UK 15:43 Monday, 26 October 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.
At No-one is watching O'clock ( 6.29 PM) the news finally came through. Congratulations to Ben "pitchfork" Turney - the EGM of AIM casino posterboy New World Oil & Gas (NEW) has not passed either proposal made by the board.
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
Terrys Chocolate Starfish
This is just a laughing stock.
The FCA and LSE must be so proud.
Kevin Taylor
@Tom,
There’s a precedent for creating a disorderly market like this and it’s the Evolution Beeson Gregory forward selling of Room Service Group more details here:
http://www.fsa.gov.uk/pubs/final/evolution_12nov04.pdf
EBG were fined £500k, with fine inflation that’s probably about £2.5m in today’s money!!!!!
DUCK AND DIVE
That’s a great find, Kevin. Everyone involved in the NEW débacle should read it, noting especially:
“Room Service’s Open Offer led to it being necessary for the LSE to issue a direction to EBG
to make a cash offer to purchasers of Room Service shares whose share purchase transactions
had not settled and who, accordingly, were precluded from participating in the Open Offer.”
and
“the short selling was carried out
under the supervision of an experienced market maker who was head of market making
and was an approved person at an authorised firm. The FSA considers that a reasonable
person in such a position would have guaranteed a source of stock borrowing in relation
to a short position of even a fraction of a company’s issued share capital. However, Mr
Potts failed to borrow any Room Service stock and did not give appropriate regard to
whether or not the short positions could be settled in a timely fashion”
and of course
“for the reasons set out below, the FSA had decided to impose financial penalties on
EBG in the amount of £500,000 and on Mr Potts in the amount of £75,000 (“the penalties”)
pursuant to section 123 of the Financial Services and Markets Act 2000 (“the Act”). The
penalties were imposed for market abuse as a result of short selling by EBG and Mr Potts”.
kingoldby
So, as far as I can see it. The management tells its cronies in the City that it will sell them discounted shares. Those cronies then sell shares that don’t exist to unsuspecting buyers, on the understanding that they will get sold discounted shares by the management. Thus pocketing free money at the expense of existing investors. Then the management find that they messed up and don’t have the authority to issue those new shares without the permission of the shareholders who will be shafted by the issue of new shares. This is not given and so the cronies are in the position of having sold non existent shares they can’t honour and the management lose all credibility with absolutely everyone.
Is that about right?
Marvin
Kingoldby.
That’s my understanding just about plus the fact that’s legal and apparently acceptable practice on AIM as long as they don’t sell before the placing is announced. It is up to the short sellers to know whether or not shareholder approval is required before they sell the non-existent shares.
Sounds mad to me but as Tom points out this is the only way many companies would be able to raise money.