TRC Capital Offers to Scam Disney Shareholders.

By Hwi Yong M Shin

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A Disney Share Certificate

On October 9th 2013, the TRC Capital Corporation made an unsolicited offer to Disney share-holders to purchase up to 2 million shares at $61 per share despite the fact that that the closing price of the of share had been $64 dollars the previous day, $3 more than the price at which TRC offered to buy. If successful, TRC’s offer would have accounted for about 0.1% percent of Disney’s current outstanding stock. On October 15th however, Disney held a press release warning its share-holders to reject the below market tender that TRC was offering. The Securities and Exchange Commission (SEC) had issued an investor alert with regard to mini-tender offers warning share-holders those in making offers at below-market prices, the “bidders are hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price.”

This is not the first time that TRC Capital has made mini-tenders for shares at undervalued prices. Founded and run by Lorne Albaum, a “securities lawyer” who runs the legal firm Albaum & Associates, the Toronto-based private investment firm has made several tenders for undervalued shares for over a decade. Although TRC isn’t the only firm making such unscrupulous offers, it is undoubtedly the most notorious practitioner. In essence, TRC offers to buy securities (stocks or shares) in a company which always amounts to less than 5% of the total equity. Since any tender that accounts for less that 5% of a company’s total equity are regulated by neither the US Securities Exchange nor any SEC regulations, as Canadian Business Magazine explains, Lorne Albuam is able to exploit “a loophole in securities legislation that has allowed him to fatten his bank account… It may be legal, but his critics allege that what Albaum does is annoying, immoral and that he should be stopped” 

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