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David Tweed

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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 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 from Williamstown. 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 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 Stock Exchange (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 The Sydney Morning Herald and The 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",[1] David Elias, also of The Age, called him "a man with no conscience".[2] The Sydney Morning Herald reports that Tweed once stated that "I didn't do morals at school."[3] He has also been described as an "..indefatigable bottom feeder" by Ian Porter and Nabila Ahmed of The Age[4] 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. 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[5]); 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 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 time value of money would not be able to easily evaluate whether to keep or sell their shares. 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.

Investment Strategy

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. 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.[6][7]

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.[8]

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.[9] 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.[10]

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.[11] 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.[11] Tweed took AMP to the Australian Federal Court 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 Corporations Act to have charged a figure he believes was too high.[12]

In a letter dated 11 November 2007 Tweed's company Colonial Capital Corporation is offering to buy BHP Billiton shares at a price of $42.47. Similar to offers mentioned above, payment is to be in 18 instalments of $2.36.

According to Woodside Petroleum, David Tweeds company "Hassle Free Share Sales" has been registered to Ms Suzanne Forster.

Below market value offers

  • 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 2006-12-10 from DSPC to purchase BHP Billiton shares at $18.00, 70% 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 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 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 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 2008-03-26 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 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 St. George Bank (SGB) shares at $13.39 when the ASX valued them at $26.77
  • 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 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 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 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

References

  1. ^ Suzanne Carbone and Lawrence Money, "Same old Dave", 5 April 2006, The Age
  2. ^ David Elias, "Tweed feeds on the vulnerable", 11 December 2004, The Age
  3. ^ David Elias (30 December 2004), "Tweed finds profit preying on old folk", Sydney Morning Herald
  4. ^ "Offer to suit half-price Tweed" , The Age
  5. ^ 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", 11 September 2003 - Commonwealth Bank of Australia
  6. ^ Michael Rowland (10 September 2003), "Federal Court deals blow to share trader David Tweed", ABC Radio's PM
  7. ^ David Ellis (24 October 2003), "Accidental hero defeats David Tweed", Sydney Morning Herald
  8. ^ IAG Shareholder Warning about DSPC and NSPC
  9. ^ Transcript of Inside Business - 27th November 2005
  10. ^ Australian Securities and Investments Commission, ASIC stops flawed takeover by David Tweed for Clime Capital. Press release, Wednesday 9 August 2006.
  11. ^ a b Craig Binnie (27 July 2006), "Government still won't act on Tweed". Herald Sun.
  12. ^ Vanda Carson (12 July 2006), "Tweed alleges AMP overcharged", The Australian.

ANZ has received a request from Hassle Free Share Sales Pty Ltd (HFSS)for a copy of ANZ’s register of shareholders. The register is a public document containing shareholders’ details (including the number of shares held by, and the address details of, individual shareholders). ANZ is obliged under the Corporations Act to provide HFSS with these details. HFSS has made previous similar requests of other Australian listed companies, and then has written subsequently to shareholders of those companies making unsolicited offers to purchase their shares at a price clearly below the current market price.

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) - to be confirmed from ASIC
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