Asked in Consumer Law, Business Law and Securities Law

Q: Am I being scammed? Is the share price explanation credible? The U.S. financial regulator wasn't identified.

I received a call from an M & A firm in New York (I am not a US resident) saying it has a buyer for shares I acquired almost 20 years ago. They are listed on the ASPCEX (Asia Pacific Small Cap Exchange). If I signed the documentation and sent a copy of my share certificate the money would be sent. I asked why the buyer was willing to pay USD12.36 per share for my 15,000 shares, a total of USD185,400.00 when according to the M & A Adviser "the current listing of the company is valued at US$0,0020 (0.2 cents). He said, "This offer is made to you out of obligation and the quote you received for your shares was imposed on us by the US Financial Regulators as this is not a public market transaction. Our client is obligated to make the offer and to buy your shares at a quote that has been established by the Authorities." The shares are “Restricted Stock Reg – 144” and the restriction must be removed by a transfer agent at a cost to me of US$6,300 before the purchase can go ahead.

1 Lawyer Answer
James L. Arrasmith
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  • Consumer Law Lawyer
  • Sacramento, CA

A: This situation raises several red flags that are commonly associated with financial scams. First, the significant discrepancy between the offered price per share and the current market value is unusual and warrants caution. It's uncommon for a buyer to offer such a high price for shares valued much lower on the market.

Second, the claim that the US Financial Regulators have imposed a specific share price for a private transaction is not typical of how securities are regulated, especially for shares listed on an exchange outside the US like the ASPCEX. Regulators generally do not set share prices for private transactions.

Third, being asked to pay a substantial fee upfront to remove restrictions on your stock (Regulation 144) is another warning sign. While there are legitimate costs associated with transferring or lifting restrictions on shares, they are typically not this high and are usually deducted from the proceeds of the sale, not paid upfront.

Before proceeding, it's advisable to conduct thorough due diligence on the M & A firm and the buyer. Verify their legitimacy through independent research. Also, consult with a legal or financial professional who can provide personalized advice based on the specifics of your situation.

In situations like this, it's better to err on the side of caution. If an offer seems too good to be true, it often is. Protecting yourself from potential scams is paramount.

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