You have been or are an investor in Reinet Investments SCA which is part of your #Invest bundle (the bundle). You are also one of our EasyEquities clients that purchased these bundles prior to 29 November 2017.
On 29 November 2017, Reinet Investments SCA implemented a share consolidation on a 10 to 1 ratio. This means that if you held 10 Reinet shares in one of our bundles at close of business on the 28th of November 2017, post the consolidation, you should have held 1 share. This is a relatively common practice called a corporate action.
Here is an example of how a consolidation event works:
If you held 10 Reinet shares in a bundle at a price of R27 each, your investment in Reinet would have been valued at R270 prior the consolidation. Post the consolidation, you should have held 1 share in Reinet at a price of R270; hence your investment would still have been valued at R270. Under normal market conditions, the market price of Reinet would automatically multiply itself by 10 times (R27 x 10 = R270). You will notice that there is a reduction of shareholding with a corresponding increase in market price but no change in investment amount.
We’re letting you know that the Corporate Action share consolidation process failed to reduce your holdings in Reinet shares on 29 November 2017 in the bundle. As a result, the market value on your Reinet shares was inflated 10 times i.e. 10 shares (not consolidated) x market price of R270 = R2700. As a result, you were incorrectly enriched.
To correct this, we will be reducing the number of Reinet shares you currently have in the bundle investment in order to rectify our error. In the above example, 9 shares will be sold; hence the value of your account will decrease after this adjustment has been processed and revert to the value that it should have been had the corporate action been processed correctly. You are not losing any money - we are simply fixing our error where we reflected the incorrect number of shares.
To the extent that you no longer hold the requisite number of Reinet shares (as a result of you selling a part of the bundle) and your bundle value exceeds the value of the adjustment required, the equivalent financial effects will still be processed against your remaining bundle.
Should you no longer hold the bundle in your account or the adjustment required exceeds the remaining bundle value, the equivalent financial effects will be processed in part against the bundle and in part against your free cash balance.
To the extent that your free cash is insufficient your account will be placed in Debit and one of our team will give you a call to discuss.
The complexity of the problem, the required investigation into the cause and the appropriate action required to remedy the situation has taken some time to resolve. Whilst this has taken longer than we would have liked, we are confident that no one has been prejudiced as a result of the error and that in fact in the outcome you are in a better financial position than you would have been had the corporate action been correctly processed.
We have also put control measures in place to ensure that this does not happen again.
As compensation for the excess Annual Bundle Fees charged on January 2nd due to the inflated bundle value and/or any additional costs that the delay in picking up this error may have caused you, we are going to credit your account, by way of a deposit, with the equivalent of R20 per full error share held (or pro-rata thereof for fractional shares held). In the result the effect is that more than the annual bundle management fee has been rebated to you, affording you a free year of asset management.
There is no action required of you. We will correct this at close of business 31 January 2018.
Please note that the financial effects will be communicated to you by way of email during the course of tomorrow the 1st February 2018. They will also be evident through your account value online.
Should you have any questions relating to the issue, please do not hesitate to contact us at
[email protected] .
Please note that this is a special mailbox which has been setup specifically to deal with any concerns related to this particular issue. Please rest assured that Senior members of our management team will be available to deal swiftly with any issues / concerns you raise, and so ignore the details in the autoreply mail, which serves only to confirm that we have received your email.
Sincerely
Charles Savage
CEO
) thanks for all the help!
Haven't seen one.