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Chipotle Mexican Grill, Inc. Message Board

  • rlfadj rlfadj Nov 21, 2012 8:17 AM Flag

    Fraud and Buyback Schemes

    If u are longs, u need to protect urself. Do ur research. More info are out there on this scam. Read partial article below.

    Fraud and Buyback Schemes

    The fraud inherent in buyback schemes consists of management, supported by fund managers using voting rights of beneficial owners, diverting profits to their advantage and ignoring their duty to shareholders, while using false and misleading arguments.
    No one knows how much of the more than one trillion dollars used to finance stock repurchases during the Great Bubble ended in executives' pockets and how much went to fund managers, investment bankers, accountants, and other intermediaries.
    Long-term investors who retired during the 1980s and 1990s benefited.
    A fraud is still a fraud, although victims may not know they have been taken.
    However, most stockholders did not sell into the rising market and were cheated.
    A fraud is still a fraud, although victims may not know they have been taken and may delay in filing suit.
    If the bear market that started in the summer of 2000 continues long enough, there will be millions of unhappy investors and fertile ground for tort lawyers.
    Suits against the tobacco industry became effective when millions gave up smoking, making it easier to impanel sympathetic juries.
    When Baby Boomers start to cash in their mutual funds after 2012, tort lawyers may find profitable opportunities for action against the directors, fund managers, and investment bankers that profited from corporate buybacks — if they are still alive.
    A Complicit SEC

    Corporations cannot force stock prices up alone.
    During the boom, help came from mutual funds, state and local government controlled portfolios, life insurance companies, and foreign investors.
    The SEC also played a part by granting corporations safe-harbor from stock manipulation and by not requiring adequate disclosure of costs associated with buybacks and executive stock options.
    The SEC condoned manipulation and steered business to brokers.
    The SEC actually supported buybacks, as long as investment bankers managed the programs, thereby assuring that Wall Street would profit from the scheme, providing brokers with inside information for trading desks and favored clients.
    Pension plan trustees may have exercised their votes to approve buyback programs, thereby keeping management happy and securing lucrative corporate trust business.
    Federal tax laws also favored buybacks by allowing companies to charge off executive remuneration under option schemes, without reporting such expenses to shareholders.
    There was less federal tax due on buybacks linked to stock options than on the fairer and more transparent alternative of dividends and cash salaries for executives.

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