Archive for March, 2013

Winbase Equities – Thieves, Conmen or?

Last year I was contacted by a salesman from Hong Kong based investment firm, Winbase Equities. I was looking for a place to invest some of my Self Managed Super Fund money so I agreed for him to have the broker call. David Sperring called me and came across as a knowledgeable and decent professional. The pitch was that they bring new clients aboard with an investment in Heating Oil in November and vacation gasoline in June as these futures always make strike and you never lose your investment. I did my due diligence and while the basic information seemed accurate I can’t say their promise of making $65,000 from $5,000 seemed a lot to make from one trade, especially as they said they only take 1% if I make money but I figured plenty of others make millions this way, why not give it a try. Of course, I was naive and uneducated in the ways of investing on the stock market but I did my best to investigate the firm, the broker and the market.

All seemed plausible and I was prepared to risk my five large because sometimes you have to take risks to get anywhere. If I had known about Puts and Calls I would have hedged this ‘bet’ with a Put, or sell order so that if the price dropped I could get my money back. I would lose all if it didn’t make ‘strike’ without the put. In this case that was about 34 cents per share more than the starting price. In fact the price never went up more than a few cents this year and so when my option expired I lost my money. No problem, that’s the risk you take. At least that is how I would have felt if I hadn’t been let’s say, managed, or handled.

Let me be the first to say I have little doubt everything David and Winbase Equities did was legal and by the book. The book of course doesn’t say they have to ‘educate’ the investor but one would think it ethical to at least advise him properly; at least it is considered so in Australia. David, once I had sent my five grand off to the bank account they use in China, said I might be in luck and Richard, the big boss, might call me and give me some of his precious time. Lo and behold Richard did indeed call me. Spoke to me at length and very ‘folksy’ he was too. Lots of ‘genuine’ interest about the wife and kids and of course how rich he had become doing this very same investing thing.

It was then the alarm bells rang loud. He was too suave and smooth and I knew a sales pitch when I heard one. He told me about puts and calls and how you must have a put or else you could lose the lot. OK, why didn’t David warn me of this, he knows all about puts and calls? Oh, I would have to invest more to ‘qualify’ for a put to cover my calls. I didn’t have another $5,000 to invest but Richard let me stew on this over the weekend then called back with the ‘good news’. The company was willing to throw in $3,000 f the needed $5,000 because they like me or whatever. As if! They would never risk a dime of their own money, no company would. I told Richard I was not spending another dime, we’d see how the options I had fared.

Of course they dived so I sent an email to David Sperring asking him where was my $5,000, exactly? I didn’t mention I had recorded the conversations we had and those I had with Richard but I did get a response. The reply I got was a call from Richard. He wanted me to invest a few more grand and all would be well. I refused and told him I thought his behaviour was sharp practise in my book. A set up. An obvious rip. I accepted it was probably 100% legal but it was certainly not ethical and he wasn’t getting another penny. He was taking this well until I mentioned how I would be blogging about my experiences. That’s when he offered to extend my investment another month! Free of charge. OK, so all of a sudden my $5,000 wasn’t ‘gone’? No, the company would do this just for me because Richard liked me and didn’t want me thinking he was a conman. Please, Richard, don’t expect me to swallow that one.

He did reinstate my account and for another month I watched the price of heating oil go nowhere near where it had to for me to make any money. I doubt it would have and I think the 34 cents was too much, but all part of the sting. They hook you with the call, then advise how you need a put. You save your money and have confidence in them to invest again. I didn’t have the extra to throw in and I guess they are not used to dealing with true peasants like me. Actually I had the extra but I had made it a rule when I invested the $5K that I would test the waters with that and that was all I was prepared to lose.

For me it was a calculated risk, a gamble. It may have paid off but it didn’t. No sour grapes, no crying. What miffed me no end was the way David (who has never once replied to several emails or calls) set me up and Richard finished me off, or tried to. Winbase Equities are still out there, of course. As I said, no doubt they operate within the laws of wherever they are but I would not, based on my personal experience, recommend them to anyone. Even someone I didn’t like. I should have stuck to my original plan and bought that much in silver bullion but I admit to being tempted by the chance to make a significant return. I did think the investment had legs when I paid in but as soon as they closed the trap with the phone call from Richard I knew then, with months to go until the option ran out, I had lost my money.

I have since invested on the stock market and made a small gain by using the hard won knowledge of puts and calls. They lied to me when they said the minimum to have both a put and a call was more than my $5,000. Other brokers do it for less, even if they don’t. I’ll be in Hong Kong in a few months and I know where David works and lives. I think a visit and an apology are in order, but we all know that will take some getting. What do I think happened? I think they buy a swag of options and of course have puts to cover their calls, then they sell parcels of these to punters like me. They get us aboard with the good news, then once they have our money they hit us with the bad news. They select the strike (34 cents in my case) knowing it will never get there. They have their calls at  a more reasonable 15 cents or whatever. They will never lose and they make a ton of money from silly punters like me who buy in at $5,000 and above a time. All legal I guess but hardly ethical. Caveat Emptor. I am aware, have paid for my education and will put the investment to good use. Meanwhile I am starting to investigate just what happened to my money as it was not mine, it belonged to my SMSF and next October the ATO will want to know where it went. Having lost five clams in one year isn’t that bad though, before I started my own super fund the professional incompetents running my other fund were losing me far more!

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