David Tweed

Last updated

David Tweed is an Australian businessman who conducts a business of offering to buy securities at either below market value, or at a price that is above market value but via installments. Paying in installments can disadvantage the seller due to the time value of money. Tweed's business practices are controversial in some quarters and his success has attracted criticism from the media and the Australian Securities & Investments Commission. The Federal Government introduced legislation to regulate Tweed's activities.

Contents

Early and personal life

Born as David Tschernitz, Tweed is the son of Austrian migrants. He was born and raised in the inner Melbourne suburb of Footscray. He was educated at Penleigh and Essendon Grammar School and graduated from RMIT with a degree in accounting. Tweed's first and only job was as a runner then floor trader and then adviser for brokerage firm, McKinley Wilson, and according to Peter MacLaren (Dec'd), his former boss, he changed his surname to Tweed after he was promoted to the trading room. It transpired that Tweed had assumed the same name as a former business journalist and later sharemarket analyst who had an extended working stay in Europe. [1] His original house doubled as his office and was in Roden Street, West Melbourne, however he has since moved into the Melbourne central business district.

According to the Herald Sun , Tweed lived in a de facto relationship with Donna Newman for 22 years before they married on 23 June 2018, in Las Vegas; they also have three children together. The Sun also alleges that "Mr Tweed has been ostracised by his family, who have begged him to stop his unscrupulous behaviour" but is defended by Ms Newman's father Dennis, who has said that,

"If people have got shares and they have no idea what to do with them, then maybe they are better off without them. Let people who can look after them look after them. I know that sounds very callous but . . . he's not breaking any laws." [2]

Investment strategy

Companies owned by David Tweed
‡ Country Estate and Agency Company
‡ National Exchange Corporation
‡ Australian and New Zealand Exchange
‡ National Share Purchasing Corporation Pty Ltd (NSPC)
‡ Direct Share Purchasing Corporation Pty Ltd (DSPC)
‡ Australian Share Purchasing Company Pty Ltd (ASPC)
‡ Prudential Nominees
‡ Colonial Capital Corporation Limited (in New Zealand)
‡ Share Buying Group (SBG)
‡ Hassle Free Share Sales Pty Ltd (HFSS)
‡ Stokes (Australasia) Ltd (SKS)

In Australia, there is a high proportion of share ownership by less sophisticated investors. This is a by-product of the demutualisation and other corporate actions in the last 20 years[ when? ] in Australia. Companies such as Insurance Australia Group (IAG) and AMP, Axa, Tower, IOOF, OFM Investments, Aevum have demutualised and in the process given shares to the former (mutual) policyholders.

Tweed set up four companies: National Exchange Pty Ltd, National Share Purchasing Corporation Pty Ltd (NSPC), Direct Share Purchasing Corporation Pty Ltd (DSPC) and Australian Share Purchasing Corporation (ASPC). By obtaining contact details through the share register of target companies, he has made several offers to purchase shares in those companies. The offers are often far below the market prices that could be realised on the Australian Securities Exchange (ASX). For instance, when AMP was trading at around $17, Tweed offered $13 for the shares which subsequently fell to $5. Tweed's offers would often be in the form of a cover letter with large font detailing his offer and with an enclosed off-market transfer form that was pre-filled with the details of the target shareholder. A large number of shareholders, often elderly people who had never owned shares before, would take up the offer despite the market price clearly available in newspapers such as the Sydney Morning Herald and Australian Financial Review .

Tweed has been accused of unethical behaviour and of taking advantage of unsophisticated shareholders. Gossip columnists Suzanne Carbone and Lawrence Money of The Age called him a "[t]ight-fisted share-scammer", [3] David Elias, also of The Age, called him "a man with no conscience". [4] The Sydney Morning Herald reports that Tweed once stated that "I didn't do morals at school." [5] He has also been described as an "..indefatigable bottom feeder" by Ian Porter and Nabila Ahmed of The Age. [6]

In general, no law has been broken by Tweed in advancing his offers. Several shareholders who had accepted Tweed's offers annulled the contract due to technicalities in the off-market transfer process; however, the great proportion were relieved of their shares. Whenever a technicality has been identified, Tweed has amended his practices to stay one step ahead of the law, thus frustrating those[ who? ] that would like to shut him down. Tweed has mercilessly[ according to whom? ] sued to enforce performance of agreements signed, often for minor[ according to whom? ] amounts of less than $1000. These cases are usually settled in his favour and also enable the former shareholders to avoid the legal costs of mounting a defence.

To foil his schemes, several measures have been attempted. Companies have tried to close their share registers, citing National Privacy Principles (NPP) or providing them in a non-machine readable form (to make it difficult for Tweed to easily create offer letters [7] ); a court case in 2003 required that all offers that Tweed advanced would need to attach the last known market price of the shares in question. In September 2010, Tweed put out a press release stating, 'that after suing Challenger Financial Services, Challenger settled by refunding $10k of his legal costs and also provided Tweed with a new register for their frozen mortgage fund'. In September 2010, Tweed began an action against Wesfarmers for breaking the law by not providing its share register. Wesfarmers gave up at the door of the court and agreed to pay Tweed his full costs. Queensland based LM Investments is fighting Tweed on the same basis as Wesfarmers.

In each instance, rather than retiring his scheme, Tweed has fought back. The share registers are a matter of public record, and Tweed brought action against companies that attempted to close their registers. On 13 December 2010, legislation was implemented that stopped share predators from obtaining share registers in Australia.

When required to advertise the market prices of the shares, Tweed began advancing offers to buy the shares 'in installments' so that people ignorant of the time value of money would not be able to easily evaluate whether to keep or sell their shares.

Tweed has brought his share purchase activities to New Zealand. On 13 March 2007, Tweed featured on a New Zealand consumer protection programme - TARGET. The television programme revealed that he had established a company in New Zealand called "COLONIAL CAPITAL CORPORATION". Attempts to contact the company by reporters of that programme were thwarted by an absence of contact details. A search of the NZ company's office reveals that the address for service of the company is given as the office of 'Andrew James Kennedy'. Mr Kennedy is a commercial and taxation lawyer. The address of his law firm, Prudentia law, corresponds with that of the company.

Investment history

In September 2003, the Supreme Court of Victoria found that Tweed's offer to purchase shares from investors in OneSteel was deceptive. He had offered to purchase them for $2 a share over a 15-year period through his company National Exchange Propriety Limited. At the time the accounting group KPMG calculated that this valued the shares at just 78 cents in today's dollars.[ clarification needed ] In his ruling, Justice Robert Osborne stated that the National Exchange acceptance form was so worded that before it could enforce a binding contract on people tempted by low-ball purchase offers, they had to send in the shareholder registration number as well as the signed form before the deadline set out in the offer. The court action was undertaken by David Tweed against David Vane, a caretaker whom he took to the court to claim $977. [8] [9]

In December 2005 he made an offer (through his companies NSPC, DSPC and ASPC) to purchase IAG shares. NSPC offered shareholders $8.10 per share, paid out over 18 annual instalments of 45 cents per share. This meant that shareholders would have received the final payment in 2023. DSPC made an offer for $3.00 per share and another for $3.50 per share. According to IAG this was less than the lowest price at which IAG's shares have traded in the past year. [10]

Through his company National Exchange, Tweed attempted to gain control of Clime Asset Management in 2005 through 2006, as well as calling extraordinary general meetings (at Clime's cost) to have the board of directors of the company removed. The board stated that investors bought into Clime due to Roger Montgomery a Clime director. By 30 June 2009 Montgomery had quit Clime after having sold his 25-year management contract for over $3m. At one point Tweed offered to be bought out of Clime at their net tangible asset value (NTA), which Clime refused to do. [11] However, this attempt was halted by ASIC in August 2006, who raised "serious objections to the way the bid was structured" by Australian Share Purchasing Company Pty Ltd (ASPC). ASPC withdrew from the takeover soon after. Clime has consistently traded below NTA since. [12]

In 2006, Tweed changed tack slightly and offered investors $13 per share, while the price was $8.91. However, he offered to pay them the $13 in 20 annual instalments of 65 cents per instalment. This allowed Tweed to take advantage of the time value of money, while disadvantaging investors. [13] He also wrote to AMP investors offering them $13 per share, while the price was $8.91. In a similar way to previous offers, Tweed offered to pay them the $13 in 20 annual instalments of 65 cents per instalment. [13]

Tweed took AMP to the Federal Court of Australia alleging that they unfairly sold his company, Direct Share Purchasing Corp (DSPC), the share register for an inflated figure of $44,000. Tweed believed that he should have been sold the register from between $231 and $750 and that it was against the Corporations Act to have charged a figure he believes was too high. [14] Upon appeal, the Full Federal Court unanimously found Tweed's DSPC had been charged $17,000 by Axa for Axa's share register when a "generous" fee was $250. In a letter dated 11 November 2007, Tweed's company, Colonial Capital Corporation, offered to buy BHP Billiton shares at a price of $42.47. Similar to the nature previous offers, payment was to be in 18 instalments of $2.36.

In March 2011, Justice White of the Supreme Court of New South Wales found that fund manager Perpetual was justified in double-checking with shareholders before processing transfers, part of its fiduciary duties as the responsible entity. White also found that Perpetual was justified in not processing forms. [15]

In 2012, Tweed settled a dispute over $35,000 on the steps of the Melbourne Magistrates Court with 77-year-old Annelott Gerandt. Tweed tried to buy units in the Colonial First State Mortgage Income Fund for half their face value from Gerandt, who thought that the paperwork she received was from Colonial. [16]

Related Research Articles

<span class="mw-page-title-main">Dividend</span> Payment made by a corporation to its shareholders, usually as a distribution of profits

A dividend is a distribution of profits by a corporation to its shareholders, after which the stock exchange decreases the price of the stock by the dividend to remove volatility. The market has no control over the stock price on open on the ex-dividend date, though more often than not it may open higher. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business. The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.

A shareholder of corporate stock refers to an individual or legal entity that is registered by the corporation as the legal owner of shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. A person or legal entity becomes a shareholder in a corporation when their name and other details are entered in the corporation's register of shareholders or members, and unless required by law the corporation is not required or permitted to enquire as to the beneficial ownership of the shares. A corporation generally cannot own shares of itself.

<span class="mw-page-title-main">Myer</span> Australian department store chain

Myer is an Australian mid-range to upscale department store. It trades in all Australian states and one of Australia's two self-governing territories. Myer retails a broad range of products across women's, men's, and children's clothing, as well as footwear and accessories, cosmetics and fragrance, homewares, electrical, connected home, furniture, toys, books and stationery, food and confectionery, and travel goods.

Coles Supermarkets Australia Pty Ltd, doing business as Coles, is an Australian supermarket, retail and consumer services chain, headquartered in Melbourne as part of Coles Group. Founded in 1914 in the suburb of Collingwood by Sir George Coles, Coles currently operates 846 supermarkets throughout Australia, including several now re-branded Bi-Lo stores. Coles has over 120,000 employees and accounts for around 27 per cent of the Australian market.

<span class="mw-page-title-main">HIH Insurance</span> Former Australian insurance company

HIH Insurance was Australia's second-largest insurance company before it was placed into provisional liquidation on 15 March 2001. The demise of HIH is considered to be the largest corporate collapse in Australia's history, with liquidators estimating that HIH's losses totalled up to $5.3 billion. Investigations into the cause of the collapse have led to conviction and imprisonment of a handful of members of HIH management on various charges relating to fraud. A Royal Commission was formed in the wake of the collapse. It also led to the 2002 Review of the Law of Negligence led by David Ipp and subsequent Tort reform.

<span class="mw-page-title-main">Vueling</span> Spanish low-cost airline

Vueling S.A. is a Spanish, low-value, low-cost airline based at Viladecans in Greater Barcelona with hubs at Barcelona–El Prat Airport (main), Paris-Orly Airport in Paris, France, Amsterdam Schiphol Airport in Amsterdam, The Netherlands and Leonardo da Vinci–Fiumicino Airport in Rome, Italy (secondary). It is the largest airline in Spain, measured by fleet size and number of destinations. As of 2021, Vueling serves 122 destinations in Africa, Asia, Europe and the Middle East, and carried more than 34 million passengers in 2019. Since 2013, it has been an operating company of International Airlines Group, the parent company of British Airways, Iberia and Aer Lingus.

<span class="mw-page-title-main">AMP Limited</span> Financial services company in Australia and New Zealand

AMP Limited is an Australian financial services company that operates in Australia and New Zealand. It offers superannuation and investment products, financial advice and banking services through AMP Banking, including home loans and savings accounts. AMP is headquartered in Sydney, Australia. The company previously operated a global investment management business through its subsidiary AMP Capital.

<span class="mw-page-title-main">Target Australia</span> Australian discount department store chain owned by Wesfarmers

Target Australia Pty Ltd is a department store chain owned by Australian retail conglomerate Wesfarmers. Target stocks clothing, cosmetics, homewares, electronics, books, and toys selling both in-store and online. The company's head office is located in the Melbourne suburb of Williams Landing which the company moved to in 2018. Despite the identical logo, name and similar type of outlets, Target Australia carries no direct relation or affiliation to the American retailer Target Corporation.

Insurance Australia Group Limited (IAG) is a multinational insurance company. It is the largest general insurance company in Australia, and also the largest in New Zealand through its subsidiary IAG New Zealand. IAG had its origins in the National Roads and Motorists' Association NRMA. It is headquartered in Sydney, Australia.

Network Ten Pty Limited, trading as Paramount Australia & New Zealand, is a major media company in Australia. Headquartered in Sydney, its major asset is Network 10, a free-to-air television network. Formerly a public company listed on the Australian Securities Exchange, since December 2019, it has been a subsidiary of Paramount Networks UK & Australia.

A squeeze-out or squeezeout, sometimes synonymous with freeze-out, is the compulsory sale of the shares of minority shareholders of a joint-stock company for which they receive a fair cash compensation.

Share repurchase, also known as share buyback or stock buyback, is the reacquisition by a company of its own shares. It represents an alternate and more flexible way of returning money to shareholders. Repurchases allow stockholders to delay taxes which they would have been required to pay on dividends in the year the dividends are paid, to instead pay taxes on the capital gains they receive when they sell the stock, whose price is now proportionally higher because of the smaller number of shares outstanding.

<span class="mw-page-title-main">SGIO (Western Australia)</span> Insurance brand in Western Australia

SGIO was an insurance company founded and based in Western Australia. Established in 1926 as the State Government Insurance Office by the Government of Western Australia, it provides business insurance. It is a subsidiary of Insurance Australia Group (IAG).

<span class="mw-page-title-main">Insignia Financial</span>

Insignia Financial Ltd is an Australian financial services company that originated with the Independent Order of Odd Fellows and was formerly known as IOOF Holdings Ltd. It provides clients with a range of financial services including financial advice, investment management, superannuation and estate and trustee services. It is listed on the ASX 200.

Sigma Healthcare Limited is an Australian, ASX-listed company with a focus on the pharmacy industry. The company has pharmacy operations in retail, wholesale and distribution. From its head office in Clayton, Victoria, Sigma manages over 1,200 branded and independent pharmacies. Sigma Healthcare owns Australian retail pharmacy brands: Amcal, Discount Drug Stores and Guardian Pharmacy. The company also has a presence in the hospital pharmacy services, contract logistics, dose administration aids and other healthcare service adjacencies.

<span class="mw-page-title-main">Coles Group</span> Australian public company

Coles Group Limited is an Australian public company operating several retail chains. Its chief operations are primarily concerned with the sale of food and groceries through its flagship supermarket chain Coles Supermarkets, and the sale of liquor through its Coles Liquor outlets. Since its foundation in Collingwood, Victoria in 1914, Coles has grown to become the second-largest retailer in Australia after its principal rival, Woolworths, in terms of revenue.

<span class="mw-page-title-main">Merlin Entertainments</span> British leisure company that famously owned Alton Towers

Merlin Entertainments Limited is a British entertainment company based at Poole in Dorset, England, which operates a number of theme parks and other tourist attractions. It was listed on the London Stock Exchange until November 2019, when it was acquired by a consortium that includes Kirkbi A/S.

Firepower International was a fraudulent company that advertised as a Hong Kong-based company owned and operated by Global Fuel Technologies Ltd, specializing in technology purporting to reduce the fuel consumption and environmental impact of petrol-operated vehicles. There were other offices in Sydney, China, Rhodes, Athens and Papua New Guinea, according to the now-defunct official company website. However, "in reality it was a handful of people in an industrial estate in Perth", who were conducting a complex of fraudulent operations. The original entity—Firepower Operations Pty Ltd—was a A$1 company, first registered in December 2004, owned by Firepower Holdings Group Ltd, a company with an address in the British Virgin Islands.

<span class="mw-page-title-main">Public float of QR National</span>

In 2010, the Queensland Government split the government owned rail operator Queensland Rail into two companies: the government owned passenger operator Queensland Rail and the freight operator QR National, the latter to be floated in late 2010.

<span class="mw-page-title-main">Treasury Wine Estates</span> Australian wine company

Treasury Wine Estates is an Australian global winemaking and distribution business with headquarters in Melbourne. It was formerly the wine division of international brewing company Foster's Group.

References

  1. ↑ Tweed feeds on the vulnerable The Age 11 December 2004
  2. ↑ Craig Brinnie (25 July 2006), "Partner under investigation"
  3. ↑ Suzanne Carbone and Lawrence Money, "Same old Dave", 5 April 2006, The Age
  4. ↑ David Elias, "Tweed feeds on the vulnerable", 11 December 2004, The Age
  5. ↑ David Elias (30 December 2004), "Tweed finds profit preying on old folk", Sydney Morning Herald
  6. ↑ "Offer to suit half-price Tweed", The Age
  7. ↑ The Commonwealth Bank was accused of doing this. On their website they wrote "National Exchange has alleged that the [bank's shareholder register] was provided in an unsuitable format. The Bank believes that it has complied with the requirements of the law in providing its share register data, and will be vigorously defending the action." "Legal action by National Exchange" Archived 27 August 2006 at the Wayback Machine , 11 September 2003 - Commonwealth Bank
  8. ↑ Michael Rowland (10 September 2003), Federal Court deals blow to share trader David Tweed PM
  9. ↑ David Ellis (24 October 2003), "Accidental hero defeats David Tweed", Sydney Morning Herald
  10. ↑ IAG Shareholder Warning about DSPC and NSPC Archived 16 December 2005 at the Wayback Machine
  11. ↑ Transcript of Inside Business - 27 November 2005
  12. ↑ ASIC stops flawed takeover by David Tweed for Clime Capital Archived 3 March 2016 at the Wayback Machine . Australian Securities & Investments Commission 9 August 2006.
  13. 1 2 Craig Binnie (27 July 2006), "Government still won't act on Tweed". Herald Sun .
  14. ↑ Vanda Carson (12 July 2006), "Tweed alleges AMP overcharged", The Australian .
  15. ↑ Michael Pascoe (9 March 2011), "Tweed beaten - a win for the grannies", "Sydney Morning Herald".
  16. ↑ Ben Butler (13 April 2012), "David Tweed bows out of Battle", "Sydney Morning Herald".
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.