cudeco(cdu) trading - representations, page-161

Hi CDU'ers,


The following is the text of a further letter that I have forwarded today to Mr. Greg Medcraft, Chaiman, Austalian Securities and Investments Commission:-


"Your ref. CCC11\0338 - CuDeco(CDU) Limited – Trading.

Dear Mr. Medcraft,

I refer to my letter to you on the 26th October, 2011, whereby I requested you to undertake an audit and inspection of CuDeco(CDU) Securities traded on the
Australian Securities Exchange(ASX), especially on the 18th August, 2010.

CuDeco(CDU) Limited has been subject to various anomalous trading behaviors and this demand for a forensic audit was designed to establish whether malfeasance was evident in
CuDeco(CDU) Securities trading.

In a Conference hook-up with your Mr. ... ....... and Ms. ......... ........ on the 24th October, 2011, both of them would not agree to such an audit on the grounds of costs.

A reply from your Mr. .... ..... on the 18th November, 2011, on your behalf, further indicated to me that extensive enquiries and research by ASIC into my concerns had proved negative and that no further action was proposed. It suggested that I do not write to ASIC again on this matter.

However, research undertaken in the “CuDeco Shareholder Research” Document has revealed that price volatility with CuDeco(CDU) Securities on the 18th August, 2010, caused severe margin loss selling resulting in shares being stripped from CDU retail holders.
Factors highlighting the trading of CDU Securities on the 18th August, 2010, are listed hereunder:-

1. A share price that endured an irrational 49% price fall compared to before the trading halt; and a 31% fall from its opening price on the day, all triggered by trading activity that took advantage of an under reporting of Rocklands mineral resources.

2. Relentless selling pressure throughout each hour of trading with C........... Securities instrumental in forcing lower prices despite their accumulation over the course of the day.

3. A volume spike caused by a torrent of wash trades that swamped the market and prevented it from providing proper price discovery. A record 16.46 million shares traded.

4. The release of an unsigned broker report on F...... letterhead with a price target of $1.20 soon after the company re-commenced trading. F...... had previously put out a recommendation of $9.60 per share for CuDeco on 26th August, 2009, with analysis based on expected grades around 2% Cu.

5. F...... were also prominent as sellers in the Pre-Open auction to commence trading.

6. Dominance over trading by brokers previously identified as acting mainly for corporate entities and institutions i.e. the so called “sophisticated” or “better informed” sector of the market. And as evidenced by the register, they retained their holdings.

7. Dominance by C........... Securities with their buying and selling for retail agents, (with a net accumulation bias as per the register), but more particularly their dominance all day long through the large amount of churn they implemented for “sophisticated” clients.

8. Also remarkable was the 887,945 XT trades put through the market by C........... Securities compared to second ranked D...... Securities with 115,686. The details
associated with the high volumes of XT trades would be able to provide useful insights into the trading that took place on the 18th August, 2010.

9. The dominance of B..., D.., H..., P.., M... & G.. with their heavy net selling most likely to be on behalf of institutions and corporate entities given their lack of retail clients in the previous 7.5 months of trading.

10. Highly anomalous “Down Tick” statistics which support the notion that the share price was manipulated/managed downwards throughout the day by constant flow of wash trades between supportive brokers. The ASK to BID ratio associated with price falls was an
astonishing 941 to 71.

11. Brokers who were prominent in daily trading (C..., U.., M... & M...) in the previous 7.5 months, playing much more subdued roles on the 18th August, 2010.

12. A share price that retreated through every hour of trading amidst record trading volumes.

13. The possibility that a great deal of naked selling took place intra day.

14. Brokers S... and A..... took on uncharacteristically prominent roles in churning stock with much higher participation rates than previously established over 7.5 months. In one day’s trading they eclipsed the total of all their previous involvement.
B..’s involvement was markedly increased as well.



Therefore, in view of the voluminous later research that has been undertaken with the “CuDeco Shareholder Research” Document; and in the light of your Public Statement on the 4th December, 2012, that Accounting Firms are warned that they will be named and shamed if the standard of audit continues to deteriorate in the wake of major collapses and corporate failures, I consider a forensic audit of the trading of CuDeco(CDU) Securities on
the 18th August, 2010, should be undertaken.

CuDeco(CDU) Securities have many anomalous features in the course of trading over the past 2 years 5 months. New technologies in use in recent years may need in-depth auditing of some stocks to see what really is happening in the ASX. A forensic audit will get to the crux of the situation and discover irregularities that have not been picked up with normal surveillance techniques.

It is imperative that ASIC find out what has transpired in the trading of CuDeco(CDU) Securities so that the necessary action can be taken to fix the System and redress financial losses incurred by retail traders where such is disclosed.

Yours sincerely,

Maxw..."



Referred for the information of CDU shareholders concerned.

cheers,

Max