I retired from personal blogging in July 2008 but you can find me over at blog.xero.com
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You seem to be able to get away with almost anything in this country. The Sunday paper front page mentions two sets of child killers, known but at large. Outrageous. I guess the example starts from the top as the government looks to change the law (major) to get around their illegal election spending (who really cared?).
At least the Sunday Star Times did the first basic bit of an investigation on PlusSMS. Sunday Star Times: Plus SMS: founder sells as firm burns
The media has had 9 days (and a year of pointers) since the story broke and finally the most basic of investigation has taken place. The NBR had a week and surprisingly they had a bit of a look but did not go deep.
But the latest disclosure about Donoghue’s holding - 85 million shares - is 19.026 million less than his previous disclosure in February.
It is not known how much he sold those shares for, but at a typical market price of 40c during that period Donoghue could have pocketed $7.6 million from the sale.
Securities law requires share trades by company officers to be disclosed within five working days.
In February, Donoghue disclosed he had made $10.4m from the sale of 19 million shares off market.
To me it is completely unethical that Founders take cash off the table without revenue. The fact that the market was mislead makes it criminal. PlusSMS was a sham from the start, taking advantage of investors lack of technology understanding and using technology, online forums, to generate hype. Why was it allowed to go on for so long when individuals were clearly fleecing investors?
The Star-Times asked Plus SMS for details of its share register - a public document - but, despite being given three days’ notice, the company was unable to produce it.
At a time when the New Zealand Stock Exchange is struggling to regain credibility and trying to stem the tide they need to act firmly and swiftly. There has to be consequences. If we want to move people from property to business investment we have to have confidence in our markets.
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What concerns me is how little investigation some investors put into their investments. I’ve been keeping an eye on PlusSMS for a very long time and just couldn’t understand how a company with 5K revenue was worth hundreds of millions.
If you don’t understand a business you should never invest. Isn’t that one of the foundation rules of investment?
I’m not condoning what happened and I fully agree with you - people should have been asking questions a lot earlier.
- JD
I would have loved these guys to be ripped apart on Dragon’s Den. I’m out!!
A very dodgy company, but I cant understand who would have invested in the company … there business concept to me seemed very left field and revenue was non-existant .. feel sorry for mums and dads who might have lost money but Id imagine it would be more speculative traders who lost.