I am a small investor who over the years has invested in several PLCs listed on AIM. It is in the nature of these Companies, in many cases, to require funding. This is particularly true of small pharmas who are helping to develop the drugs of the future but spend years progressing drug compounds through clinical trials with no income. I will use small pharma Companies as my example but the same scenario is true for many AIM Companies involved in many sectors.
For the small PI investor AIM presents an opportunity to invest in small Companies and I for one expecting there to be capital raising and unavoidable dilution as shares in issue and associated financial debt/instruments increase. Effectively, as shares in issue and debt increases, existing shareholders own a smaller part of the pie. The hope for small PIs is that as years go by and results demonstrate efficacy the pie will get bigger, hopefully considerably bigger, which compensates for the R&D spend and dilution and hopefully we make a profit. In the case of small pharmas the Company wins, the patient wins as a result of newly developed drugs and the investor wins by making a return on capital employed. This clearly isnt always going to be the case; things dont always work out and in the case of small pharmas the success rate is very small indeed. All PIs who invest in small pharmas should expect more Companies to fail as an investment than work out and make gains but we hope that the smaller percentage who deliver do so in spectacular style and compensate for losses made elsewhere. That is the risk/reward strategy I follow. I take fair gains and accept fair losses.
I do however take exception to the ever increasing examples of Brokers and Companies excluding shareholders from the process of raising funds through placements. Often we are never given the chance to participate in the placement of new shares and issue of warrants. The first we know is when an announcement is made saying the Company is delighted to announce what is nothing more than a hugely discounted shares issue, often timed around good news leading to a pump and dump spike in the share price where the newly issued shares and warrants are converted/sold quickly at a profit leaving existing shareholder holdings diluted and them out of pocket. This, Im my opinion, is little more than legal theft orchestrated by Brokers and specialist investment firms who specialise, in some cases, in raising funds for Companies who would find it difficult to access main stream borrowing elsewhere.
I accept all the risks and I am not complaining about making legitimate losses but I cannot understand why it is legal for existing shareholders to be cut out of capital raising when this is done through the issue of new shares. Companies will always need to raise money from time to time so why is it legal to cut out existing shareholders or, to only invite certain shareholders, to participate in the capital raising when we are all subject to the dilution this creates?
This week we saw Beanfort the UK/US Broker effectively closed down by the FCA after a sting operation in the US by the DoJ. The FCA seem to have been aware problems of problems with Beaufort and have had their operation in the UK under sanction and close supervision for some time. It seems to me that although the FCA restricted their service to clients in the UK that Beaufort have been left to continue assisting Companies to raise money in the UK to keep up the cover in support of the DoJ covert operation.
I would ask the committee to consider two things in respect of the above.
1. Investigating the ways in which Brokers and specialist funding Companies are allowed design and a arrange funding packages for AIM Companies, often rewarding themselves in the process disproportionately whilst at the same time excluding existing shar
The founder of a US start-up that promised to revolutionise blood testing has agreed to settle charges that she raised over $700m (£500m) fraudulently.
The Securities and Exchange Commission, a top US financial regulator, said Elizabeth Holmes and Theranos deceived investors about the firm's technology.
I received a sympathetic reply from Sarah. She is referring the matter on but also suggested I contact the following to reinforce my complaint regarding the inability of our regulators to properly police aim. May I suggest those of you who are unhappy with the recent events affecting Valirx "Beaufort Securities/ YV" do the same. Best wishes. Freddie
George Morris. He was in great form having had a couple of days away. He was his usual friendly informative self, sharing over 5 minutes of his time to talk with me. He does read our blog and appreciates our continued interest in current events. He also appreciates the speculation for an update and the reasons why. He said there was nothing at all to worry about. Also that they are in discussion / looking at several brokers and that they would probably make their minds up by the end of the week, albeit there is actually no urgency generated by others.
All in all a good conversation. I just wish other companies I invest in were so open and appreciative dialogue with us small investors.
Best wishes. Freddie
Please find a copy of my letter to Dr Sarah Wolleston MP
I have cut out personal information...
I have limited savings, invested in small healthcare biopharma companies trying to make a difference. Most are registered on aim and all are being destroyed due to lack of financing and apparent market manipulation/insider trading.
One of the culprits Beaufort Securities, now insolvent, was found out during an FBI sting operation. It appears that our own financial services authorities are disinterested in bringing these culprits to justice.
I have lost around 80% of my savings and so it's too late for me, but I'm so sad that so many of our small scientific institutions are slowly being destroyed by fraudulent companies allowed openly to manipulate share prices and bring down small fledgling companies. It is the responsibility of the FSA to police aim and yet it has taken the FBI to uncover Beaufort wrongdoings in the UK. This is the tip of the iceberg.
As I say, many biotech companies are being destroyed as I write and it is down to greed and corruption...there is now proof. Please refer to the recent Financial Times report on Beaufort Securities
and please ask Sarah to fight for our biotechnology future by bringing the FSA to account through our Chancellor and forcing them to properly police our financial institutions Yours sincerely
Take a look at email & reply by russell cox to Dr liam Fox local MP requesting the Government to be made responsible for the conduct of the FCA. If everyone can take a similar approach and initiate contact with your local MP we can all group together and push HM Treasury to take action!
449k shares was a sell at just under 3p. The seller believes Val will do well but has switched funds to velocys where he believes greater short term profit potential exists for him.
So with that sell the 4.75% rise held. Excellent!
I agree could be anytime but I'm sticking with them and averaging down at 2.5p if and when we get there.
There is definitely a chance this will play out with a big gain so I want to stay invested in the interim but any chance of as quick 'out and back in' and I'll take it. Yes, i might miss the big one but there is always another share to follow.
Yes indeed and any new broker is going to be keenly aware of what they are taking on. No getting away from it, there's 'no smoke without fire' and VAL's future funding will take on a new dimension with a new broker and eyes will be firmly on news flow, timing of such and any attempted institutional ramping.
The City watchdog delayed shutting down a broker at the centre of allegations of money laundering and share ramping despite fears the firm was close to collapse in order to allow the FBI to complete an undercover investigation.
In a move that will raise questions about whether the authorities put customers funds at risk, the Financial Conduct Authority gave Beaufort Securities a stay of execution as far back as December so that US prosecutors could get the evidence they needed to bring charges against the firm.
I am a long term holder, check the posting history it will be a lot longer than yours?
I'm a fan of VAL's products but not of the dubious funding (IMHO) and how shareholders have been cut out and never given a chance to participate. They have shown little concern for the dilutive effects this has had.
I see nothing wrong with trying to make some money from VAL in any way I can given that shareholders/investors have been paying the bills one way or another for years without return.
Trying to just hold onto VAL shares and waiting for a result has proved a disaster for long term holders. Better to trade when you can and accept that if the products are good and ultimately marketable that you might be out of the shares when they truly re-rate.
In rather a funny twist of fate VAL may well have to call on existing shareholder for future funding, they may be the only ones prepared to do so given the 'new transparency' we might be about to see with the FCA taking a look at how 'AIM works' and the Beaumont issue out in the open?
Unlike most long term holders who have sat on the shares I am actually still in profit having taken my chance to get out on the last spike and having averaged down prior to that.
Fall in love with a share at your financial peril. Many PI shareholder's have done this over the year only to realise that they are nothing more to management than an inconvenient, whinging reality of funding a development phase public company.
Another week slips by and still we wait for the drop to 2.5p which seems inevitable without welcome news, a broker on board and shareholder funds burning away on a daily basis.
Still plan to average down again at 2.5p. Actively managing my holding and hoping to get out on a spike in the price to buy back in when the price drops. It worked last time and why not again. Some might allege that Beaufort used 'pump and dump' tactics in the UK, not just the USA. I wouldn't know about such things but if that were how they got placings away here in the UK, a more vigilant and embarrassed FCA might be looking out for such tactics in the future?
Any new broker to VAL will be acutely aware VAL's previous broker was Beaufort and it's entirely possible that all previous fund raisings involving Beaufort clients are, or will be, scrutinised by the FCA. That might make future fund raising trickier because it might have to be done 'under an FCA microscope' for all ex Beaufort client Companies.
Good luck all and remember, buy, sell or average down, just don't hold!
Thank you Tired and confused for your two posts .
I was aware yesterday and was surprised no one else seemed interested in it.
You have stated you think they would be up to the same here , that adds up.
I also fear many other brokers might of been doing same sort of thing especially the ones we know had very strong links with Beaufort.
One of which you have been unable to log into since yesterday evening hoping its just a coincidence.
FT article which confirm Department of Justice action against Beaufort in the US and how they are being supported by the FCA :-)
It would be good if we had some comment from VAL Management as to whether OUR assets are in anyway affected by the failure of Beaufort? We can hope but given the naive financing VAL have engaged in (IMHO) it wouldn't be a surprise if they don't actually know at this time (IMHO)
There is a tendency for shareholders to focus on the headline news and great products and potential VAL has but if the Business is built on sand then it will come crashing down.
On reflection, this might see the very rapid 'fire sale' of VAL to a third party. Without a broker VAL rely on current funds for survival. Maybe the VAL will update us on the urgent action they are now taking to secure access to future funding. Maybe not?
No doubt Yorkville will raise their head again (I do hope not!)
What is certain is that all transactions and potential 'pump and dump' activities in the UK are going to be looked at by the FCA. They haven't said this but given according to the FT Beaufort were 'at it' in the US why would they have resisted that type of activity in the UK? It could lead to some very interesting information on funding activity and how it was orchestrated for several UK Companies is my guess: But hey, what do I know. What I know doesn't matter, it's really a question of what the FCA and the US Department of Justice knows, if you get what I mean.
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