Monday, August 31, 2009

Ripples from Senator Kennedy's death

A story in the Wall Street Journal's weekend edition makes an important point about the political fall-out from Senator Edward Kennedy's demise.

Kennedy had chaired the Senate's Health committee, which was to have made him the administration's point man in efforts to reform the US health care system. Now that he is gone, it appears that one of my Senators, Christopher Dodd, will take over at Health.

Yet Senate rules prohibit Dodd from chairing more than one committee at a time, so this will mean he'll have to step down as chair of the Banking Committee. He was to have been the administration's go-to guy for the re-wiring of financial regulation. The question then is: who will step in there?

Next in line would be Senator Tim Johnson. Johnson has in the recent past broken with his party over financial-regulatory issues, so he may not be a loyal soldier for President Obama's plans. The administration might have to chose between fighting to keep him out of that chairmanship, or lettinbg him take it and trying to work around him.

I recommend the story, which had Damian Paletta's byline and gave a contribution credit to Jonathan Weisman.

Sunday, August 30, 2009

California Micro Devices (CMD)

CMD, a company headquartered in Milpitas, Calif., supplies semiconductors that are used in mobile handsets, LEDs, and personal comupters. Its manufacturing facilities are in China, Japan, and Korea.

It holds its annual meeting September 17, and the activist investment fund that threatens to play the role of skunk at that picnic has the oddly Hegelian name Dialectic Capital Management, which holds 8.8% of the company's stock.

The dispute concerns the Arques Technology deal. Back in April 2006, CMD acquired Arques, a move it proudly referred to at the time as "an important milestone in the evolution" of CMD. It thereby added DDR memory voltage regulators to its product portfolio. But by December 2008, management had become sufficiently disenchanted that it wrote off all the goodwill associated with that acquisition.

So ... what the heckis a DDR memory voltage regulator? As a techie doofus, I'll look it up. DDR stands for "Double data rate." It was a class of integrated circuit that began to be included in computers in the mid 1990s. Since then there has been DDR2 and DDR3. So it is possible that in buying Arques, CMD thought it was buying something more cutting-edge than was in fact the case, which would explain the disenchantment.

At any rate, the dissidents contend that such "debacles" are part of a recurring theme, "management has repeatedly embarked on risky projects in an indecisive manner, failing to deliver tangible results for stockholders. Meanwhile, the Board has clearly failed to hold management accountable."

Wednesday, August 26, 2009

Thoughts from Conyers Dill

About the poison pill.

(And yes, I know that rhymes.)

But the rhyme is not my fault.

Heck, I could have called this entry "Thoughts from Neil Henderson About the Poison Pill." But I'ma wild and crazy guy.

Tuesday, August 25, 2009

Reader's Digest

The Reader's Digest Association (RDA) filed for bankruptcy court protection yesterday with a pre-aranged restructuring deal with the majority of its senior secured lenders. [So this will be, fittingly enough, an abbreviated bankruptcy with the boring stuff ommitted.]

The filing includes only the RDA's US units. It also has divisions in Canada, Latin America, Europe, Africa, Asia, Australia, and New Zealand -- all of which are unaffected. Indeed, in a bit of "having/eating the cake" legerdemain, those unbankrupt units will have access to the debtor-in-possession financing that the bankruptcy filing will secure.

The bankruptcy appears to be a side-effect of the Ripplewood LBO of a couple of years ago. That and the fact that RDA is suffering from the malaise that affects all dead-tree operations these days.

RDA is represented in this bankruptcy by Kirkland & Ellis LLP. It has filed in the Manhattan bankruptcy court, case number 09-23529.

Monday, August 24, 2009

Xethanol changes name, sells a plant

Gulf Alternative Energy Corporation, a Houston based plant traded in the pink sheets under the symbol GAEC, announced recently that it has agreed to purchase an ethanol-production facility formerly owned by Xethanol Biofuels LLC.

The plant, in Blairstown, Iowa, is designed to produce six million gallons of ethanol per year.

I regard the whole ethanol industry as it exists in the US at present as a creature of unwise subsidization, and the whole idea of putting someone else's potential foodstuff in my car and burning it strikes me as ... how shall I say this ... bad Karma. Xethanol itself was founded, though, with the intriguing idea of focusing on cellulosic ethanol -- that kind that does not come from foodstuffs. Wood chips and scrap paper have ethanol, but it is more difficult to use theirs because they also have cellulose. A break-through in this area would be very good news for everybody, but for that very reason it has been a domain for con artists too.

Xethanol, the seller of the plant, has changed its name, amid what I gather is a broadening of focus. It is now the Global Energy Holdings Group.

Still, the reason this struck me as worth sharing in this blog is that the seller of that plant, Xethanol, was the subject of the first target of an experiment in a "new model" for journalism that I have mentioned before here, the Sharesleuth website financied by Mark Cuban, run by Chris Carey.

Sharesleuth still exists, at least as a URL. The items on that website are all rather long in the tooth. I have no idea whether there is any news gathering activity still underway there. But I think any objective student of the situation will deign that, as an experiment, the results of this one are negative. However journalism in the future is to be financed, it will not be financed by finding companies to expose publicly in order to assist in a financier's short sales.

Sunday, August 23, 2009

Judge Dismisses Biovail lawsuit

This week a judge in a state court in New Jersey has dismissed a suit against the hedge fund SAC, the investment vehicle of Steven A. Cohen. This is the lawsuit brought by the Canadian pharmaceutical company Biovail, the lawsuit that attained especial prominence because it was the object of a "60 Minuites" profile in March 2006.

The opinion dismissing the case is available through Scribd.

Initiated on February 22, 2006, and first couched in terms of the New Jersey Racketeering Influenced and Corrupt Organizations Act. The case had been removed the federal court immediately upon filing, but then remanded to state court.

But it was tainted, in the opinion of the court, because the documents from Bank of America Securities pursuant to a protective order back in 2005 were then wrongly used to draft the complaint in the state case.

Apparently pursuant to a desire to remove that taint and under the sway of new counsel, Biovail reframed the complaint in trade libel, and took the position that the New Jersey court should apply Ontario's law. New Jersey has a "substantial relationship" test on choice of law. Specifically, in a tort action the law of the place of injury should govern unless another forum has a more significant relationship to the place or parties.

Most of the defendants are situated in New York, and the stock is traded in New York on the NYSE, so thatis the law he applies. And New York has strict requirements for the pleading of "special damages" in trade libel.

Bottom line, "Biovail's complaint fails in that the statements alleged are not the type that are considered within the gamut of trade libel, but rather defamation, a claim for which the statute of limitations has long since run." The opinion gives the impression that Biovail lost interest in the matter after its own recent executive upheavals, which I have chronicled in other posts here.

Wednesday, August 19, 2009

Desert Equity's Bid

Desert Equity LP has offered $4.25 per share for up 3.74 million shares of the stock of White Electronic Designs Corp., a computer chip manufacturer headquartered in Phoenix.

This is an insider's buy-out proposal. Desert Equity is itself controlled by the chairman of White Electronics, Brian Kahn.

Desert Equity first announced plans for the cash offering on Thursday, August 13, which was in turn just six days after the board of directors of White Electronics voted to eliminate the "poison pill" it had created back in 1996.

Share price has had a very wide range over the last year, from $3 to $5.25. Its has been a tumultuous year, featuring a proxy fight annouynced in February and settled earlier this month. the stock price closed yeserday, August 18, at $4.22, on low volume. This would seem to indicate that the market believes the deal will go through, so the price of the target will stay near the buy-out offer until the deal is consummated.

White Electronic has also announced that former Cubic Corp. executive Gerald Dinkel would take over as president and CEO, filling a position that had been vacant for a year.

A bit of corporate history to round this out: White Electronics is an Indiana corporation that began life in 1951 as Bowmar Instrument Corporation (Bowmar).

On October 26, 1998, Bowmar merged with Electronic Designs, Inc. (EDI) and the combined firm adopted the present name.

In 2001, White electronics acquired Panelview, Inc. (Panelview), a designer and manufacturer of enhanced commercial flat panel display products.

Tuesday, August 18, 2009

Get that fourth volume out, Mr Saber

I wrote a review of a book by Nasser Saber some time ago. The fellow who was then managing editor at HedgeWorld, who knew Saber somewhat, asked me to write a review of the book, which was the third volume of an ongoing series.

The book seemed when I first looked it over to be sufficiently strange that I thought I should inform myself about the earlier volumes before writing about it. I did so, and ended up writing a rather unflattering review about the whole series.

Nasser wasn't happy about this, and made several complaints, one of which (the least subjective of the bunch) was that I had misquoted him by inserting an exclamation mark into a certain sentence I quoted.

He was wrong. I had not made up the exclamation mark and had thus been more accurate in quoting his book than he evidently wanted me to be. Anyway, after a bit of e-mailing back and forth, my new BFF told me that I would be likely to receive unflattering mention myself in his next volume. I continue to wait.

Here is Mr Saber's blog, with cover shots of each of the three volumes out so far, the number still does stand at three. One of his recent posts begins with the remark, "I want to work on Vol. 4, but they pull me back!" That sentence of course is a tribute to the Godfather movies. What he seems to mean is that the fascinating absurdities of contemporary politics and culture pull him away from his task of writing book four of the set, into writing blogs about ... the police in Cambridge, Mass., or why American movie makers are no good, and so forth.

I'll just sit here tapping my foot, waiting to be made infamous.

Monday, August 17, 2009

Closed-end funds, Part II

Resuming my line of thought from yesterday....

Stephen Ross, in Neoclassical Finance, explains that behvioral economists make an example of closed-end funds, with their "visible and disturbing characteristic" that they routinely sell at significant discounts from their net asset values. this is a "seeming insult to rationality and the NA principle [No Arbitrage -- which in turn is crucial to neoclassical finance] that we will examine."

But in Ross' view, the customary discount can be explained as the result of (a) agency costs, in particular management fees, (b) the asymmetry of information among investors as to whether management has the ability to add value, and (c) the fact that arbitraging betweren NAV and the stock price is by no means costless "and is, in fact, widely recognized to be problematic." He gives a symbolic representation of that explanation that need not be reproduced here.

In my view, Ross uses this test case to score some solid blows aganst the behavioralists' presumption that irrational sentiments explain the prices of securities and their derivatives. And it is because he uses it as a test case that I have ever since had an eye on Karpus, and those funds that do engage in the sort of arbitrage that Ross described as "problematic."

Yesterday I noted that Karpus and Bulldog are both stirring things up at the Insured Municipal Income Fund Inc. Today I would like to add only that Karpus has another fight on its hands.

Last month Brett Gardner, portfolio manager at Karpus, filed a letter with the SEC that he had apparently also sent to the Putnam Funds board. He said that the board was misleading shareholders on the question of the merger of two ofits closed funds into one, and the opening of that one. The opening, of course, is a clssic discount-abolishing measure.

I believe Putnam has a meeting scheduled for November. We'll see how it shakes out.

Sunday, August 16, 2009

Closed-End Funds, Part I

Insured Municipal Income Fund Inc. (the “Fund”) (NYSE:PIF) is a closed-end management investment company, advised by UBS Global Asset Management, that normally as its title suggests invests most of its assets in tax exempt munis.

On Friday it announced its results for the quarter that ended June 30. Earnings come to 23 cents per common share.

Some of the shareholders aren't happy. Two institutional shareholders in particular among the unhappy may be familiar to readers of this blog: Bulldog Investors General Partnership has proposed its own nominees for the board, and Karpus Investment Management has suggested terminating the investment advisory agreement with UBS Global.

I see a press release, via BusinessWire, in which UBS/Insured Mutual trumpets the support it has received from two advisory services, but I don't see any date for the upcoming meeting at which such things would be voted upon.

It's worth keeping an eye on. Karpus, of Pittsford, New York, has a fascinating distinctive strategy. I believed, when I started work on this entry, that I had discussed that strategy in this blog before but now I can't find any such entry. Anyway, here's the gist of it: Karpus focuses on closed-end funds. It looks for cases in which stock price has been below net asset value, and it moves in to demand certain measures aimed at narrowing that discount: a tender offer, open-ending, merger with another fund, or liquidation.

In its target space, in other worlds, there is a simple metric for valuation, and that is precisely the strength of the appeal Karpus can make to shareholders.

My own attention was drawn to this strategy in 2005, when I wrote a review of a then-new book by Stephen Ross, NEOCLASSICAL FINANCE. Ross defended modern financial theory. including the hypothesis of efficient markets, against challenges from "behavioral economics," and as an illustration of those challenges, and of why he finds themunpersuasive, he cited the "closed-end fund puzzle."

I'll summarize Ross' argument, and return to Karpus as a practitioner of Ross' theory, in tomorrow's entry.

Wednesday, August 12, 2009

DiPascali Pleads Guilty

Bernard Madoff's efforts to portray himself as a "lone gunman" have been to no avail.

One of his key co-conspirators, perhaps the key co-conspirator, has now pleaded guilty. That would be Frank DiPascali, who was Madoff's director of options trading for a decade, from 1986 to 1996.

That title is a crucial fact in understanding the case against DiPascali, even more crucial than the title "Chief Financial Officer" that he assumed in 1996. Because the strategy that Madoff claimed to be pursuing, the investing thesis that supposedly laid all these golden eggs he kept reporting to investors, was what is known as a "split strike options" strategy.

The idea is that Madoff would buy a portfolio consisting of about 35 of the bluest of blue chip stocks, stocks included within the S&P Index. He would then sell call options and buy put options at different strike prices, on the S&P index itself, creating a cushion on both sides of the purchase price of those stocks. The options positions would cost him money if the price of the underlying stocks rose rapidly (but that would be okay, since he owned the stocks and benefitted from that rise), and they would earn him money if the index fell rapidly (which would cushion the effect of that fall).

The claim has been purely fictitious for a long time now -- but the key fact is -- if the claim had been truthful, the director of options trading would be a very busy and strategically crucial person in the overall operation. How could that director not know that he wasn't doing what Madoff kept telling clients he was doing? this was the crucial point that drew attention to DiPascali. He must have been the Mayor of a Potemkin Village.

Concomitant with the guilty plea on the criminal charges, DiPascali also entered into a partial settlement with the SEC on its civil complaint. This complaint lays out the mechanics of the Madoff fraud more thoroughly than any document yet made public. See for yourself.

This could be very bad news for othr co-conspirators, and there clearly are others. DiPascali is not as stoic as his former boss about accepting more than one hundred years behind bars as a sentence. He'll talk. Indeed, he said yesterday: "I know my apology means almost nothing. I hope my actions going forward with the government will mean something."

Yes, but watch out when you do take up residence in prison, Frank. The new neighbors don't have a high opinion of squealers.

Tuesday, August 11, 2009

Lion's Gate

The annual high tide of shareholder's meetings and, accordingly, of proxy contests arrives in the late spring and early summer. That tide is now going out.

Still, there are some waves incoming that continue to lap against the sandcastle of our attention -- one of them is the possibility of a proxy contest at the September annual meeting of Lion's Gate, the entertainment company.

There was a fascinating article on this in the L.A. Times yesterday. It said that Carl Icahn owns 17.7% of the company and after a period in which he was very critical of the board has become suspiciously quiet lately, as if mulling whether he will put up a challenge slate for September.

Lion's Gate has had some very big cable-television hits, notably Mad Men and Weeds. I have illustrated this post with a photo of the irresponsible bachelor uncle of the series Weeds, Andy Botwin by name, played by Justin Kirk. Easily my favorite. But this isn't supposed to be a television show fanboy type of blog.

Let me close, then, by saying that should Icahn seek to cause trouble, Lion's Gate does have some large shareholders who are friendly with management, among them Michael Steinberg, whose Steinberg Asset Management owns 14.6%, and Gordon Crawford, whose Capital Research Global Investors holds about 9.5%.

Monday, August 10, 2009

Stephen Bainbridge

Stephen Bainbridge, a professor at UCLA School of Law, has written on "Shareholder activism in the Obama Era."

His thesis is that the financial crisis of last fall and the new administration it did so much to give us have allowed a certain theory of corporate governance to gain new traction -- an institutional-investor-centered theory would shift power toward pension fund managers and their like. Bainbridge is somewhat wary about the likely effects.

My own view is that in general Bainbridge is too enamoured of boards of directors. He is a believer in a board-centered theory of corporate management, one in which boards are possessed of enormous discretion, and any interference therewith is likely to be a bad thing because ... well, because it hampers them.

Such worries are misplaced. As I believe recent history shows, boards that are not held accountable from outside can become locked into disastrous strategies, as at LTCM, can trust untrustworthy managers, as at Enron, etc. There must be a disruptive influence. Andrew lo's work on the "path dependency" to which boards can become maladaptively prey may shine some light here, I think.

Sunday, August 9, 2009

B of A and Merrill Lynch

DealBook, the New York Times affiliated service that follows M&A, venture capital, and hedge funds in a blog-like format, has risen to the defense of Kenneth Lewis, the Chief Executive of Bank of America.

Lewis' critics complain that he pressed for B of A's acquisition of Merrill Lynch, while withholding crucial information from shareholders on what it would cost them. The Securities and Exchange Commission shares this view.

But DealBook quotes at length from Richard X. Bove, of Rochdale Securities, who believes shareholders have benefitted from the deal.

I'll leave it there.

Wednesday, August 5, 2009

New board at Carlisle Goldfields

The dissidents prevailed at the July 31 shareholders meeting (mentioned as one of the thre brief items in my entry on this blog on Sunday, August 2) of Carlisle Goldfields.

Carlisle has defined reserves of 412,000 ounces of gold in the Lynn Lake Greenstone Belt of Manitoba. Here's some more information about the geology of it.

The only incumbent director re-elected was Carl McGill, who thus represents the voice of continuity. In a statement, McGill said the usual good-sport stuff: "It was a well-fought proxy contest....Now that the shareholders have made their decision, the new board of directors intends to pursue its vision and to implement plans to achieve the common objective of all - to enhance shareholder value."

The new board members are: Steven Mintz, Bruce Reid, Donald Alexander Sheldon and Frank C. Smeenk.

Those names don't immediately ring a bell for me. I googled the first of them. There exist, unsurprisingly, a number of fellows named Steven Mintz. Though I could be wrong, I believe the pertinent one is this fellow.

The long-running CMKM diamond saga has developed in me some interest in Canadian mineral claims, so I'll keep on eye on this company.

Tuesday, August 4, 2009

Goldman Sachs & JP Morgan on board

The FT reports that two major US investment banks are supporting the CFTC's plan for stringent limits on speculation in energy commodities.

The CFTC seems ready to put a ceiling on traders' positions, as a reaction to the surge in crude oil prices last summer that brought them to $147 per barrel.

The FT quotes Blythe Masters, the head of global commodities for JP Morgan, saying, "It would make sense to impose position limits across all markets," but that the limits should look through to the end-market participant.

That quote, and the accompanying black-and-white photo of Ms Masters, drew my attention to the story rather forcibly. I knew that I had read about Blythe Masters recently. It is a striking name, and so draws attention to itself. "Ah, that's it!" I said after a moment of head scratching. "She was featured in Gilliam Tett's book!"

Tett's recent book, FOOL's GOLD, was aout (in the words of her subtitle), "how the bold dream of a small tribe at J.P. Morgan was corrupted by Wall Street greed and unleashed a catastrophe." Ms Masters was a central figure in that tribe, and he disillusionment is one of the threads that runs through Tett's tale.

The "bold dream" in question was the aggressive use of credit derivatives as a risk management instrument and their marketing as such. It was Masters who said, in 1997: “Credit derivatives will fundamentally change the way banks price, manage, transact, originate, distribute, and account for risk.”

Masters, too, was one of those within the truibe who felt discomforted by the way other institutions soon employed credit derivatives in the context of mortgages. She said, "We [at JPM] just could not get comfortable" with such an application.

Perhaps her eagerness now to embrace government re-regulation of energy derivatives should be considered a new step in her continued disillusion with her own youthful boldness. If so, it is a pity.

Monday, August 3, 2009

BS v. BS: An update

Last December, the Financial Times ran an opinion column by Nassim Nicholas Taleb, author of Fooled by Randomness (2001) and The Black Swan (2007) with co-author Pablo Triana. They used the ongoing market chaos to reinforce an argument they had made before, that contemporary financial risk management in general is misguided and that the Black Scholes Merton model is part of the reason. I cannot help but think of this as the "Black Scholes versus Black Swans," or the BS v. BS controversy.

"Ask for the Nobel prize in economics to be withdrawn from the authors of these theories," they urged their readers. "Boycott professional associations that give certificates in financial analysis that promoted these methods. The fraud can be displaced only by shaming people, by boycotting the orthodox financial economics establishment and the institutions that allowed this to happen."

I've written of this here before and now seek only to update.

In May of this year, GQ ran a flattering article on Taleb called "The Thinker," in which the writer, Will Self, describes Taleb as "a genuinely significant philosopher ... someone who is able to change the way we view the struicture of the world through the strength, originality, and veracity of his ideas alone."

Taleb claims, naturally, to do a good deal more than theorize about finance -- he claims to have proven his own views in practice. In this regard, I note that the above passage in Self's essay appears soon after a quotation with a startling number in it, a number ($20 billion) that has attracted a lor of attention since the appearance of this issue of GQ, and has in fact become a new battleground in the war of BS v. BS.

"We didn't short the banks -- there's not much to be gained there, there were all these complex instruments, options and so forth. We'd been building out positions for a long while ... when they went to the wall we made $20 billion for our clients, half a billion for the Black Swan fund." So Taleb supposedly told Self.

So presumably, in addition to the profit he made for and through his own fund, he made another $19.5 billion for outside clients. Janet Tavakoli picked up on this right away, and she contacted Nassim about that $20 billion figure. He told her that the magazine made an error there. Did they just make the number up? Perhaps not. The $20 billion, Taleb said, "might correspond to the face value of positions."

The mistake is not a trivial one. It relates to the whole issue of the "scalability" of results. It is one thing to claim you've made some money picking up pennies in front of a steam roller because you've been nimble enough to dart in and out safely. It is another thing to say that the strategy can be increased indefinitely to any scale -- to even a $20 billion scale -- that there is that much money in front of aforesaid steamroller.

Last week, Tavakoli -- the principal of Tavakoli Structured Finance -- revisited the matter of the disappearing $20 billion on her website, in a piece called "Where Were the Drama Pundits [Whitney, Taleb, and Gasparino] When It Mattered?"

She notes that Taleb has posted the GQ article, with its $20 billion figure, on his website,, and he is silent there about the error. Indeed, Taleb praises Self's profile of him as one of the "most representative overall" yet done.

Silence on a little matter of $20 billion may be taken, Tavakoli submits, "as endorsement whatever the source of the original error," an endorsement of the suggestion that a strategy of running in front of the Black-Scholes steamroller applies to large investments -- a point for which there is "actually no empirical evidence."

It is a good point, and reinforces my suspicion that, pennies notwthstanding, there may be life in the old BSM steamroller yet. Enough life so that it is better to be in its driver's seat than to dart around in front of it.

P.S. Tavakoli has asked that I clarify two points in the above. First, she says, "I wrote that Taleb has 'corrected' the error [re: the phantom $20 billion], but he did so more than two months after his original posting, and only in the face of media pressure."

Taleb's more recent position is that the $20 billion figure stands for a "notional amount," and that the actual gains produced thereby were between $250 and $500 million. This is the subject of Tavakoli's second requested clarification. she questions "how Taleb made so little on bearish derivatives for the 2007-November 2008 timeframe in question...." The top of that range, $500 million, is only 2.5% of the $20 billion notional amount.

Sunday, August 2, 2009

Three brief items

1. Ruisi Leaves Rowan's board

Rowan Companies Inc., an oil and gas drilling company based in San Francisco, Calif., said in a filing July 29th (Wednesday) that Lawrence Ruisi has resigned from its board of directors.

Ruisi was there at the designation of Steel Partners II LP, which named him to the board back when Steel Partners owned 9.5% of Rowan's equity, and was seeking to change the strategic direction of what it saw as an undervalued company. Those days are gone. Steel Partners' attention has moved elsewhere, and it now owns only 3.8% of Rowan.

2. Children's Place to Buy 2.45 million shares from Dabah

Ezra Dabah is a former chief executive of Children's Place Retail Stores Inc., a children's apparel retailer. He left that post at the recommendation of the board in September 2007.

Dabah tried to buy the company last year, and this year he seemed poised to wage a proxy fight to gain control of Children's Place at the stockholders meeting July 31, Friday. He had a slate of three allies in the running. If they had all won, then (given his own seat and that of his father-in-law, Stanley Silverstein) he would have had that control.

It was not to be. Instead, the company agreed to buy half of Dabah's stake from him, i.e. 2.45 million shares.

3. Carlisle Goldfields Ltd (CGJ), a Canadian firm engaged in the exploration and development of mineral properties, held its annual shareholders meeting Friday, July 31.

One of the bones of contention between management and dissidents was the cause of the de-listing of CGJ from the Toronto Stock Exchange on June 16, 2009. Dissidents appear to have blamed it on the incompetence of the incumbents. Incumbents reply that the TSX was concerned over two issues -- martket capitalization and the fact that the CEO and the CFO were at that time one and the same.

"Market capitalization issues are not uncommon at this time at the TSX, with numerous companies under the same scrutiny; however, the trading price of the Company's shares is not something over which management or the Company has any control. Regarding the dual role of CEO and CFO by the same individual, the Company could not afford a CFO at the time so the President and CEO took on the second role by becoming CFO on an interim basis to ensure that the Company could file its financial statements and avoid serious regulatory penalties."

Management says that it has a plan to be re-listed soon after the election. We'll se how the votes tally up.