The bad news is that I canāt see Freetrade being able to do anything to facilitate this rights issue as there has been other corporate actions recently i.e tender offers and rights issues that they have also refused to participate in ( I know as I lost the opportunity to sell my shares at a profit in a tender offer because freetrade said no) so if they now allow this one then it will open them up to financial claims from other users who have lost out recently.
The only way they will be able to do it and limit their liability to compensation is to set a future date to do it but they would have to do it for all corporate actions.
I do feel for you all as I say i recently lost out because they wouldnāt allow me sell my shares in a tender offer.
I mean Iām not sure thatās true. The terms are pretty clear. They could easily pick and choose without opening themselves up to any liability. Setting a president that shapes future expectations on the other handā¦
Thatās why I wanted more clarification about why they canāt do it. I have always just assumed it was a āmore hassle than itās worth to usā type situ rather than a technical / administrative impossibility.
IES recently raised and they didnāt support that. Even though it was (I think) the largest capital raise on the LSE this year (prior to this) I can understand that kind of. It is a small cap stock that isnāt held widely and wonāt affect many people. This is a whole different situationā¦.
I do get your point and in a legal court sense yes they could use the terms and conditions to do a pick and choose scenario, however as a financial regulated company its a whole different ball game as the regulator will look at the terms and conditions and the scenario and decide if its regarded as fair for all which means they could still face an issue with the financial regulators as they could say the terms and conditions and the way they used it are unfair and the ombudsman can still award compensation.
As they have previously when someone complained about freetrade didnāt offer scrip dividend and the ombudsman found in freetrades favour to a point and still awarded compensation to the claimant because of it (donāt know for sure but i assume that might be why they do now do scrip dividends)
It could easily be run as a one off manual process, and FT needs to give this some priority on the product roadmap. Its the first time Iāve been caught out and the value is quite small, but if this becomes a fairly regular thing I will move my ISA.
Freetradeās lack of taking reasonable steps to pass on the monetary benefit of the discounted rights issue is set to cost me circa Ā£1.5k - Ā£2K. Absolutely fuming.
My comment was written before Freetrade communicated they were selling the nil rights and passing on the proceeds. They took a couple of days to approve my comment.
Credit to Freetrade for taking action to address this situation. They need to act more swiftly in future though - just saying āsorry we donāt do rights issuesā is unacceptable when their terms and conditions state they will take reasonable actions to pass on benefits of corporate actions.
Hi fellows, Iāve been following the conversation since I saw the price drop. I donāt really understand the latest update that Freetrade sent and also forgot to take a screenshot. I donāt know what Nil rights is either. I sense that Freetrade is doing something right based on the latest comment. Could someone explain?
NG needed more money to be able to invest in large projects. It decided to issue more shares to raise the funds. This meant that each previous share would be worth less as there would be more shares in circulation. (This is the price drop) Accounting for the dilution the average price per share should be circa ~Ā£8.50 or thereabouts.
To not royally piss off its earlier investors it issued those shares at a discount based on your holdings. For each 24 shares in NG that you owned you would have been able (in an ideal fully functional trading application) to buy 7 shares for Ā£6.45 each. For nebulous āreasonsā FT is unable to accomplish that, nor to take āreasonableā steps to allow such a sale to happen. What was allowed was the ability to sell the ability to purchase the shares at that price on the issue day. What FT did to placate the users was to sell those rights and distribute those funds across the holders of NG. In essence it was a ādividendā of 0.4178 per share. Each share buy right was sold for ~1.4325 on the open market. Currently NG is trading at ~9.01 and only time will tell how efficient the sale was in terms of capturing the actual value of the rights. It is better than nothing, but IIRC the shares will go āliveā on Jun 10th so on that day calculate the difference between the share price and 6.45 to get the value you could have had without resorting to selling the rights. As of now FT was able to capture 1.43 out of a possible 2.56 so 55% of what should have been possible. If NG tanks then it would have been a good move if it surges then it was a bad move.
I suspect the Ā£1.43 will end up being worse that what we could have made by exercising the rights, however it is better than nothing which is what I originally thought we were going to get
Also used the money to buy more NG shares. Reasonably happy with the outcome, although my preference is for FT to set some priority to add NRI functionality on the platform.
Along with that they really NEED to layout in the terms that they are going to pay out all dividends, as the way it is written they donāt have to pay any out at all. Dividends are corporate actions and arenāt covered by FT according to the terms. In theory they will take āReasonable Stepsā to pay them, but I think they should be explicitly stated to be covered.
Itās funny before this I was not even thinking about looking at any other brokers but I thought Iād have a gander at trading 212 after all this chaos and the amount Iāve lost out and their wording of the terms and conditions coming out worries me.
Even their fx fee is cheaper than freetrade. Itās frustrating as I have even invested in freetrade but now the flaws are starting to come through the cracks and not really seeing any progress especially getting basic features such as using Avg cost rather than FIFO
Freetrade have just changed the CEO. Iām pinning my hopes on this resulting in a dramatic change of pace when it comes to feature rollouts and development of the product.
Far too many FT clients end up T212 customers due to things like this. I only opened an account because FT didnāt offer stocks that required a nationality declaration at the time.