$1740.7 million was the cash-on-the-table money to
Morgan-Stanley-Dean-Witter from Sycamore Networks.
7.475 million shares at $38 each opened @ $270.8750 amounts to
$1.7billion
[$232.875 x 7.475 million] as FREE MONEY to MSDW. A handout. Alms for
the
poor. Charity. Well, not exactly... its service fees to generate mass
hysteria! The cost to create a Pygmalion Effect.
$1.7 billion will certainly attract SEC if not DOJ to investigate SEC
for
not investigating into this gross irregularity! If not then the
politico-financial pressures from foreign countries will intervene.
Fortunately, the money goes to lots of big foreign guns from outside of
the
country too who invest in the financial institutions, hoping that it
will be
used to hush their respective media, governments... For how long?
Now, how does cash-on-the-table work?
Say the price is @ $177 like it was sometime today. MSDW may decide to
buy
up, say, 500,000 shares at $180 [$3 higher]. That's a $1.5 million out
of
their pocket... that comes from the $1.7 billion kitty. A few choice
'flipping' like that may trigger the Law of Greater Fools, where the
market
starts gobbling up by placing orders at, say, $185... then 190... 200...
The mass hysteria begins!
But, there's $1.7 billion dollars of FREE play money available to MSDW
that
the market does not have.
Also, what is the whole point of share price when the opening price is
not
the same? Should prospectus indicate how much the Opening Price would
be? Is
the market entitled to know what the investment banks are doing during
the
silent period? What is the purpose of the silent period when a few
choice
investment banks get to have information that is not available for the
market? How do they know that the stocks must open at $270 and not at
$38?
Something is not right on the free-market when it comes to
cash-on-the-table
even if one were to reject the all the traditional economic models that
explains inflated stocks. Some serious disclosure is in the offing.
[Note: I am merely using Sycamore as an example... just convenient since
its
recent & historic. Cash-On-the-Table is not exclusive to Sycamore by any
stretch of imagination or fact].
And then we NRIs criticize India for all the corruption, bribery &
general
malaise.
Sendil ~zen~ Nathan
Digital Strategy & Information Architecture
http://iArchitect.org/