Author Topic: A company I own got bought out, but I can't cash out.  (Read 3756 times)

John Hjorth

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Re: A company I own got bought out, but I can't cash out.
« Reply #20 on: February 12, 2020, 05:21:23 AM »
I just hung up the phone on a conversation with my primary broker. I ended up in contact with a guy at the trading desk in Stockholm. He was very patient with me, listening to me through my lengthy explanation of the situation.

His suggestion how to approach the situation was very much - if not fully - identical to the latest suggestions here in this topic from rb and Greg, while he also mentioned the alternative originally posted in this topic by Greg to ask for the share certificates combined with the DIY method for the rest of the process.
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writser

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Re: A company I own got bought out, but I can't cash out.
« Reply #21 on: February 12, 2020, 05:26:49 AM »
rb, I'm not an expert on backoffice stuff but I think you are incorrect. The clearer is not relevant here. All trades on Euronext France settle through LCH Clearnet (https://www.euronext.com/nl/node/779). IB is a member of LCH Clearnet. All brokers directing orders to Euronext Paris are members of LCH Clearnet. That is the whole point of a central clearing party. But the custodian handles the corporate action, not the clearer. For example, if you receive a dividend, the transfer agent / share registrar of the company will make sure the custodian (and all other holders on the register) gets a cheque or wire. The custodian will then distribute the money to their clients. The clearer has nothing to do with this. And with a corporate action, your broker will send instructions to the custodian. The custodian bundles these instructions and sends them to the transfer agent, who will then execute the corporate action in conjuction with the company, update the share registry and subsequently inform the custodian of the changes and/or wires cash to the custodian. Also in this case the clearer is completely sidestepped. The only function of the clearing house is to eliminate counterparty risk when buying / selling and to consolidate multiple transactions.

As Hielko pointed out, the problem here is (probably!) that this corporate action is not available for US entities, due to security laws. The custodian knows your nationality because they need that to, for example, determine correct withholding taxes (and for corporate actions such as this one). Moving your shares to a different custodian will (again, probably!) not solve the problem as the transfer agent still sees that he has to deal with a US shareholder who is ineligible to participate in the offer. If this is the case, and I think it is the case, (but to make sure you could contact Fidelity or another broker to see if they can tender your shares) your best bet would be to contact the buying broker (Gilbert Dupont) to see if they can buy your shares outside of the tender offer in a private transaction. I translated the prospectus using Google and that seems to be a possibility, which is why I suggested you contact them.

Then, the final question is how Gilbert Dupont is going to buy your shares. Will Euronext cancel the trading halt and can you sell on-exchange? Can Gilbert buy through an OTC transaction on Euronext (which, to be fair, would settle through LCH Clearnet) that the IB trading desk can facilitate? Or can you transfer your shares from IB to Gilbert's account with a FOP transfer? Or would you have to register shares in your own name and get the transfer agent to pick up your position? These are questions outside the scope of my knowledge and IB and Gilbert Dupont should figure that out between themselves. It's probably going to be annoying to orchestrate this as a retail shareholder. But if you request a physical certificate you immediately forego most of these possibilities. Opening your own custodian account would probably be an enormous hassle in Europe and would also limit your options. On top of that, you would be trying the exact same thing from that custodian account that your broker could do for you, without any back-office experience whatsoever. I would never consider that unless explicitly requested. Have you ever tried to reach out to a custodian? They will do their utmost, utmost best to avoid having anything to do with retail clients. "Hi, I'm Spekulatius, can you help me with completing these complicated forms so I can participate in a corporate action in Cameroon that probably conflicts with US security laws? Maybe we can lie about my nationality? And can you deposit the money in my Paypal account afterwards? Thanks."

Finally, my guess is that if you do nothing, at some point somebody at the custodian will panic because they still have these shares and they do not immediately want to transfer them to a registrar in Cameroon, because nobody has done that before and nobody wants to hang on the phone with Cameroon for a few hours to discuss your case with somebody who probably knows more about brewing beer than shareholder registries. At that point the custodian might contact IB. Or the custodian might contact the transfer agent, who might contact SABC. If you have harrassed all parties down the chain relentlessly I would guess the ball starts rolling at that point. Of course that is a bit speculative and who knows, your shares might end up on the registry in Cameroon. Even if so, at that point I'd be willing that SABC would remove you from the registry and send you a wire, if you harass them long enough. It would be good to clarify that with SABC legal because it would mean you have a backup plan (or a main plan :P).

Then again, I (fortunately!) didn't work in back-office so I could be wrong about some of these things. In fact, I might be completely wrong in which case I'd gladly hear so. It's a mysterious world behind your trading interface. One I prefer to avoid as much as possible.

And, as I said before, I have no clue about IRA's so I don't know how the above would affect your tax status, or would affect whatever else that is relevant for IRA's.
« Last Edit: February 12, 2020, 06:26:35 AM by writser »
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oddballstocks

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Re: A company I own got bought out, but I can't cash out.
« Reply #22 on: February 12, 2020, 06:32:35 AM »
Interesting dilemma!

My suggestion would be to pull the stock out of the IRA into a certificate, or just a normal brokerage.  Replace it with cash to satisfy the US Gov.  From there you have some room to work.

Next step is to sell directly to the French broker.  Brokers do negotiated transactions all the time.  You might take a bit of a haircut, but so what.  They will be buying the shares from you, then just tendering directly on their own account.  For them it's an easy way to make a spread.

You can try to work with them directly, or work with a desk in the US who has relationships.  I have talked to Fidelity traders in the past who phoned up brokers in Switzerland while I was on the phone to make trades.  I know you don't want to go with Fidelity, but you need a more full service broker who can a) speak french and b) has those connections.  I don't think you can have an IB trader make trades over the phone.  They aren't built for that.

If you're able to get certificates (which is highly unlikely) then you can negotiate directly with the company.  Although I think you'll have more success working with the clearing broker.

I'd go all out nuclear on this one.  Look up employees who work in the back office at Gilbert Dupont and start to contact them directly.  Say you have this problem and you need help, who do you talk to?  People will help you out and get you directed to someone who can get this done.  You just have to be persistent and ask everyone.  I think the full service broker in the US is probably your best bet, but there is a price.  Might be a few hundred euro to transact and tender, but that's a lot cheaper than spending months trying to get someone deep in a cube farm to handle the situation as a one-off.
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writser

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Re: A company I own got bought out, but I can't cash out.
« Reply #23 on: February 12, 2020, 06:40:11 AM »
You can try to work with them directly, or work with a desk in the US who has relationships.  I have talked to Fidelity traders in the past who phoned up brokers in Switzerland while I was on the phone to make trades.  I know you don't want to go with Fidelity, but you need a more full service broker who can a) speak french and b) has those connections.  I don't think you can have an IB trader make trades over the phone.  They aren't built for that.

Yes, good suggestion. If you have the shares at Fido you could get them to call Gilbert. Some of the solutions I outlined are probably easier there (I guess, it being a full-service broker) than at IB (though IB also has a trading desk).
« Last Edit: February 12, 2020, 06:46:13 AM by writser »
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John Hjorth

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Re: A company I own got bought out, but I can't cash out.
« Reply #24 on: February 12, 2020, 06:43:45 AM »
Ref. Nate's post, I've now opened a support ticket at my primary broker [in Danish, here translated to English] like this :

Quote
Hi,

Who is the custodian of BCAM on Euronext Paris?
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writser

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Re: A company I own got bought out, but I can't cash out.
« Reply #25 on: February 12, 2020, 06:55:12 AM »
John: shares can be held by multiple custodians. What custodian your Danish broker uses is not particularly relevant. Spekulatius can see on his IB daily statements where his assets are held. I'm pretty sure it is Euroclear - which is a confusing name because in this case it is the custodian, not the clearer. Again, not 100% sure here but 99%.
« Last Edit: February 12, 2020, 07:00:00 AM by writser »
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John Hjorth

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Re: A company I own got bought out, but I can't cash out.
« Reply #26 on: February 12, 2020, 07:11:59 AM »
Thanks, writser,

I'm certainly an ignorant about this kind of back office stuff. So just consider it a try to get a name of my primary brokers custodian for BCAM [if any now] for Spekulatius - hopefully - to get a direction for a potential "hole" through which to communicate.
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rb

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Re: A company I own got bought out, but I can't cash out.
« Reply #27 on: February 12, 2020, 07:35:18 AM »
John: shares can be held by multiple custodians. What custodian your Danish broker uses is not particularly relevant. Spekulatius can see on his IB daily statements where his assets are held. I'm pretty sure it is Euroclear - which is a confusing name because in this case it is the custodian, not the clearer. Again, not 100% sure here but 99%.
Sorry, I don't mean to nitpick because it's a very productive discussion.

But Euroclear would not be the custodian. It would be the depository. The custodian is who's between the broker and Euroclear. So the broker deposits the shares at it's custodian, which in turn keeps them at Euroclear. Yea, it's annoying.
« Last Edit: February 12, 2020, 07:37:13 AM by rb »

John Hjorth

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Re: A company I own got bought out, but I can't cash out.
« Reply #28 on: February 12, 2020, 07:51:51 AM »
Thanks, rb.

[And now I'll just keep my ignorant mouth shut here.]
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rb

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Re: A company I own got bought out, but I can't cash out.
« Reply #29 on: February 12, 2020, 08:05:53 AM »
Writser, what can I say, for someone who didn't work in back office you have pretty deep knowledge about this stuff. Everything you wrote is pretty spot on. I didn't work in back office but I know quite a bit about it because I'm weird like that.

The reason why I mentioned whether the shares are at Euroclear (which they probably are) is because you can can have weird cases where the trade is executed on Euronext, clear through Clearnet, but it's in some weird depository somewhere. In cases like these is better to check just to be sure.

This whole situation seems weird. While, I'm not a securities lawyer, as far as I know the regs Spek mentioned have to with transparency in pricing of securities. So it's very hard to understand how a public corporate action is in violation of the regs, but OTC trades in those securities are not.