Tuesday, January 05, 2016

A giant pump and dump scam

That's the only way to describe what has happened to Dick Smith Electronics. They were bought by Anchorage Capital, a private equity firm, for $20 million in 2012. Anchorage then gutted the business, pumping up the reported profit in the meantime, and used that increased reported profit to dump it on the public for $520 million in 2013. Of course, that gutting led to long-term problems, which have finally resulted in the company going bankrupt again. But Anchorage has walked away with half a billion dollars, ripped straight from the pockets of the fools who bought in to their IPO. And now that the company is bankrupt, they (or someone just like them) gets to pull the same scam again. Rinse, repeat...

And this is why you should never trust stock markets. They're simply scams and tools for the sociopathic rich to steal more money.