of gambling addiction, makes our friend Tweed look like a very small fish in comparison.

]]> By: NPOV http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323396 NPOV Sat, 11 Oct 2008 21:27:23 +0000 http://clubtroppo.com.au/?p=6040#comment-323396 Yes but Tel you never *knowingly* took advantage of anyone. David Tweed must have known that they only people that were going to take up his offer were those that weren't capable of fully comprehending the extent to which they were getting an extremely poor deal. Those who trade on the stockmarket, for the most part, understand there's always a degree of risk. Even you "buying in at the low point" is risky - there's every chance that the shares you buy never significantly increase in value. Tweed was all but guaranteed to make a profit with his plan, as the probability of the collective value of all the shares he was offering to buy dropping in value by half and never recovering before he resold them is virtually zero - and given he was paying in delayed instalments, even if that happened and he made no money out of the share transactions, he wasn't going to be left out of pocket. Yes but Tel you never *knowingly* took advantage of anyone. David Tweed must have known that they only people that were going to take up his offer were those that weren’t capable of fully comprehending the extent to which they were getting an extremely poor deal.
Those who trade on the stockmarket, for the most part, understand there’s always a degree of risk. Even you “buying in at the low point” is risky – there’s every chance that the shares you buy never significantly increase in value. Tweed was all but guaranteed to make a profit with his plan, as the probability of the collective value of all the shares he was offering to buy dropping in value by half and never recovering before he resold them is virtually zero – and given he was paying in delayed instalments, even if that happened and he made no money out of the share transactions, he wasn’t going to be left out of pocket.

]]> By: Tel_ http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323393 Tel_ Sat, 11 Oct 2008 21:07:37 +0000 http://clubtroppo.com.au/?p=6040#comment-323393 <blockquote>The offer cannot advantage the offeror except by tricking the offeree. Thats the test. Its an objective test.</blockquote> Let's say the stock market takes a dive and I buy in at the low point, then a few weeks later it recovers nicely and I sell out. I couldn't have made a profit without someone else making a loss in this situation. Thanks to the anonymity of the trading system, I never know who made that loss, but they must be real.

The offer cannot advantage the offeror except by tricking the offeree. Thats the test. Its an objective test.

Let’s say the stock market takes a dive and I buy in at the low point, then a few weeks later it recovers nicely and I sell out. I couldn’t have made a profit without someone else making a loss in this situation. Thanks to the anonymity of the trading system, I never know who made that loss, but they must be real.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323328 Nicholas Gruen Sat, 11 Oct 2008 14:09:51 +0000 http://clubtroppo.com.au/?p=6040#comment-323328 <blockquote><em>So is ASIC to view the offer and go through a mountain of proposals so that it can block Tweeds proposal?</em></blockquote> Why is this so hard to get? ASIC is given a power to nominate someone as someone who has made offers which are not <em>bona fide</em>. How is this defined? It is making an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it. Upon ASIC so finding it would then require the the person to pay it to vet any offers the person wished to issue to the market. This is subject to the normal administrative law remedies if the person feels that ASIC is acting <em>ultra vires</em>. <blockquote><em>How do you prove Tweeds intention from a letter? How do you show to a judges satisfaction that it is deceit? How do you show it is targeted to those unable to make an informed decision. How do you prove those recipients are unable to make what is described as an informed decision. What constitutes an informed decision? Just being old is not enough. Lacking worldly experience hardly takes things further.</em> </blockquote> The offer cannot advantage the offeror except by tricking the offeree. That's the test. It's an objective test. How could Tweed benefit from offering to buy people's shares at half their market velue except by tricking them?

So is ASIC to view the offer and go through a mountain of proposals so that it can block Tweeds proposal?

Why is this so hard to get?

ASIC is given a power to nominate someone as someone who has made offers which are not bona fide. How is this defined? It is making an offer that could not yield benefits to its maker unless the offeree is tricked into agreeing to it. Upon ASIC so finding it would then require the the person to pay it to vet any offers the person wished to issue to the market. This is subject to the normal administrative law remedies if the person feels that ASIC is acting ultra vires.

How do you prove Tweeds intention from a letter? How do you show to a judges satisfaction that it is deceit? How do you show it is targeted to those unable to make an informed decision. How do you prove those recipients are unable to make what is described as an informed decision. What constitutes an informed decision? Just being old is not enough. Lacking worldly experience hardly takes things further.

The offer cannot advantage the offeror except by tricking the offeree. That’s the test. It’s an objective test. How could Tweed benefit from offering to buy people’s shares at half their market velue except by tricking them?

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323326 denningesque Sat, 11 Oct 2008 12:41:06 +0000 http://clubtroppo.com.au/?p=6040#comment-323326 There are huge problems in regulating to your desired result NG. There is a couple of ways to do it (within the parameters you have set out). The Corporations Act would need to be amended so that ASIC has an administrative function. Presumably that would require the offer to be approved before it is sent out. How wide do you draft the law? You can't amend the law to specify it applies to a particular named person. It is appalling on so many levels. I don't think the Federal Government has done it or would even contemplate doing it. On top of that it is easily evaded. Someone else will do it. Even if you listed those people through regulation it would require constant updating as Tweed works through nominees. The amendment would need to relate to a particular action or service. Presumably the action/service would be an offer to purchase shares or an offer to a particular class of individuals. Either or both options would catch the hundreds if not thousands of offers made by legit companies making take over bids for a sum of money or a share swap offer (or a combination). So is ASIC to view the offer and go through a mountain of proposals so that it can block Tweed's proposal? The problem is that it is very difficult to legislatively "weed out" Tweed type proposals from all others. Your proposal is not the same as banning pyramid schemes, which are banned, because that form of scam can be defined and proved. You can't sensibly legislate a "trickery" or a "fairness" test. Is the test to be a ridiculously low offer for shares. How do you define that legislatively? Do you say an offer 10 or 30% less than the market value falls within this category. So what about offers that are part share swap and part cash. Sometimes shares in a small public company will be sold for a lot less than the market value if there are other benefits to the shareholders (seats on boards etc..). In today's environment where shares are on a roller coaster, mostly heading southward the offer made today might be on the money when considered by ASIC. How do you incorporate a bona fide test? How do you objectively determine what is bona fide and what is not in this type of situation? As I said earlier that sort of a test would give small business a major headache (& not manna from heaven). It could easily be used against small business owners expanding by taking over other companies in financial difficulties. Against my interest it would give a lot of lawyers a lot of work. For what positive purpose though. ASIC would not want to have its officers jump the box in a court review to give evidence of how they determined the offer was not bona fide. I know that the average ASIC officer would rather have his/her front teeth knocked out in a serious car accident than give evidence under oath and be cross examined. What time frame would be applicable? It has to be some reasonable time frame. That means more resources (and pressure) for ASIC. As I said earlier, hundreds of thousands if not millions into its budget. Regulators hate being gatekeepers. They much prefer to oversee and prosecute when they find a breach or one is brought to their attention. Apart from the costs involved there will always be line ball decisions. ASIC would be exposed if it gets it wrong. ASIC's decision, even if described as administrative, would be subject to judicial review. ASIC, much like any party to litigation, hates losing. If it loses it pays the winners costs. If the primary intention of the regulation is to frustrate Tweed and his ilk that would offend against public policy. The parliamentary draftsman would have a fit. The most likely by product of this regulation would be to slow down the legitimate trade in shares and run up costs across the board. The above is jsut a few of the more obvious reasons why no government Federal or State, ALP or Liberal, have ever contemplated going down this path. On another level every citizen has to be responsible. HRGH says "The intention of David Tweed is to deceive people." How do you prove Tweed's intention from a letter? How do you show to a judge's satisfaction that it is deceit? How do you show it is "targeted" to those unable to make an informed decision. How do you prove those recipients are unable to make what is described as an "informed decision". What constitutes an informed decision? Just being old is not enough. Lacking worldly experience hardly takes things further. Moral outrage is one thing, regulating then enforcing it is a horse of an entirely different colour. I am pretty sure Tweed sends his offers to everyone on the share register. I know what side of the argument gets the rough end of the pineapple. There are huge problems in regulating to your desired result NG. There is a couple of ways to do it (within the parameters you have set out). The Corporations Act would need to be amended so that ASIC has an administrative function. Presumably that would require the offer to be approved before it is sent out. How wide do you draft the law? You can’t amend the law to specify it applies to a particular named person. It is appalling on so many levels. I don’t think the Federal Government has done it or would even contemplate doing it. On top of that it is easily evaded. Someone else will do it. Even if you listed those people through regulation it would require constant updating as Tweed works through nominees.
The amendment would need to relate to a particular action or service. Presumably the action/service would be an offer to purchase shares or an offer to a particular class of individuals. Either or both options would catch the hundreds if not thousands of offers made by legit companies making take over bids for a sum of money or a share swap offer (or a combination). So is ASIC to view the offer and go through a mountain of proposals so that it can block Tweed’s proposal? The problem is that it is very difficult to legislatively “weed out” Tweed type proposals from all others. Your proposal is not the same as banning pyramid schemes, which are banned, because that form of scam can be defined and proved. You can’t sensibly legislate a “trickery” or a “fairness” test. Is the test to be a ridiculously low offer for shares. How do you define that legislatively? Do you say an offer 10 or 30% less than the market value falls within this category. So what about offers that are part share swap and part cash. Sometimes shares in a small public company will be sold for a lot less than the market value if there are other benefits to the shareholders (seats on boards etc..). In today’s environment where shares are on a roller coaster, mostly heading southward the offer made today might be on the money when considered by ASIC. How do you incorporate a bona fide test? How do you objectively determine what is bona fide and what is not in this type of situation? As I said earlier that sort of a test would give small business a major headache (& not manna from heaven). It could easily be used against small business owners expanding by taking over other companies in financial difficulties. Against my interest it would give a lot of lawyers a lot of work. For what positive purpose though. ASIC would not want to have its officers jump the box in a court review to give evidence of how they determined the offer was not bona fide. I know that the average ASIC officer would rather have his/her front teeth knocked out in a serious car accident than give evidence under oath and be cross examined.
What time frame would be applicable? It has to be some reasonable time frame. That means more resources (and pressure) for ASIC. As I said earlier, hundreds of thousands if not millions into its budget. Regulators hate being gatekeepers. They much prefer to oversee and prosecute when they find a breach or one is brought to their attention. Apart from the costs involved there will always be line ball decisions. ASIC would be exposed if it gets it wrong. ASIC’s decision, even if described as administrative, would be subject to judicial review. ASIC, much like any party to litigation, hates losing. If it loses it pays the winners costs.
If the primary intention of the regulation is to frustrate Tweed and his ilk that would offend against public policy. The parliamentary draftsman would have a fit. The most likely by product of this regulation would be to slow down the legitimate trade in shares and run up costs across the board.
The above is jsut a few of the more obvious reasons why no government Federal or State, ALP or Liberal, have ever contemplated going down this path.
On another level every citizen has to be responsible. HRGH says “The intention of David Tweed is to deceive people.” How do you prove Tweed’s intention from a letter? How do you show to a judge’s satisfaction that it is deceit? How do you show it is “targeted” to those unable to make an informed decision. How do you prove those recipients are unable to make what is described as an “informed decision”. What constitutes an informed decision? Just being old is not enough. Lacking worldly experience hardly takes things further. Moral outrage is one thing, regulating then enforcing it is a horse of an entirely different colour. I am pretty sure Tweed sends his offers to everyone on the share register. I know what side of the argument gets the rough end of the pineapple.

]]> By: hrgh http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323305 hrgh Sat, 11 Oct 2008 09:07:58 +0000 http://clubtroppo.com.au/?p=6040#comment-323305 "What about things like lotteries and scratchies. Dont these also take advantage of people who lack the ability to act in their own financial interest?" The intention of David Tweed is to deceive people out of their money. It is targeted to those unable to make an informed decision. The intention of a scratchy is not deception. It is targeted those able to make informed decisions. “What about things like lotteries and scratchies. Dont these also take advantage of people who lack the ability to act in their own financial interest?”

The intention of David Tweed is to deceive people out of their money. It is targeted to those unable to make an informed decision.

The intention of a scratchy is not deception. It is targeted those able to make informed decisions.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323251 Nicholas Gruen Sat, 11 Oct 2008 08:15:20 +0000 http://clubtroppo.com.au/?p=6040#comment-323251 <blockquote><em>If we didnt have so many stupid regulations constantly bullying people into filling out useless paperwork then granny wouldnt feel that signing random contracts was normal.</em></blockquote> Well there's some real truth in that - but I fancy you've overdone it. The market is much more complex. A lot of the stuff people get isn't driven by regulation. It's driven by the complexity of the market. Do you want to participate in a dividend reinvestment plan, a capital raising or whatever. Those are the main things you have to fill out. And the kind of basic contract law and company law one finds at common law would require people to elect to participate in such things and make decisions about them. I actually think we need to think more actively about how to simplify things here. Firms should make offers that if renounced don't forego lots of value. Today if you don't know what you're doing or are away overseas and some juicy rights issue comes up, you miss out. I think the default setting for doing nothing should wherever possible be some independent expert's best guess as to what would do the shareholder who did nothing the least harm. Obviously some judgements would have to be made, but the alternative is to make the choices by default, rather than design.

If we didnt have so many stupid regulations constantly bullying people into filling out useless paperwork then granny wouldnt feel that signing random contracts was normal.

Well there’s some real truth in that – but I fancy you’ve overdone it. The market is much more complex. A lot of the stuff people get isn’t driven by regulation. It’s driven by the complexity of the market. Do you want to participate in a dividend reinvestment plan, a capital raising or whatever. Those are the main things you have to fill out. And the kind of basic contract law and company law one finds at common law would require people to elect to participate in such things and make decisions about them.

I actually think we need to think more actively about how to simplify things here. Firms should make offers that if renounced don’t forego lots of value. Today if you don’t know what you’re doing or are away overseas and some juicy rights issue comes up, you miss out.

I think the default setting for doing nothing should wherever possible be some independent expert’s best guess as to what would do the shareholder who did nothing the least harm. Obviously some judgements would have to be made, but the alternative is to make the choices by default, rather than design.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323248 Nicholas Gruen Sat, 11 Oct 2008 07:35:00 +0000 http://clubtroppo.com.au/?p=6040#comment-323248 D, It's starting to look like it's impossible to get anywhere here. It is not about misrepresentation. This is a situation in which whatever problem remains cannot be dealt with by preventing misrepresentation. Because David Tweed is not misrepresenting anything. He's been forced to tell people he's trying to buy at below market value. Yet we know that he wouldn't send out the letters if he didn't make money. And virtually all of the money he makes is from tricking people - that's right, tricking them without using any misleading words in his letter to them. They're bewildered people. Old people. People who shouldn't be responding to such letters, many of whom know that but who live alone and don't know what else to do. Now you've said the definition I've offered would be manna from heaven for small businesses. Now bear in mind, what I've talked about is some provision somewhere in the act or regulations which permits ASIC to issue some order preventing Tweed from making such offers on the grounds that they can only be worth his while if they trick people into acting against their own interests. It can, if you like be defined to exclude a situation where ASIC thinks people are being asked to take an unfair risk. Rather, ASIC has to come to the view that the offer is simply based on trickery. This doesn't become a picnic for lawyers because the test is applied in the first instance administratively - not judicially. If DT wants to fight it in court, he's welcome to. I can't think of a single other scam that could come within the kind of definition I'm talking about. And the Investigators - a show on which Tweed figured - was a show in the 1980s. And your (wrongly) picking me up on the point yet again illustrates my point. I was challenging your point about defamation law being relevant. You said not a word about it but choose to quibble about some minor and essentially irrelevant detail of what I was saying. I appreciate I'm not going to change your mind. There can still be some merit in debating something but not, I agree, if the other person is simply going to go through what the other person has said and pick odd bits they reckon they can disagree about. D,

It’s starting to look like it’s impossible to get anywhere here.

It is not about misrepresentation.

This is a situation in which whatever problem remains cannot be dealt with by preventing misrepresentation. Because David Tweed is not misrepresenting anything. He’s been forced to tell people he’s trying to buy at below market value.

Yet we know that he wouldn’t send out the letters if he didn’t make money. And virtually all of the money he makes is from tricking people – that’s right, tricking them without using any misleading words in his letter to them.

They’re bewildered people. Old people. People who shouldn’t be responding to such letters, many of whom know that but who live alone and don’t know what else to do.

Now you’ve said the definition I’ve offered would be manna from heaven for small businesses. Now bear in mind, what I’ve talked about is some provision somewhere in the act or regulations which permits ASIC to issue some order preventing Tweed from making such offers on the grounds that they can only be worth his while if they trick people into acting against their own interests.

It can, if you like be defined to exclude a situation where ASIC thinks people are being asked to take an unfair risk. Rather, ASIC has to come to the view that the offer is simply based on trickery. This doesn’t become a picnic for lawyers because the test is applied in the first instance administratively – not judicially. If DT wants to fight it in court, he’s welcome to. I can’t think of a single other scam that could come within the kind of definition I’m talking about.

And the Investigators – a show on which Tweed figured – was a show in the 1980s. And your (wrongly) picking me up on the point yet again illustrates my point. I was challenging your point about defamation law being relevant. You said not a word about it but choose to quibble about some minor and essentially irrelevant detail of what I was saying.

I appreciate I’m not going to change your mind. There can still be some merit in debating something but not, I agree, if the other person is simply going to go through what the other person has said and pick odd bits they reckon they can disagree about.

]]> By: Tel_ http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323247 Tel_ Sat, 11 Oct 2008 07:22:26 +0000 http://clubtroppo.com.au/?p=6040#comment-323247 <blockquote>But a completely unregulated drug industry, where anyone was allowed to manufacture and consume whatever substance they wanted would almost certainly be worse than what we have now.</blockquote> Well I happen to disagree and I think you will find that since drug prohibition is a relatively recent legal invention, something like 95% of human history supports my side of the argument, and the remaining 5% of modern times is arguable. By the way, before everyone jumps on denningesque for being a lawyer, please remember that an excess of regulation (especially badly drafted regulation) is guaranteed to boost demand for the legal industry so, denningesque is doing his best to cut his own wages here. <blockquote>Tweeds success is based on grannie whos inherited 500 Natonal Mutual shares picking up her mail, reading something that baffles her and figuring shed better sign the form.</blockquote> If we didn't have so many stupid regulations constantly bullying people into filling out useless paperwork then granny wouldn't feel that signing random contracts was normal. People have become sheep because they have lived under a system that treats them like sheep, rewards blind obedience, and has ways of punishing those who would question authority.

But a completely unregulated drug industry, where anyone was allowed to manufacture and consume whatever substance they wanted would almost certainly be worse than what we have now.

Well I happen to disagree and I think you will find that since drug prohibition is a relatively recent legal invention, something like 95% of human history supports my side of the argument, and the remaining 5% of modern times is arguable.

By the way, before everyone jumps on denningesque for being a lawyer, please remember that an excess of regulation (especially badly drafted regulation) is guaranteed to boost demand for the legal industry so, denningesque is doing his best to cut his own wages here.

Tweeds success is based on grannie whos inherited 500 Natonal Mutual shares picking up her mail, reading something that baffles her and figuring shed better sign the form.

If we didn’t have so many stupid regulations constantly bullying people into filling out useless paperwork then granny wouldn’t feel that signing random contracts was normal. People have become sheep because they have lived under a system that treats them like sheep, rewards blind obedience, and has ways of punishing those who would question authority.

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323245 denningesque Sat, 11 Oct 2008 07:07:57 +0000 http://clubtroppo.com.au/?p=6040#comment-323245 NG, the whole and sole purpose of the Nigerian scam example is that sometimes no matter what the authorities do some, and only some, people act against their best interests (for whatever reason). I am all for prosecuting fraud but by any legal or logical definition Tweed's operation is not fraudulent. I am not sure I completely understand your proposal but I suspect it is to prohibit a bad bargain by the offeree (apologees if I got it wrong). Your definition of bona fides is so wide that it would bring on tears of joy to most lawyers. An unbelievably strong string to a defendant's bow .... in all sorts of cases. I don't know whether the average small business owner would be popping the champagne corks though. There is already a common law prohibition against misrepresentation and section 52 of the Trade Practices Act prohibits misleading and deceptive conduct. I am clearly not winning any converts so I'm not going to till the same old ground other than to say there is a reason why governments might loath the Tweeds of the world but are not prepared to regulate them out business. They don't want to catch the multitude of quite "innocent" transactions in their wake. If Tweed is forced to go to court I very much doubt that would stop him. His legal fees are probably tax deductible. I am pretty sure Tweed was not in operation in the 70s ( I think he would have been in school then) and I doubt he was in action in the 80s. From what I hear, the law of diminishing returns is applying to his operations. Notoriety will do that. Here at least radio talk back goes nuts when a Tweed letter goes out. He may very well get Granny's 500 shares for a song. He might also get a businessman's 500 shares who doesn't properly pay attention (less likely of course). I don't want to beat up on the Granny's of the world.... but...... we all have to take responsibility. Unfashionable and unpopular but true. Put another way don't expect any government of whatever persuasion to throw a regulatory blanket over share purchases. My last hurrah. You are in your trench and I am in mine. Fine words (or even mine) won't change anyone's position. NG, the whole and sole purpose of the Nigerian scam example is that sometimes no matter what the authorities do some, and only some, people act against their best interests (for whatever reason). I am all for prosecuting fraud but by any legal or logical definition Tweed’s operation is not fraudulent. I am not sure I completely understand your proposal but I suspect it is to prohibit a bad bargain by the offeree (apologees if I got it wrong). Your definition of bona fides is so wide that it would bring on tears of joy to most lawyers. An unbelievably strong string to a defendant’s bow …. in all sorts of cases. I don’t know whether the average small business owner would be popping the champagne corks though.
There is already a common law prohibition against misrepresentation and section 52 of the Trade Practices Act prohibits misleading and deceptive conduct. I am clearly not winning any converts so I’m not going to till the same old ground other than to say there is a reason why governments might loath the Tweeds of the world but are not prepared to regulate them out business. They don’t want to catch the multitude of quite “innocent” transactions in their wake. If Tweed is forced to go to court I very much doubt that would stop him. His legal fees are probably tax deductible.
I am pretty sure Tweed was not in operation in the 70s ( I think he would have been in school then) and I doubt he was in action in the 80s. From what I hear, the law of diminishing returns is applying to his operations. Notoriety will do that. Here at least radio talk back goes nuts when a Tweed letter goes out. He may very well get Granny’s 500 shares for a song. He might also get a businessman’s 500 shares who doesn’t properly pay attention (less likely of course). I don’t want to beat up on the Granny’s of the world…. but…… we all have to take responsibility. Unfashionable and unpopular but true. Put another way don’t expect any government of whatever persuasion to throw a regulatory blanket over share purchases.
My last hurrah. You are in your trench and I am in mine. Fine words (or even mine) won’t change anyone’s position.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323240 Nicholas Gruen Sat, 11 Oct 2008 05:45:57 +0000 http://clubtroppo.com.au/?p=6040#comment-323240 Btw, D, I wasn't having a go with my comment about Denning - just recounting a story. Btw, D, I wasn’t having a go with my comment about Denning – just recounting a story.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323239 Nicholas Gruen Sat, 11 Oct 2008 05:01:04 +0000 http://clubtroppo.com.au/?p=6040#comment-323239 D, You say the proposal is for more transparency. It's not. It is a proposal for the prohibition of market behaviour which is clearly lacking in <em>bona fides</em> (defined quite tightly to mean behaviour that cannot be commercial without the other party being misled about the transaction - however well it has been disclosed to them together with a scheme to administer it. You can quote other scams and pretend, for the sake of argument, that we're proposing to get rid of them. But we're not - or I'm not. We're talking about this scam. If you're concerned about the cost, that's fine. Tweed can pay ASIC's and the court's costs unless he wins a case demonstrating that his offers are bona fide. I'm not usually this rude on this blog - so I apologise in advance, but your last sentence exhibits another lawyer's pathology. Arguing for the sake of it and with scant regard for the merits. The defamation laws have been no impediment to the exposure of David Tweed's activity. Tweed has had plenty of exposure and publicity. (Still, perhaps I'm speaking too soon - can you enlighten me as to how defamation laws have prevented anyone from publicising Tweed's activities - he was exposed on 'the investigators' or whatever it was called on the tele I think in the late 70s - perhaps it was the eighties.) And regarding the merits of the argument that we encourage publicity of Tweed. Tweed's success is based on grannie who's inherited 500 Natonal Mutual shares picking up her mail, reading something that baffles her and figuring she'd better sign the form. It's a small scam. The level of publicity you'd have to give it to ensure a fair proportion of grannies are forewarned would be truly huge wouldn't it? D,

You say the proposal is for more transparency.

It’s not. It is a proposal for the prohibition of market behaviour which is clearly lacking in bona fides (defined quite tightly to mean behaviour that cannot be commercial without the other party being misled about the transaction – however well it has been disclosed to them together with a scheme to administer it.

You can quote other scams and pretend, for the sake of argument, that we’re proposing to get rid of them. But we’re not – or I’m not. We’re talking about this scam. If you’re concerned about the cost, that’s fine. Tweed can pay ASIC’s and the court’s costs unless he wins a case demonstrating that his offers are bona fide.

I’m not usually this rude on this blog – so I apologise in advance, but your last sentence exhibits another lawyer’s pathology. Arguing for the sake of it and with scant regard for the merits. The defamation laws have been no impediment to the exposure of David Tweed’s activity. Tweed has had plenty of exposure and publicity. (Still, perhaps I’m speaking too soon – can you enlighten me as to how defamation laws have prevented anyone from publicising Tweed’s activities – he was exposed on ‘the investigators’ or whatever it was called on the tele I think in the late 70s – perhaps it was the eighties.)

And regarding the merits of the argument that we encourage publicity of Tweed. Tweed’s success is based on grannie who’s inherited 500 Natonal Mutual shares picking up her mail, reading something that baffles her and figuring she’d better sign the form. It’s a small scam. The level of publicity you’d have to give it to ensure a fair proportion of grannies are forewarned would be truly huge wouldn’t it?

]]> By: denningesque http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323238 denningesque Sat, 11 Oct 2008 04:37:58 +0000 http://clubtroppo.com.au/?p=6040#comment-323238 NG, yes I am a lawyer so yes I have done you the favour of showing you my sociopath - ology. You should know that. You have been to my web site. Yes my moniker is a nod to the great Master of the Rolls. It was hardly a big secret. And yes he was a friend of the common man/woman and he could be a terror on barristers, or so I have read, who maundered on (much like I was - I get it). And he changed the law, sometime bending it out of recognition. Often for the better. But even he didn't didn't go so far as change the basic law of contract. The points I made in my "central casting" monologue is that the proposed cure for Tweed's behaviour will have a worse effect on everyone else. NG and BBB are throwing the onus onto me to think up a cure. You have the complaint, you provide the prescription. It is not that it hasn't been looked at before by many over a long time. I made the point that there are real problems to trying to do this. That is the point NG and BBB didn't address. Contract law is not "a bad law" as such. It is about as basic as it gets. It is at the heart of commerce. I mean, what do you want from ASIC? The Tweed law whereby any offer he makes has to be vetted by ASIC or the Federal Court? OK, then add a few (read many) million to the budget - assuming the law is constitutional which I doubt. The changes made at the suggestion of ASIC does require further transparency. That was politically driven but I have no real problems with that. The effect of the law was to require more information - ie more transparency. So Tweed and others provide that additional material which does help the recipient. So what. There will be always punters who will ignore the information under their nose or the advice they receive. Don't forget that only a small minority of offerees responded to Tweed's letters. Maybe a law to stop trading in shares except through a stock broker. Except that Tweed got a licence. Or lets have ASIC review all trades to see if they are fair. A classic example of the problem of trying to save people from themselves is when the Queensland police contacted people last year who were sending money to Nigeria in response to the famous email scams. Some of the punters refused to believe they were being scammed and a few were angry, accusing the police of interfering and "ruining" their chance to get the $20,000,000 on offer. So what law do we enact to stop these people from parting from their hard earned. Perhaps a ban on transferring money overseas. That will hurt a lot of families of immigrants who rely on remittances. I am all for prosecuting the fraudster but if someone doesn't listen to reason what do you do. The doctrine of equity deals with those very unfair situations where one party is disadvantaged, like someone under duress or where one party lies or hides relevant information. All of that can void a contract. And that is good and I am all for law reform as long as it achieves a benefit and doesn't create another lot of problems. I think the Fair Trading and Trade Practices Acts are good ways of regulating behaviour. But none of that really applies here. You seem to want a law to ensure that "bad" behaviour is not rewarded. So define "bad" behaviour that can be applied in a rational way. Perhaps a register of malefactors. Yeah right! Perhaps a good first step was to restrict of the defamation laws. And encourage publicity of Tweeds behaviour. NG, yes I am a lawyer so yes I have done you the favour of showing you my sociopath – ology. You should know that. You have been to my web site. Yes my moniker is a nod to the great Master of the Rolls. It was hardly a big secret. And yes he was a friend of the common man/woman and he could be a terror on barristers, or so I have read, who maundered on (much like I was – I get it). And he changed the law, sometime bending it out of recognition. Often for the better. But even he didn’t didn’t go so far as change the basic law of contract.
The points I made in my “central casting” monologue is that the proposed cure for Tweed’s behaviour will have a worse effect on everyone else. NG and BBB are throwing the onus onto me to think up a cure. You have the complaint, you provide the prescription. It is not that it hasn’t been looked at before by many over a long time. I made the point that there are real problems to trying to do this. That is the point NG and BBB didn’t address. Contract law is not “a bad law” as such. It is about as basic as it gets. It is at the heart of commerce.
I mean, what do you want from ASIC? The Tweed law whereby any offer he makes has to be vetted by ASIC or the Federal Court? OK, then add a few (read many) million to the budget – assuming the law is constitutional which I doubt. The changes made at the suggestion of ASIC does require further transparency. That was politically driven but I have no real problems with that. The effect of the law was to require more information – ie more transparency. So Tweed and others provide that additional material which does help the recipient. So what. There will be always punters who will ignore the information under their nose or the advice they receive. Don’t forget that only a small minority of offerees responded to Tweed’s letters. Maybe a law to stop trading in shares except through a stock broker. Except that Tweed got a licence. Or lets have ASIC review all trades to see if they are fair.
A classic example of the problem of trying to save people from themselves is when the Queensland police contacted people last year who were sending money to Nigeria in response to the famous email scams. Some of the punters refused to believe they were being scammed and a few were angry, accusing the police of interfering and “ruining” their chance to get the $20,000,000 on offer. So what law do we enact to stop these people from parting from their hard earned. Perhaps a ban on transferring money overseas. That will hurt a lot of families of immigrants who rely on remittances. I am all for prosecuting the fraudster but if someone doesn’t listen to reason what do you do.
The doctrine of equity deals with those very unfair situations where one party is disadvantaged, like someone under duress or where one party lies or hides relevant information. All of that can void a contract. And that is good and I am all for law reform as long as it achieves a benefit and doesn’t create another lot of problems. I think the Fair Trading and Trade Practices Acts are good ways of regulating behaviour. But none of that really applies here. You seem to want a law to ensure that “bad” behaviour is not rewarded. So define “bad” behaviour that can be applied in a rational way. Perhaps a register of malefactors. Yeah right!
Perhaps a good first step was to restrict of the defamation laws. And encourage publicity of Tweeds behaviour.

]]> By: Nicholas Gruen http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323235 Nicholas Gruen Sat, 11 Oct 2008 03:36:54 +0000 http://clubtroppo.com.au/?p=6040#comment-323235 I saw Lord Denning aged (I think) 86 as Master of the Rolls. He was a strange bird with a northern accent, and not a lot of patience for barristers who were maundering on. I saw Lord Denning aged (I think) 86 as Master of the Rolls. He was a strange bird with a northern accent, and not a lot of patience for barristers who were maundering on.

]]> By: Bingo Bango Boingo http://clubtroppo.com.au/2008/10/09/stopping-david-tweed/#comment-323234 Bingo Bango Boingo Sat, 11 Oct 2008 03:15:41 +0000 http://clubtroppo.com.au/?p=6040#comment-323234 denningesque, if you can't think up a regime that gets rid of the David Tweeds but allows the rest of the market to function as freely as it does now, might I suggest you just haven't thought very hard about it? The fact that you have identified disclosure as the relevant regulatory question suggests that you really haven't understood the problem at all. Nick is quite right. The tendency of practising commercial lawyers to forget that there is such a thing as a bad law, or that there may be a need for a new good law, is disturbing. I know it is fashionable in some circles to pretend from time to time that there is no moral basis for commercial law, but only the truly clueless actually believe it. Finally, it's ironic that you've chosen the moniker 'denningesque'. I assume it's a little joke on your part. Lord Denning rarely let the terms of the then-existing common law get in the way of doing justice. BBB denningesque, if you can’t think up a regime that gets rid of the David Tweeds but allows the rest of the market to function as freely as it does now, might I suggest you just haven’t thought very hard about it? The fact that you have identified disclosure as the relevant regulatory question suggests that you really haven’t understood the problem at all.

Nick is quite right. The tendency of practising commercial lawyers to forget that there is such a thing as a bad law, or that there may be a need for a new good law, is disturbing. I know it is fashionable in some circles to pretend from time to time that there is no moral basis for commercial law, but only the truly clueless actually believe it.

Finally, it’s ironic that you’ve chosen the moniker ‘denningesque’. I assume it’s a little joke on your part. Lord Denning rarely let the terms of the then-existing common law get in the way of doing justice.

BBB

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