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'''David Tweed''' is an Australian businessman who conducts a business of offering to buy shares 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 ]. Tweed's business practices are controversial in some quarters and have attracted criticism from the media. David Tweed''' is an ]n businessman who conducts a business of offering to buy ] 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 ]. Such a business is legal in Australia provided that it complies with relevant Government regulation.


==Early and personal life== ==Early and personal life==
Born as David Tschernitz, he was the son of an Austrian migrant from ]. He was educated at ] in the early 1980s. Tweed's first job was as a "runner" for a brokerage firm and according to Peter MacLaren, his former boss, he changed his ] to Tweed, when he was promoted to the trading room, under the belief that it would assist his career.<ref name="Tweed original name"> (11 December 2004), '']''</ref> This name was taken from the name of a business journalist and sharemarket analyst who had temporarily left Australia to work in Europe.<ref name="Tweed original name"/> His original house doubled as his office and was in Roden Street, ], however he has since moved into the city. Born as David Tschernitz, he was the son of an Austrian migrant. He was educated at ] in the early 1980s. Tweed subsequently earned an accounting degree from the Royal Melbourne Institute of Technology. Tweed's first and only full time job was as an employee of stockbroker McKinley Wilson from which he later resigned to commence his discount share offer business. His original house doubled as his office and was in Roden Street, ], however he has since moved into the city.


According to the '']'', Tweed lives in a ] relationship with Donna Newman and they have three children.<!-- Please do NOT list the names of the children! --> 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, Tweed lives in a ] relationship with Donna Newman and they have three children.<!-- Please do NOT list the names of the children! -->
:"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."<ref>Craig Brinnie (25 July 2006), </ref>


==Investment strategy== ==Investment strategy==
{| class="infobox" style="margin: 0 0 1em 1em; border: 1px solid #aaa;" align="right" cellpadding=0 cellspacing=0 {| class="infobox" style="margin: 0 0 1em 1em; border: 1px solid #aaa;" align="right" cellpadding=0 cellspacing=0
! style="padding: 0 .5em; font-size: 111%; background: #ccf" align="center" | Companies owned by David Tweed<br>and Suzanne Forster ! style="padding: 0 .5em; font-size: 111%; background: #ccf" align="center" | Companies owned by David Tweed
|- |-
| align="center" style="padding: 0 .5em; | &#8225; Country Estate and Agency Company | align="center" style="padding: 0 .5em; | &#8225; Country Estate and Agency Company
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| align="center" style="padding: 0 .5em; | &#8225; Colonial Capital Corporation Limited (in New Zealand) | align="center" style="padding: 0 .5em; | &#8225; Colonial Capital Corporation Limited (in New Zealand)
|- |-

| align="center" style="padding: 0 .5em; | &#8225; Share Buying Group (SBG) - to be confirmed from ]

|-

| align="center" style="padding: 0 .5em; | &#8225; Hassle Free Share Sales Pty Ltd (HFSS)

|}


In Australia, there is a high proportion of share ownership by less sophisticated investors. This is a by-product of the ] and other corporate actions in the last 20 years in Australia. Companies such as ] (IAG) and ] (AMP) have demutualised and in the process given shares to the former (mutual) policyholders. In Australia, there is a high proportion of share ownership by less sophisticated investors. This is a by-product of the ] and other corporate actions in the last 20 years in Australia. Companies such as ] (IAG) and ] (AMP) have demutualised and in the process given shares to the former (mutual) policyholders.


Tweed set up two companies: National Share Purchasing Corporation Pty Ltd (NSPC) and Direct Share Purchasing Corporation Pty Ltd (DSPC). By obtaining contact details through the ] 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 ] (ASX). For instance, when AMP was trading at around A$13, Tweed offered A$2.50 for the shares. 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 '']'' and '']''. Tweed set up two companies: National Share Purchasing Corporation Pty Ltd (NSPC) and Direct Share Purchasing Corporation Pty Ltd (DSPC). By obtaining contact details through the public ] of target companies, he has made several offers to purchase shares in those companies. The offers are either below the market prices that could be realised on the ] (ASX) or greater than the market price but paid over years by instalments.


Tweed's offers would often be in the form of a cover letter with large font detailing his offer. The offer, in accordance with the Corporations Law, clearly displayed the most current market price of the securities together with the price offered to the shareholder. Accompanying the offer document was an enclosed off-market transfer form that was pre-filled with the details of the target shareholder. Payment for all purchases were made to accepting shareholders within 5 business days of receipt of the off-market transfer form.
⚫ Tweed has been accused of unethical behaviour and of taking advantage of unsophisticated shareholders. Gossip columnists Suzanne Carbone and Lawrence Money of '']'' called him a "ight-fisted share-scammer",<ref name="tightfistedsharescammer">Suzanne Carbone and Lawrence Money, , 5 April 2006, '']''</ref> David Elias, also of ''The Age'', called him "a man with no conscience".<ref name="NoConscience">David Elias, , 11 December 2004, ''The Age''</ref> The ''Sydney Morning Herald'' reports that Tweed once stated that "I didn't do morals at school."<ref name="SMH_MoralsAtSchool">David Elias (30 December 2004), , '']''</ref> He has also been described as an "..indefatigable bottom feeder" by Ian Porter and Nabila Ahmed of ]<ref name="TheAge_half_price"> , '']''</ref>


A large number of shareholders have accepted Tweed's offers despite the market price being clearly available in newspapers such as '']'' and '']''. The market price was also clearly visible on the offer document. However, his offers have also been accepted by professionals such as doctors, lawyers and judges who would be expected to know the price of their shares. While people accepting his offers would make more money by selling on the ASX, that requires the appointment of a stockbroker and Tweed's offers provide an easy way of selling shares.
⚫ 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. Tweed has also sued to enforce performance of agreements signed, often for minor amounts of less than $1000. These cases are usually settled in his favour, to enable the former shareholders to avoid the legal costs of mounting a defence.


⚫ Tweed has a poor relationship with the press arising from his policy of not granting interviews unless he is paid. Tweed has been accused of unethical behaviour and of taking advantage of unsophisticated shareholders. Gossip columnists Suzanne Carbone and Lawrence Money of '']'' called him a "ight-fisted share-scammer",<ref name="tightfistedsharescammer">Suzanne Carbone and Lawrence Money, , 5 April 2006, '']''</ref> He has also been described as an "..indefatigable bottom feeder" by Ian Porter and Nabila Ahmed of ]<ref name="TheAge_half_price"> , '']''</ref>
⚫ To foil his schemes, several measures have been attempted. Companies have tried to close their share registers citing ] (NPP) or providing them in a non-machine readable form (to make it difficult for Tweed to easily create offer letters<ref name=CommBank>The Commonwealth Bank was accused of doing this. On their website they wrote "National Exchange has alleged that the ]] 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." , 11 September 2003 - ]</ref>); 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 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 have performed their contracts by transferring their shares. Tweed has sued to enforce performance of agreements signed, often for minor amounts of less than $1000. These cases are usually settled in his favour.
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 through the ASX listing rules against companies that attempted to close their registers. 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 ] would not be able to easily evaluate whether to keep or sell their shares.


⚫ To foil his offers several measures have been attempted. Companies have tried to close their share registers citing ] (NPP) or providing them in a non-machine readable form (to make it difficult for Tweed to easily create offer letters<ref name=CommBank>The Commonwealth Bank was accused of doing this. On their website they wrote "National Exchange has alleged that the ]] 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." , 11 September 2003 - ]</ref>); Regulatory changes in 2003 required that unsolicited offers to buy shares needed to prominently show the last known market price of the shares in question. The fact that Tweed has been able to continue his business since then indicates that people are (or should be) aware that they could get a better return by selling their shares on the stock exchange but instead choose the convenience of accepting the offer put in front of them by Tweed.
Mr Tweed has brought his share purchase activities to New Zealand. On 13 March 2007 Mr 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 companies 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.


Other companies, not associated with Tweed, such as Hassle Free Share Sales Pty Ltd registered to Ms Suzanne Forster, and Share Buying Group Pty Ltd, have recently entered into the discount share offer business.
⚫ ==Investment history==
In September 2003, the ] found that Tweed's offer to purchase shares from investors in ] 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 ] calculated that this valued the shares at just 78 cents in today's dollars. In his ruling, ] 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.<ref name=ABC2003>Michael Rowland (10 September 2003), , ABC Radio's ''PM''</ref><ref name=SMH2003>David Ellis (24 October 2003), , '']''</ref>


==Securities laws contraventions==
⚫ 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.<ref name=IAGWarning></ref>


Tweed's offers have contravened securities regulations on two occasions. Each time Tweed was ordered to allow the accepting shareholders the opportunity to withdraw from their contracts.
⚫ 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. At one point Tweed offered to be bought out of Clime at their net tangible asset value, which Clime refused to do.<ref name=clime></ref> 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) and threatened legal action if the takeover bid continued. ASPC withdrew from the takeover soon after.<ref name="ASICToTheRescue">'']'', . ], Wednesday 9 August 2006.</ref>


In September 2003, the Federal Court of Australia found that the first instalment offer Tweed made was misleading. He had offered to purchase shares in OneSteel for $2 a share over a 15-year period through his company National Exchange Propriety Limited. At the time the accounting group ] calculated that this valued the shares at just 78 cents in today's dollars. The Court found that there was no false statement in the offer, the proposed payment of the purchase price over time in instalments had not been made sufficiently prominent. Tweed subsequently amended his offers to fix this deficiency.
⚫ 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 installment. This allowed Tweed to take advantage of the ], while disadvantaging investors.<ref name="AMP13Dollars">Craig Binnie (27 July 2006), . '']''.</ref> He also wrote to ] 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 installment.<ref name="AMP13Dollars"/> Tweed took AMP to the ] alleging that they unfairly sold his company, Direct Share Purchasing Corp, 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 '']'' to have charged a figure he believes was too high.<ref>Vanda Carson (12 July 2006), , '']''.</ref> 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 offers mentioned above, payment was to be in 18 instalments of $2.36.


In 2004 the Federal Court found that an offer made to shareholders in Aevum breached the law because it had not been dispatched with sufficient speed and also that it had not been expressed to be open for at least one month. The Court found that although there was no express requirement to keep the offer open for a month, such a requirement could be implied into the legislation.
⚫ Other companies, not associated with Tweed, such as Hassle Free Share Sales Pty Ltd registered to Ms Suzanne Forster, have more recently entered into the discount share offer business. For instance, in a letter dated August 3, 2009, they offered to purchase IAG shares for $1.51, but freely admitted that the market value of the shares was $3.67. They also only offered to pay the costs 10 days after the shares were sold to them.

==Court actions by Tweed==

Australian law allows for anyone to obtain a copy of a company's share register upon payment of a "reasonable fee". Companies had adopted the practice, not just with Tweed but with everyone, of charging high amounts for their registers in an effort to dissuade people from requesting copies.

In 2005 Tweed commenced an action against IAG alleging that the $46,000 which it had charged for a copy of its register, provided on a single CD rom, was not reasonable. The matter was settled before trial, with IAG repaying the $46,000 to Tweed plus court costs.

In 2008 Tweed commenced a similar action against AXA which had charged $17,000 for its register, again provided on a single CD rom. The Federal Court found that a reasonable fee was $250 and ordered AXA to refund the balance. The decision was appealed by AXA but the finding of the trial judge was unanimously upheld by the Full Federal Court.

Other companies have tried to make their registers difficult to use. Tweed commenced action in the Federal Court against one such company, ING, alleging that what had been provided was not a copy of the register as required by law. The matter was settled before trial with ING providing a replacement register and paying Tweed's court costs.

==Other Business==

⚫ 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. At one point Tweed offered to be bought out of Clime at their net tangible asset value, which Clime refused to do.<ref name=clime></ref> 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) and threatened legal action if the takeover bid continued. ASPC withdrew from the takeover soon after.<ref name="ASICToTheRescue">'']'', . ], Wednesday 9 August 2006.</ref>


==Below market value offers== ==Below market value offers==

*An offer dated 2006-09-05 from DSPC to ] (CML) shareholders made an offer to buy shares at $7.50 each, only 54% of their market value.
Offer made by companies associated with David Tweed include:
*An offer dated 2006-10-06 from the Australian Share Purchasing Corporation offered $1.50 for ] Class B shares, which were valued at $2.71 on that date.

*An offer dated 2006-10-08 from DSPC to ] shareholders, offered $8.50 for shares currently worth $14.34, 60% of the market value.
*An offer dated 2006-12-10 from DSPC to purchase ] shares at $18.00, 70% of their market value. *An offer dated ] from DSPC to ] (CML) shareholders made an offer to buy shares at $7.50 each, only 54% of their market value.

*An offer dated 2007-01-21 from Colonial Capital Corporation Ltd (CCC) to purchase AMP shares at NZD 6.00 when the market value was NZD 11.74 (51% of the market value)
*An offer dated 2007-05-01 offering to purchase Tower Australia Group Limited shares at $1.75NZ when the ASX valued them at $2.88NZ *An offer dated ] from the Australian Share Purchasing Corporation offered $1.50 for ] Class B shares, which were valued at $2.71 on that date.

*An offer dated 2007-09-21 from SBG offering to purchase Insurance Australia Group (IAG) shares at $2.68 when the ASX valued them at $4.93
*An offer dated 2007-11-13 from HFSS offering to purchase IAG shares at $2.20 when the ASX valued them at $4.45 *An offer dated ] from DSPC to ] shareholders, offered $8.50 for shares currently worth $14.34, 60% of the market value.

*An offer dated 2008-02-13 from SBG offering to purchase CSL shares at $16.01 when the ASX valued them at $34.00
*An offer dated 2008-02-20 from ASPC to ] (ORG) Shareholders offered to buy shares at $5.50 each, whilst stating the 'market value of original share' was $8.37. *An offer dated ] from DSPC to purchase ] shares at $18.00, 70% of their market value.

*An offer dated 2008-03-02 from ASPC offering to purchase AMP shares at $5.35 when then ASX valued them at $8.05
*An offer dated 2008-03-26 from Hassle Free Share Sales (HFSS) offering to purchase NHF shares at $0.46 when the ASX valued them at $0.90 *An offer dated ] from Colonial Capital Corporation Ltd (CCC) to purchase AMP shares at NZD 6.00 when the market value was NZD 11.74 (51% of the market value)

*An offer dated 2008-04-30 from ASPC offering to purchase RIO shares at $100.00 when the ASX valued them at $136.08
*An offer dated 2008-07-07 from Hassle Free Share Sales (HFSS) offering to purchase ] (SGB) shares at $13.39 when the ASX valued them at $26.77 *An offer dated ] offering to purchase Tower Australia Group Limited shares at $1.75NZ when the ASX valued them at $2.88NZ

*An offer dated 2008-09-01 from Hassle Free Share Sales (HFSS) offering to purchase Insurance Australia Group (IAG) shares at $1.85 when the ASX valued them at $3.97
*An offer dated 2008-10-03 from Hassle Free share Sales (HFSS) to purchase Woolworths Shares at $14.23 when the ASX valued them at $28.23. *An offer dated ] from ASPC to ] (ORG) Shareholders offered to buy shares at $5.50 each, whilst stating the 'market value of original share' was $8.37.

*An offer dated 2008-11-10 from Hassle Free share Sales (HFSS) to purchase Woolworths Shares at $13.00 when the ASX valued them at $29.18.
*An offer dated 2008-11-17 from Hassle Free share Sales (HFSS) to purchase Insurance Australia Group (IAG) Shares at $1.71 when the ASX valued them at $3.91. *An offer dated ] from ASPC offering to purchase AMP shares at $5.35 when then ASX valued them at $8.05

*An offer dated 2008-12-02 from Hassle Free share Sales (HFSS) to purchase Australia & New Zealand Banking Group(ANZ) Shares at an under valued level.
*An offer dated 2008-12-15 from Hassle Free Share Sales (HFSS) to purchase Insurance Australia Group Limited (IAG) Shares at $1.70 when the ASX valued them at $3.96 *An offer dated ] from ASPC offering to purchase RIO shares at $100.00 when the ASX valued them at $136.08

*An offer dated 2009-06-01 from Hassle Free Share Sales (HFSS) to purchase Insurance Australia Group Limited (IAG) Shares at $1.89 when the ASX valued them at $3.63
⚫ ==Investment history==
*An offer dated 2009-07-03 from Hassle Free Share Sales Pty Ltd (HFSS) to purchase Insurance Australia Group Limited (IAG) shares at $$1.51 when the ASX valued them at $3.67

⚫ 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.<ref name=IAGWarning></ref>

⚫ 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 installment. This allowed Tweed to take advantage of the ], while disadvantaging investors.<ref name="AMP13Dollars">Craig Binnie (27 July 2006), . '']''.</ref> He also wrote to ] 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 installment.<ref name="AMP13Dollars"/> 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 offers mentioned above, payment was to be in 18 instalments of $2.36.

⚫ Other companies, not associated with Tweed, such as Hassle Free Share Sales Pty Ltd registered to Ms Suzanne Forster, have more recently entered into the discount share offer business. For instance, in a letter dated August 3, 2009, they offered to purchase IAG shares for $1.51, and in accordance with the Corporations Law, admitted that the market value of the shares was $3.67. They also offered to pay the costs 10 days after the shares were sold to them.


==References== ==References==

Revision as of 23:12, 12 January 2010

David Tweed is an Australian businessman who conducts a business of offering to buy shares 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. Such a business is legal in Australia provided that it complies with relevant Government regulation.

Early and personal life

Born as David Tschernitz, he was the son of an Austrian migrant. He was educated at Penleigh and Essendon Grammar School in the early 1980s. Tweed subsequently earned an accounting degree from the Royal Melbourne Institute of Technology. Tweed's first and only full time job was as an employee of stockbroker McKinley Wilson from which he later resigned to commence his discount share offer business. His original house doubled as his office and was in Roden Street, West Melbourne, however he has since moved into the city.

Tweed lives in a de facto relationship with Donna Newman and they have three children.

Investment strategy

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 in Australia. Companies such as Insurance Australia Group Limited (IAG) and AMP Limited (AMP) have demutualised and in the process given shares to the former (mutual) policyholders. Tweed set up two companies: National Share Purchasing Corporation Pty Ltd (NSPC) and Direct Share Purchasing Corporation Pty Ltd (DSPC). By obtaining contact details through the public share register of target companies, he has made several offers to purchase shares in those companies. The offers are either below the market prices that could be realised on the Australian Stock Exchange (ASX) or greater than the market price but paid over years by instalments. Tweed's offers would often be in the form of a cover letter with large font detailing his offer. The offer, in accordance with the Corporations Law, clearly displayed the most current market price of the securities together with the price offered to the shareholder. Accompanying the offer document was an enclosed off-market transfer form that was pre-filled with the details of the target shareholder. Payment for all purchases were made to accepting shareholders within 5 business days of receipt of the off-market transfer form. A large number of shareholders have accepted Tweed's offers despite the market price being clearly available in newspapers such as The Sydney Morning Herald and The Australian Financial Review. The market price was also clearly visible on the offer document. However, his offers have also been accepted by professionals such as doctors, lawyers and judges who would be expected to know the price of their shares. While people accepting his offers would make more money by selling on the ASX, that requires the appointment of a stockbroker and Tweed's offers provide an easy way of selling shares. Tweed has a poor relationship with the press arising from his policy of not granting interviews unless he is paid. 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 "ight-fisted share-scammer", He has also been described as an "..indefatigable bottom feeder" by Ian Porter and Nabila Ahmed of The Age 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 have performed their contracts by transferring their shares. Tweed has sued to enforce performance of agreements signed, often for minor amounts of less than $1000. These cases are usually settled in his favour. To foil his offers 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); Regulatory changes in 2003 required that unsolicited offers to buy shares needed to prominently show the last known market price of the shares in question. The fact that Tweed has been able to continue his business since then indicates that people are (or should be) aware that they could get a better return by selling their shares on the stock exchange but instead choose the convenience of accepting the offer put in front of them by Tweed. Other companies, not associated with Tweed, such as Hassle Free Share Sales Pty Ltd registered to Ms Suzanne Forster, and Share Buying Group Pty Ltd, have recently entered into the discount share offer business.

Securities laws contraventions

Tweed's offers have contravened securities regulations on two occasions. Each time Tweed was ordered to allow the accepting shareholders the opportunity to withdraw from their contracts.

In September 2003, the Federal Court of Australia found that the first instalment offer Tweed made was misleading. He had offered to purchase shares in OneSteel 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. The Court found that there was no false statement in the offer, the proposed payment of the purchase price over time in instalments had not been made sufficiently prominent. Tweed subsequently amended his offers to fix this deficiency.

In 2004 the Federal Court found that an offer made to shareholders in Aevum breached the law because it had not been dispatched with sufficient speed and also that it had not been expressed to be open for at least one month. The Court found that although there was no express requirement to keep the offer open for a month, such a requirement could be implied into the legislation.

Court actions by Tweed

Australian law allows for anyone to obtain a copy of a company's share register upon payment of a "reasonable fee". Companies had adopted the practice, not just with Tweed but with everyone, of charging high amounts for their registers in an effort to dissuade people from requesting copies.

In 2005 Tweed commenced an action against IAG alleging that the $46,000 which it had charged for a copy of its register, provided on a single CD rom, was not reasonable. The matter was settled before trial, with IAG repaying the $46,000 to Tweed plus court costs.

In 2008 Tweed commenced a similar action against AXA which had charged $17,000 for its register, again provided on a single CD rom. The Federal Court found that a reasonable fee was $250 and ordered AXA to refund the balance. The decision was appealed by AXA but the finding of the trial judge was unanimously upheld by the Full Federal Court.

Other companies have tried to make their registers difficult to use. Tweed commenced action in the Federal Court against one such company, ING, alleging that what had been provided was not a copy of the register as required by law. The matter was settled before trial with ING providing a replacement register and paying Tweed's court costs.

Other Business

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. At one point Tweed offered to be bought out of Clime at their net tangible asset value, which Clime refused to do. 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) and threatened legal action if the takeover bid continued. ASPC withdrew from the takeover soon after.

Below market value offers

Offer made by companies associated with David Tweed include:

  • An offer dated 2006-09-05 from DSPC to Coles Myer (CML) shareholders made an offer to buy shares at $7.50 each, only 54% of their market value.
  • An offer dated 2006-10-06 from the Australian Share Purchasing Corporation offered $1.50 for AWB Limited Class B shares, which were valued at $2.71 on that date.
  • An offer dated 2006-10-08 from DSPC to Rinker shareholders, offered $8.50 for shares currently worth $14.34, 60% of the market value.
  • An offer dated 2007-01-21 from Colonial Capital Corporation Ltd (CCC) to purchase AMP shares at NZD 6.00 when the market value was NZD 11.74 (51% of the market value)
  • An offer dated 2007-05-01 offering to purchase Tower Australia Group Limited shares at $1.75NZ when the ASX valued them at $2.88NZ
  • An offer dated 2008-02-20 from ASPC to Origin Energy (ORG) Shareholders offered to buy shares at $5.50 each, whilst stating the 'market value of original share' was $8.37.
  • An offer dated 2008-03-02 from ASPC offering to purchase AMP shares at $5.35 when then ASX valued them at $8.05
  • An offer dated 2008-04-30 from ASPC offering to purchase RIO shares at $100.00 when the ASX valued them at $136.08

Investment history

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.

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 installment. This allowed Tweed to take advantage of the time value of money, while disadvantaging investors. 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 installment. 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 offers mentioned above, payment was to be in 18 instalments of $2.36.

Other companies, not associated with Tweed, such as Hassle Free Share Sales Pty Ltd registered to Ms Suzanne Forster, have more recently entered into the discount share offer business. For instance, in a letter dated August 3, 2009, they offered to purchase IAG shares for $1.51, and in accordance with the Corporations Law, admitted that the market value of the shares was $3.67. They also offered to pay the costs 10 days after the shares were sold to them.

References

  1. Suzanne Carbone and Lawrence Money, "Same old Dave", 5 April 2006, The Age
  2. "Offer to suit half-price Tweed" , The Age
  3. The Commonwealth Bank was accused of doing this. On their website they wrote "National Exchange has alleged that the 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", 11 September 2003 - Commonwealth Bank of Australia
  4. Transcript of Inside Business - 27th November 2005
  5. Australian Securities and Investments Commission, ASIC stops flawed takeover by David Tweed for Clime Capital. Press release, Wednesday 9 August 2006.
  6. IAG Shareholder Warning about DSPC and NSPC
  7. ^ Craig Binnie (27 July 2006), "Government still won't act on Tweed". Herald Sun.

External links

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)
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