herb elliots fortune stolen by anz, page-34

SB2000

This is where it all gets so confusing and little wonder Opes Clients are confused about what they did or did not own. From what I can gather Opes Clients were legal owners of the shares and Opes only had beneficial ownership. Legal owner can buy and sell only so will be hit with capitals gains (or losses) whereas the beneficial owner has the right to use the asset for income/expenses only. So legal owner has balance sheet entries and the beneficial owner has P&L entries from a accounting POV.

I believe Opes re-charged clients for dividends etc as they can being the beneficial owner.

If a mortgage say is defaulted on for a house then the bank can sell the house as it is security against the mortgage. So in theory the bank can re-posses security if the loan is in default.

However opes prime clients (some of anyway)clearly do not understand that the margin loans they had were not a mortgage as such,they were not secured loans. They were simply personal loans. The "mortgage" type of loan was between Opes (who were not legal owners)and the ANZ.

So why, as I have asked before, were the loans actually called margin loans? In effect, in practise, it seems the same shares were treated twice as security against lending. Little wonder there is confusion. The very fact people could take out a margin loan would imply that the shares were security against that borrowing whereas they were really security for the loans between ANZ and Opes.

So from that angle ANZ had a right to sell. Just that most felt to default it was the onus of the client to keep their margin loans within terms.

So very confusing and misleading.

But no doubt Opes clients were legal owners of the shares. It is in black and white. So yes they are liable for capital gains/losses.