Ann: Trading Halt, page-147

The AFR article, like the ones preceding it, is carefully written. Some facts and a lot of allusions that aren't actually spelled out.

For example, the interest earned on cash holdings. This is written to alarm shareholders, but what are they actually saying? Is the AFR saying that the accounts have been illegally audited and that the money isn't there? Of course they aren't saying that, as that would lead to defamation against the accounting firm, etc., etc. The truth is probably that, like most businesses, their everyday account earns no or minimal interest. AFR quoted the Reserve Bank interest rate as a comparison - right, like everyone has access to that. Here's a scoop for you: my mortgage rate is three times the Reserve Bank interest rate! Shock! Of course no-one has access to that rate, whether it is for borrowing or saving.

Longer term holdings of course generate higher interest rates, but BIG has only been earning significant cash for a short time. Eventually they'll probably manage their cash better. However, should a start-up company lock its money away in a term deposit where they can't get access to it? They might as well return it to the shareholders rather than do that. I suspect the money would remain readily available for start-up costs, and hence would earn minimal interest.

Second example: AFR article makes much of having contacted two customers of BIG. Note that it is very easy to contact any customer of BIG, since the videos would each clearly identify the customer. Are you asking me to believe that AFR went out and contacted two customers, and then stopped? Of course not. They would have reached out to many. Some would not have returned the contact in the time available, and some would have. Of those that replied to AFR, are you asking me to believe that it was only two, and they both had issues. Again, of course not. If the strike rate for bad news was 100% you can guarantee that the AFR would have kept digging, to release hundreds of examples of disgruntled customers.

So I take it that the AFR reached out to many customers, and of that unknown amount they found two with issues. Had the strike rate of customer experience been high, I am convinced that the AFR would have kept digging for more. The fact that they only have two examples indicates to me that they have been digging for a while and that's all they came up with.

Last example: the strange accounts of one customer. One poster here speculates that AFR has an insider who gave them that information - possible. Again, only one issue. Had this insider known of, hypothetically, hundreds of examples you can be sure that the AFR would have written that up. So we have one example of a strange account. There could be an innocent explanation for it - the insider could themselves be lying to the AFR, or the AFR has misunderstood it. Or it could be a genuine error. With thousands of customers and accounts I'm pretty sure one or two will be in error.

So I'm left with only the factual information which appears to be that BIG and the finance company have an agreement between them, that the finance company is responsible if the customer fails to pay BIG, and that to protect themselves from BIG's insolvency the finance company has a lien on BIG's assets. Not a deal breaker for me so far.