UK 21:27 Saturday, 7 November 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
With IGas (IGAS) seemingly having to issue re-clarifications every few days (and there will be more I fancy…) we turn once again to Optimal payments (OPAY_. We have already forced out two clarifications (after hours Fri 15 Nov and pre-market Mon 17 Nov buried in a trading statement). It is striking that of the six plcs caught up in the EFH scandal, three have come fairly clean – notably Angle (AGL), but Cloudbuy (CBUY) and Quindell (QPP) have revealed much. IQE (IQE) has been fairly forthcoming too. And then there are IGAS and Optimal, who are having information dragged out of them only with the greatest of reluctance. For those two companies, our rope – like their shareholders – is long and strong.
Already a member? Sign in
• All premium articles
• Tom Winnifrith’s Bearcast
• Access to all the entire nearly 13 year archive
• ShareProphets Daily Newsletter
Cancel any time
This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.
Comments
RPC
EFH – what an unsavoury bunch. Looks like this complaint against them got well and truly squashed. Forced retraction?
http://www.ripoffreport.com/r/Equities-First-Holdings-And-Alexander-Christy/Indianapolis-Indiana-46204/REVIEW-Equities-First-Holdings-LLC-commitment-to-100-client-satisfaction-Equities-Firs-425939
They appear do be doing pretty well out of their “business”, though – $1,400,000.00 annual revenue.
https://credibility.com/offices-of-other-holding-companies/us-in-indianapolis/equities-first-holdings-llc
And a PDF of an example of their T&Cs lodged with SEC can be downloaded here:
http://stashbox.org/v/409823/EFHFull.pdf
Just another example of your “crony capitalism”, Tom. Glad to see you are tackling the fraudsters head on.
Keep up the good work. AIM is a playground for all manner of pin-striped scammers and crooks who should have been exposed years ago.
The poor sod writing on the following website has been trying for years to expose the scams on AIM but without your journalistic ability and wit, Tom. It’s a slog reading through his somewhat overblown prose but there’s a lot of truth in what he claims, imo. Just check out the company and director names that he mentions.
http://petereyrepatch.blogspot.co.uk/2010/11/pandoras-box-special-how-they-get-away.html
Jane
If EFH has indeed sold the OPAY shares at a profit and then if/when the loan is repaid by Joel Leonoff, EFH would presumably need to deliver the shares back to him. How would they do this, without loss, if they have already sold them and if the share price is still substantially above the value used for the purposes of the loan? Surely only by shorting the stock and getting the share price back down to the desired value? Or by having sold the shares on to an associated or friendly company which could then do the shorting on their behalf? If this is so, surely it would create an overhang or potential overhang on the stock? All speculation on my part (and I am in no way an expert on financial ways and means) but I have been puzzled from the start how EFH could be lending at, reportedly, 3% p.a. (and to what is for them a foreign company) when similar loans secured on stock from international banks seem to cost from 8% p.a. upwards. Sorry, there must be a catch somewhere and, as a shareholder of OPAY, really would like to have a full explanation. You’re quite right, Nigel, if there’s nothing to hide, then OPAY should give us the full facts.
nigel somerville
Jane – thankyou for your kind words. You are identifying counterparty risk: if EFH sell all the shares and they go up sharply before maturity then they have to buy them back at a massive loss. EFH is an LLC so, as I would understand it, if EFH has handed out the gains from doing the deal in the first place to its directors/shareholders etc then the LLC part kicks in: there would seem to me to be no way to go after the directors/shareholders if EFH can’t afford the loss. It would mean bankruptcy for EFH unless they could get the cash from somewhere. But the gains made at outset have all been distributed. I know the EFH website says the deal is non-recourse. But it looks as though it might also work as non-recourse the other way too!
As to not shorting, my reading of the EFH contract of on the SEC website is that EFH is not barred form shorting the shares. There is a commitment as to the present (we are not…) but no commitment as to the future (we will not…). There are also various techincal bits which look to me to allow the creation of derivatives. So I wouldn’t rule out shorts….
I’m inclined to think that EFH would be perfectly happy if all of their clients defaulted before maturity. If they do, EFH has a superb business model.
As stated before, I don’t like what I see/think EFH is up to. But I cannot for the life of me see that they are doing anything illegal.
As regards OPAY, I just don’t understand why they have not just given full disclosure and got on with life. They could post Mr Leonoff’s contract and related paperwork on the OPAY website and be done with it. Why have they not done so?
nigel somerville
RPC – yup, Morris & Morris v EFH looks a sticky wicket but I’ve not found any record of an actual trial. I assume that therefore there was an out-of-court settlement.
Rip-off report….had a look at that and dug up some interesting stuff regarding manipulation of google searches and all sorts…more Ben Edelman stuff than me, though. I also saw reports of one guy facing quite a lawsuit. There are accusations of extortion out there but I don’t think we can rely on hearsay to form a full judgement, can we? (‘nuff said, don’t want to interest m’learned friends too much!)
On Crony Capitalism, it was nice to see those fine chaps at EFH sponsoring the AIM Awards 2014. Just think, rubbing shoulders with all the great and the good of the AIM establishment, co=sponsoring the event alongside the LSE etc etc. Such an air of respectability! One of the speakers was the head of AIM.
Jane
From the EFH website.
Note the fourth paragraph,
“During the loan term, Equities First has a buy/sell relationship with the securities using unique algorithms that trade the securities during the life of the loan. Equities First also has an evolving position where our firm will buy on lows, and we are always ready to return the asset at maturity”
“Advantage Process Results Team EFH Insights Stock Loans International ContactThe EFH Blog
How Equities First Holds and Returns Stock to Borrowers
Jeff Smith
When a borrower sends Equities First the background information on a security he or she would like to use as collateral, we typically execute a quick turnaround and funding. Virtually all types of securities can be used as collateral, and there is no minimum per share price requirement for the stock.
Within 24 business hours of sending the information, Equities First determines the capability of executing the loan and calculates a proposed loan-to-value (LTV) ratio and fixed interest rate. Equities First can offer the borrower up to 80% of the value of their stock, and a low fixed interest rate, usually between 3% and 4.5%. By comparison, a typical margin loan offers only up to 50% of the stock’s value and higher interest rates, usually 5% – 8%.
After reviewing and signing the stock loan and pledge agreements, the borrower sends his or her securities to one of Equities First’s global custodial accounts. Once one of these large banks receive the stock, the borrower is funded within five to seven business days. The use of funds is completely at the discretion of the borrower.
During the loan term, Equities First has a buy/sell relationship with the securities using unique algorithms that trade the securities during the life of the loan. Equities First also has an evolving position where our firm will buy on lows, and we are always ready to return the asset at maturity.
Equities First provides statements every quarter that summarize the interest charge and any dividends to which the shares are entitled. The borrower has the additional option to request the current valuation of his or her pledged agreement at any time during the loan term. During this time period, the borrower makes quarterly fixed interest-only payments.
he stock-based loan is 100% non-recourse. In comparison, a margin loan is full recourse. For example, if the security decreases in value to a certain extent in a margin account, the borrower has to deposit additional money or securities. Since a margin loan is full recourse, the borrower may face fees and penalties if he or she does not deposit the additional funds. With a stock-based loan, the borrower may walk away from the loan with no penalties and no negative credit reporting. If the borrower wishes to ensure the return of the shares, Equities First works with the borrower to tender additional shares or cash.
At the end of the loan term, the borrower repays the loan in full and Equities First returns the same amount of identical collateral. In addition, all stock appreciation over the term is returned to the borrower. The entire process typically takes three years.
Bottom line: Equities First provides better rates, greater flexibility, and a faster transaction when the borrower needs it”
RPC
NIGEL: “As stated before, I don’t like what I see/think EFH is up to. But I cannot for the life of me see that they are doing anything illegal. “
I agree; my skim read of the EFH contract I linked seems to have every angle covered such that EFH can do pretty much what it likes with shares pledged – to its extreme financial advantage judging by annual revenue.
But just because it appears legit doesn’t make it any less stinky; it can certainly be used as a means by which company directors can short/sell shares in their own company whilst avoiding an RNS declaration of same – or can it? If it’s a loophole it needs closing and if it’s not legit then a full investigation is needed and heads must roll.
What I would like to know is how many directors of other AIM companies have been using this facility over the years. I’d lay a bet that you good folk at ShareProphets have only uncovered the tip of an iceberg.
Please keep up the good work. It’s high time that the AIM “cesspit” was exposed. But be careful – sooner or later you’ll come up against the establishment which is heavily implicated in the dubious goings on. Ever wondered how so many politicians and peers get so rich so quickly? No wonder the FCA is so useless – the establishment is hardly going to provide an axe to kill the goose that lays the golden eggs.