Replies to post #39515 on Calissio Resources Group Inc (CRGP)

[TenKay]

The issue with "keeping" the illegal dividend, goes a little beyond that. A funded dividend can be illegal for any number of reasons. Of course there are cases where such a dividend can be kept depending on the circumstances of the dividend, for example if it did not include fraud. But that consideration has limits of course.

It is reasonable to argue in this case that CRGP's dividend does not fit into that category even closely. It was never funded, fraud may have been committed to the point insiders enriched themselves, etc.

But you are correct...there are a number of ways this could go in terms of what the court and the receiver (if appointed) try to do.

I just don't accept any argument that is made that the shareholders should get to keep it because they are "innocent" and did nothing wrong. Unfortunately that is all the current arguments submitted to the judge by "interested parties" amount to. But it is unfortunate nonetheless.

Perhaps someone will make a more persuasive and credible argument in the next 7 days.

[236T568]

actually, no

the receiver will be appointed by the court

and all of the dividends will be clawed back

Yes, you are correct in that it is a strange and nonsensical concept that innocent shareholders should receive consideration when an illegal dividend has been issued. But that is just how it is, in many cases.

Yes, the DTCC can make a post payable adjustment. Yes, the court can appoint a limited power receiver, which can request this adjustment.

It is also possible for the court to scope the post payable adjustment to affect only CRGP directors and affiliates if it were possible to track the accounting down. I believe it is, since COR clearing seems to have direct knowledge of the shares CRGP bought. That is the best case scenario for shareholders. The worst case scenario is a post payable adjustment across the board. It is doubtful that this will happen due to the devastating effects it would cause to shareholders who bought in good faith (precedents here), but it is possible.

$CRGP

[janice shell]

It is doubtful that this will happen due to the devastating effects it would cause to shareholders who bought in good faith (precedents here), but it is possible.

How "devastating" will it be for most? That seems to me to be a problem, or potential problem, specific to penny stocks. Let's say a dividend was incorrectly paid by an exchange listed company, and the company decided to rescind it. Its shareholders would be for the most part investors; they wouldn't be trading in and out of issues on a short term basis, and their portfolios would be suitably diversified.

Recission of the dividend would not be devastating to such shareholders. First, though the exchange listed company would have made a mistake, it wouldn't just disappear, as CRGP did. Its stock price might take a hit as a consequence of the company's incompetence, but it would likely recover in time. Naturally, if one of the shareholders had withdrawn the amount of his dividend--say it was $15,000--to pay bills, upon reversal of the divvy he'd have either to redeposit that amount in cash, or sell other holdings. Since he'd be diversified, that wouldn't be a major problem. He wouldn't enjoy having to do that, but his bills would still be paid, and most of his portfolio would still be intact. Effectively, he'd have returned to the status quo ante: things would be as they were before the dividend was paid.

Similar scenarios play out every day. People do get margin calls. They get them because they made unwise decisions. And they have to pay up. But most of the time they aren't devastated. And when they are, well, they made unwise decisions.

So how will the judge feel about CRGP shareholders whose central argument is that they didn't know enough to do thorough research before buying, and who, in some cases, put all or most of their eggs in the CRGP basket? Those were unwise decisions.