Written by Frank Tabbert
This is a gamble not an investment and stepping up to make a bet on this, you must be prepared that you may lose big, but if you win the reward could be huge. This story is full of shady characters and past history of pumps and dumps, rises and falls and a horrible 1/120 reverse split disaster.Back in the early days of ETF's a private company called ADVISORSHARES INVESTMENTS LLC wanted to launch an ETF and needed seed capital. Finally a company stepped up to the plate and put up money with further money to be invested when the ETF reached certain financial milestones. In this particular situation,and upon providing an A U D I T E D statement to the lender that assets under administration by ADVISORSHARES had reached 150 million dollars, the lender must advance a specified amount to ADVISORSHHARES within 30 days to hold a 60% stake in the company. On December 22,2010, ADVISORSHARES sent a letter. " I am hereby notifying you that as of December 22,2010 the company's total assets under management exceed US$150,000,000 as verified on the statement attached hereto from the Company's independent auditor" NO STATEMENT WAS ATTACHED AND THIS FACT IS NOT DISPUTED. On January 25,2011 ADVISORSHARES finally sent a statement from an independent auditor verifying the milestone achievement that triggers the payment required by the lender. . The next day the lender completed it's payment obligation, however ADVISORSHARES rejected the payment and returned it on January 31 arguing that based on the December 22,2010 the milestone payment was due on January 221,2011 and cancelled all the economic value of the lender's interest in ADVISORSHARES. The case is now coming to a head, The assets managed have now grown to over1.2 Billion Dollars and this cash cow churns significant revenue for ADVISORSHARES. Does the lender legally have a claim to 60% of this company?. Should the court decide the outcome or an out of court settlement is reached in favor of the plaintiff the reward will be huge and price of the lender's shares will be many multiples of the current price. However if the defendant wins the case, the lender's shares will take a dramatic tumble. A gamble YES! Favorable odds? YES. For disclosure purposes and transparency I do have a bet riding on the plaintiff. STAY TUNED
UPDATE: THIS CASE HAS NOW SETTLED AND SHAREHOLDERS ARE NOW AWAITING A NEWS RELEASE ON THE DETAILS OF THE SETTLEMENT
The opinions in this article do not necessarily reflect the opinions of The Traders Digest or its staff and Frank Tabbert from time to time is featured as a guest writer and seasoned investor.