The collapse of Opes Prime is a spectacular story because of the dollars involved, the high profile and wealthy nature of the 1,200 client “victims” and the lifestyle and personality of those whose actions precipitated the collapse.
After telling more than one million Australians on ABC TV news last Friday that stocks were being dumped at up to 40% discounts, today Alan Kohler passed on the following message from the largest Opes Prime lender, ANZ, which is owed $600 million:
Average discount to stock sold on Friday was about 2 per cent. No stock was sold by ANZ at a 40 per cent discount (in fact not any discount remotely near that). We are committed to taking time to complete the sell down in an orderly way to ensure we obtain fair value.
However, the silence from Merrill Lynch and the high turnover and big slumps in shares such as Challenger and Admiralty Resources on Friday, suggest Wall Street’s most famous broker may indeed have been more cavalier in its attempts to recover $350 million. It reportedly has already raised $300 million from what was $500 million of secured shares. That suggests a huge fire-sale and big discounts.
It would be hard to imagine ANZ being so cavalier. After all, it is chaired by Charles Goode, the blue-blood Melbourne stockbroker who personally carries the baton for all that the legendary Sir Ian Potter represented about broking and business practices.
Goode will be absolutely appalled that his bank was funding such a reckless Collins Street broking house as Opes Prime.
The truly shocking element of this story is that all Opes clients will collectively wear the loss for the few that have failed to meet margin calls. The essential cause of the problem was not fraud, but a series of major clients whose shareholdings plunged such that they couldn’t repay their debts.
The biggest name identified so far is Sydney criminal lawyer Chris Murphy, who was at times the biggest punter on Sydney race-tracks during the 1980s. Murphy is close to the Packer family but seems to have come a cropper borrowing heavily backing the Packer-controlled Challenger Financial Group, which has plunged 70% in 5 months.
The situation gets messier with the revelation that Chris Murphy has a separate business relationship and joint investment with ousted Opes managing director Laurie Emini.
Emini is well-known for his fast-living lifestyle. He is a regular visitor to Crown Casino’s high-roller room and the Herald Sun reported on Saturday that he even visited Hugh Heffner’s Playboy mansion last year after one of his investment arms agreed to lend up to $25 million for a chain of Playboy Style stores in Australia.
S-x, debt and gambling – this collapse will go down as a true opus. And who said the 1980s entrepreneurs had a monopoly on excess.
* Check out the Mayne Report Rich List which now has almost 900 names.
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