More Neteller delays

[jetset]

ANOTHER HIATUS IN NETELLER SAGA

US Attorney's office still undecided on whether to indict Isle of Man e-wallet founders.

If readers thought that the February 14 court date set in the case against Canadian Neteller founders Stephen Lawrence and John Lefebvre would produce new information they were disappointed. As USA Today reported, the waiting game for thousands of U.S. patrons with money tied up in the Isle of Man based online payment service currently under federal investigation just got longer.

The U.S. Attorney's Office for the Southern District of New York extended the deadline until March 16 to decide whether to indict the co-founders of Neteller, an Internet money-transfer service popular among gamblers. Stephen Lawrence and John Lefebvre were arrested in January on a charge of conspiracy to transfer funds with the intent to promote illegal gambling

For U.S. customers of the site, it was another delay in their efforts to retrieve their money, which remains in Neteller segregated accounts until the legal issues are resolved.

Neteller says U.S. authorities have frozen access to about $55 million in U.S.-based accounts.

"As a result of the restrictions placed by third parties, court-ordered seizures and related legal concerns, (Neteller) is unable to make payments to U.S. customers," says a posting on the company's website.

FBI agent Neil Donovan has said funds are being held in court as potential evidence. He did not provide a timetable on when customers may get their money back.

 

[jetset]

Adding a little more information to the above material:

The case against Neteller founders John Lefebvre and Steven Lawrence has been delayed.

Though a date was set for 14 February for a preliminary hearing, and the clerk of the federal courthouse at Pearl Street New York confirmed the defendants names were on the schedule, a judge has yet to be assigned.

Yusill Scribner, spokesperson for the Southern District of New York District Attorney, told eGaming Review that by close of business yesterday [Wednesday 14 Feb.] the government had either to have returned an indictment, set a date for a preliminary hearing, or asked for more time, and that a delay of at least 30 days was anticipated.

A new deadline for an indictment to be filed has now been extended to March 16.

 

[Tester]

Sounds a good sign

When the prosecutors are delaying the hearing, it may indicate that there is some chance for the case to end up with a compromise.

But things do change in those kind of negotiations pretty quickly.

 

[jetset]

More jobs cut at Neteller

NETELLER CUTS MORE JOBS

Canadian and UK employees axed

Neteller plc continues to feel the consequences of US legislative and enforcer activities this week, and has announced that it plans to cut 250 jobs as part of its withdrawal from the US market.

The Isle of Man based e-wallet firm said 220 jobs will go at its operations in Calgary, Canada, and a further 30 will be lost in the UK. The job cuts will reduce Neteller's total workforce to 425, substantially down from a peak of 1 000 last year.

Neteller, whose main customers are online gambling firms, decided to pull out of the American market after US enforcers arrested Canadian company founders Stephen Lawrence and John Lefebvre recently, despite the duo having earlier relinquished all executive responsibilities in the company.

Neteller added that its shares, traded on the London Stock Exchange's junior AIM market, will remain suspended "in view of the continuing uncertainty."

The group reiterated that it expects to take a restructuring charge of US$1.1 million in 2006, rising to US$3.7 million this year.

 

[Tester]

Neteller's press release.
They say they will update as as soon as something changes.

Press Release
NETELLER Group Rationalisation Programme Substantially Complete


16 February 2007 - NETELLER Plc (LSE: NLR), the leading global independent online money transfer business, today issued the following update from its Board of Directors with regard to its principal operations in Calgary, Canada and the UK.

As a result of the Groups voluntary withdrawal from the US market, the Group has substantially completed the necessary reorganisation and restructuring of its operations to reduce its headcount and align related costs with anticipated revenues of its worldwide business.

This rationalisation programme has focused on the Groups Calgary-based operations where the principal teams serving the US market were employed. As previously highlighted, transfer volumes and customer enquiries through the Groups contact centres have decreased substantially since the Group ceased processing transfers for US residents. Staff reductions will total around 220 employees, across all levels, from the Groups contact centre and security teams, as well as related support functions in marketing, processing and IT/product support. Approximately half of the reductions were through the Groups voluntary redundancy programme.

In addition, as part of the rationalisation of the Groups UK facilities, it is expected that around a further 30 redundancies will arise from the relocation of the Groups Gatwick-based operations to Cambridge where they will share premises with the Groups NetBanx business. This move is expected to be completed by the end of March 2007.

Following these staff reductions, the Group will employ approximately 425 staff across its European, Americas and Asia Pacific operations, down from a peak of over 1,000 during 2006. A further part of the Groups rationalisation programme will include a review of the Groups property requirements and may include a sale or partial lease of certain of the Groups Calgary-located facilities. As stated in our trading update of 18 January 2007, the total cash costs associated with staff restructuring are expected to be in the region of US$ 1.1 million in 2006 and a further US$ 3.7 million in 2007.

Ron Martin, Group President and CEO said: The events of the past months have led to challenging times for the Group and the Board has taken these measures to ensure the Group has a sustainable business going forward. We would like to thank all of our employees who have contributed to the growth of the NETELLER business over the past few years, and for those who have left or will be leaving the Group, we wish you well for the future. The Board believes NETELLER continues to have a strong future ahead and presents many exciting opportunities for its employees.

The Groups shares will continue to be suspended from trading on AIM for the time being in view of the continuing uncertainty. Further announcements will be made as appropriate.

from here

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[rhump]

As a result of the Groups voluntary withdrawal from the US market

 

[jetset]

Press release dated today (16 February).

It looks as if there will be some property asset reductions in Calgary, too which is logical following the halving of staff.

It really is a pity to see a thriving company knocked about like this - all for politics and commercial protectionism.

 

[EasyRhino]

To be honest, I feel more sorry for my funds still tied up in neteller, since any delay in the trial of the cofounders could theoretically delay them even further.

It's hard to feel too much emotion for a publicly traded ewallet company, when it comes right down to it.

 

[jetset]

Still, you have to feel some sympathy for 400 - 500 folks who have been shown the door in Calgary and to a lesser extent the UK...joining those axed in locations as disparate as Costa Rica, Gibraltar and India as a result of this DoJ assault on global online gambling.

 

[pokerpal]

Yah, I suppose they were at the top of the game for years before all this legislation crap started happening. From most trusted to this, with all the delays for US oriented transactions, who would of thought one gov't could be so powerful.

 

[casinocide]

Unfortunate but forseeable

This thread reminds me of a conversation I had with a Neteller rep around the time I first discovered payments being declined from merchants back to my Neteller account. It went something like this;

me: I dont know what the heck you guys are doing. You could have at least given some notice so we had a chance to cash out the money we're owed. This is going to cause enormous inconveniences for your customers and a lot of people will be very upset.

agent: It's not our fault. You're government was the one who did this.

me: The government wasn't the one who disallowed payments from merchants.

agent (ignoring my legitimate points): Is there anything else I can help you with?

me: No bud, you better help yourself though. If I were you I would start looking for a new job, like yesterday.

agent: Our business is still strong and our jobs are 100% secure.

me: They told you that? That's not true man. You guys are in trouble and your job is a long way from secure.

agent: We'll see about that.

And seen we have.

 

[sdaddy]

good read

Here is a long but excellent opinion column from MajorWager on this whole Neteller situation:

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The writer sums up a lot of the feelings I have as someone who wanted to give Neteller the benefit of the doubt, but now feels very let down by their actions.

 

[pokerpal]

Alot of information could be missing from all sides...as grandmother used to say..."it will all come out in the wash"...but she also said "bullsh|t baffles brains", smart lady. I can't wait to get my money out, I need to gamble and lose it. The urges man I can't handle it. Sent my proof of dual citizenship the other day, and my utility bill. It shouldnt be long.

 

[jetset]

Good article - this sentence resonated with me because it reflected the indifference with which our own attempts to extract fundamental player-relevant information from Neteller were met:

"I attempted to ensure them that we were all in this mess together, but instead the only thing NETeller provided me over 3 weeks of e-mails, phone calls and live chats was the brush off."

 

[oldandboring40]

i dont know how things are done in the british markets, but i have never seen a stock that had trading suspended as long as neteller and not file chapter 11. i am worried that people in the company may have been skimming off all that money going thru. its a heck of a cash flow and i am sure the temptation is there. a sudden halt to that cash flow that has taken place in the last few weeks would expose such a problem. what would explain the problems that all the non u.s. customers are having? looking uglier by the day.

 

[pokerpal]

I doubt it, its too hollywood. Its not easy to go bankrupt in common wealth countries. I know in the US its probably easy as pie. I think what is happening is just as they are saying... processing delays, brought on by what is in the news these days.

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[jetset]

"i dont know how things are done in the british markets, but i have never seen a stock that had trading suspended as long as neteller....."

That thought occurred to me as well when I read on the latest release (9 February) that the shares were to remain suspended.

We have members here who are involved in this side of business in the UK - perhaps one of them could comment on how long a company can suspend its shares before the stock exchange steps in?

 

[soflat]

People thought Neteller was safe. It wasn't. And no ewallet is safe. Click2Pay is almost just as bad and will probably end up like NT. I won't use an ewallet again.

The DOJ will find its strategy flawed. People are going to find non-ewallet methods of depositing and withdrawing. The methods will be much harder to track than Neteller. They stomped out the most popular and easiest to control funding method, but they were unable to contain the problem and it has spread out to the point that it is out of their reach.

 

[Tester]

"i dont know how things are done in the british markets, but i have never seen a stock that had trading suspended as long as neteller....."

That thought occurred to me as well when I read on the latest release (9 February) that the shares were to remain suspended.

We have members here who are involved in this side of business in the UK - perhaps one of them could comment on how long a company can suspend its shares before the stock exchange steps in?

As far as I can remember, a stock can stay suspended for severall months.
Usually, stock are suspended for lack of cash, for not sending yearly reports, etc. In this case they are in a much better situation. Since, the company is doing its business etc. And they are just not willing to trade befoer hey will settle with the US and - I guess - have adequate reports for investors to describe exactly what is going on after the big change.

People thought Neteller was safe. It wasn't. And no ewallet is safe. Click2Pay is almost just as bad and will probably end up like NT. I won't use an ewallet again.

The DOJ will find its strategy flawed. People are going to find non-ewallet methods of depositing and withdrawing. The methods will be much harder to track than Neteller. They stomped out the most popular and easiest to control funding method, but they were unable to contain the problem and it has spread out to the point that it is out of their reach.

What turned out not to work, is publicly working against the - persumed - US law. Neteller did not screw up. The ODJ screw thigns up.

For places where gambling is not prohibited, I am not seeing why to fear form ewallets. Althought unexpected things are - by definition - unexpected.

Anyway, I guess the Neteller fudns will be paid eventually.

 

[jetset]

Thanks, Tester - but I would imagine there must be an official limit somewhere in the exchange rules, because otherwise unscrupulous managers could keep investment money on hold indefinitely whilst they took decisions that may not be in the best interest of those investors.

 

[Tester]

I can remember (unclearly) cases that after several months the exchange threw out the stock. These were usually cases of clear negligence of basic rules. We have quite some time ahead before this is going to happen.

The value of the shares has dropped already. The only thing is they are not trading.

There was trading at a sports exchange as to how low will Neteller drop. I cannot find it now. Maybe it was dropped because the stock is so ling not trading. They do not like unclear betting.

 

[oldandboring40]

the only thing i could come up with concerning suspension is a ten day halt when the NYSE suspends a stock. Clearly this is not the case here. But if you look at the history of U.S. stocks you will see most will only halt trading on its shares for no longer that a couple of days no matter what the news is. again not the case here, but the length of the trade halt is very alarming to say the least. its been a month!

 

[Tester]

Thanks, Tester - but I would imagine there must be an official limit somewhere in the exchange rules, because otherwise unscrupulous managers could keep investment money on hold indefinitely whilst they took decisions that may not be in the best interest of those investors.

I did some searching.

Here is what goes on in Nasdaq. Some stocks stay suspended from May to December.

See bold paragraphs.

Homestore In Suspension - How Long?
by Blanche Evans


Homestore released news late afternoon on Friday December 21st that was so potentially explosive that the NASDAQ halted trading on its ticker symbol first thing on Monday, December 24th. At publication time, trading was still halted, and it could stay suspended for a long time.

The news? That the company must restate its financial results as it conducts an inquiry into its own accounting practices.

It is an inquiry? What an understatement. Since when do companies trigger a halt to ascending stock prices to "inquire" into their own accounting practices? Was this a noble self-sacrifice or did a regulator like the NASD or the SEC ask for this inquiry?

"It's not unusual at all for a company to investigate its own accounting practices. We have some outside experts that are assisting us," says Gary Gerdemann, senior director, corporate communications for Homestore. "We don't have the full scope of details - how did it start, when will it end, etc. I don't have those details."

No one else has details either, and certainly not until the NASD and SEC are satisfied that there will be no material announcements that will significantly impact the stock - up or down. That begs the question - what other bad news is coming down the pike? And it could be bad, if the abrupt exit of CFO Joseph Shew is any harbinger. He took the top accounting job at Homestore in March and vacated it ten months later, nearly two million dollars richer.

Homestore's statement that its results must be restated without naming which quarters are in question or how many quarters back the inquiry will go doesn't bode well. The company also stated that it had retained independent counsel and independent accountants to assist with the inquiry. That's why the stock could be in for a long haul. If multiple quarters' results are being probed, the new accountants have quite a bit of work cut out for them. There won't likely be an answer found overnight, and then any answers found must pass muster with the NASD and SEC.

The only good news for Homestore is that it only has two halts against it, a T.1 for pending news, and a T.12, a halt requesting more information. What Homestore doesn't want is any news that may indicate irregular activity or worse which could trigger an H.11 - a halt for regulatory concern.

How rare is it for a stock to be halted from trading, catapulting its investors and customers into limbo? What do the halts mean?

According to Mike DeMeo, spokesperson for NASDAQ, halts can be issued for a wide variety of reasons such as the news that a company is going to be acquired or that it is declaring bankruptcy, or that it has a product announcement. The way it works is that the companies notify NASDAQ with their news by sending it to Stockwatch or Marketwatch. NASD, NASDAQ's parent, and NASDAQ look over the news to see if the news is going to impact the company's stock in a positive or negative way. "What we look for is news that will significantly affect the value of the stock," says DeMeo.

"If you go to www.nasdaqnews.com, at the newsroom there is a link to 'trading halts'," instructs DeMeo. "You'll see a long list of companies that are halted with all different reason codes for pending news, or to request more information or other reasons."

One company on the list with the same halt codes as Homestore, Novo Networks, Inc., has been suspended from trading since July.

So why did NASDAQ halt trading on Homestore? "The communication between NASDAQ and the companies is nonpublic, so we can't comment on those," says DeMeo. "Homestore's halts for news pending and requesting additional information are not specific.

How long will the halts last? "There's no time frame for when this halt will come off - there are companies that have been halted since May," he says. "It could last for months."
With so many billions lost on the NASDAQ over the last year, is NASDAQ getting more policelike? Is that what is behind Homestore's corporate colonic? "Our parent NASD is our regulator, and they have always done this to secure the fair trading of issues," says DeMeo.

What about fraud? "That’s where NASD comes in, and they look at the issues. There is a code for irregularities, H.11, a halt for regulatory concern. The SEC can also suspend trading if it has a concern. I don't have specifics about Homestore, but a lot of companies that are under watch or halt will come out publicly and say why they are being halted."

What about the investors - are they the last to know when a company has good or bad news? Again, DeMeo points inquiries to Nasdaqnews.com (or Nasdaqtrader.com). "They are the first to know," explains DeMeo. "If you go to www.nasdaqtrader.com and if you go to trading halts, you will see a bunch of companies that are being halted,and it lists when a stock is resumed. That list is refreshed at the end of the day. Traders have access to this all the time, and if they are trading in the stock, then they know to go there and be on the lookout."

After a slate of bad news, is Homestore going to be able to recover from trade suspension? The halts will not impact Homestore's ability to serve its customers, assures Gerdemann. "We continue to be the leader of our field, and we serve hundreds of thousands of customers," he says. "We are confident of our business, and will continue to concentrate on customer service."

Published: December 27, 2001

 

[jetset]

That's very interesting; essentially Nasdaq companies can stay "halted" in a trading sense for as long as it takes if they can give the exchange a good reason and presumably keep the exchange news updated on developments.

I'm trying to find out if the same rules apply in London.

 

[Tester]

The rules of the Lndon stock exchange are here

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There are many files of rules, and I was unable to find the relavant rule.