Be Careful of Rights Technicalities

Recently, there had been a lot of Rights issue and I would like to remind you to be careful about any technicalities if you are subscribing to them. Below is the text of an email I received from one of my readers.

Recently, I used the ATM to execute 3500 of Capitaland Rights Issue offered to me at $1.30. Thinking that I am assured of getting this shares, I decided to sell- of 4000 of Capitaland shares I already held at $1.90 (which I bought above $6).

However to my horror, I later discovered that I was not alloted the rights issue as I had inadvertently accepted my individual CDP acct for the ATM transaction. I was told the offer was for my joint account acct and my transaction was therefore rejected. The CDP staff told me its my mistake & there’s nothing they can do. My broker at iOCBC told me he heard of a similar case.

To me there is a “Murphy” in the system. I wonder if you know of a recourse & how I can make sure this doesn’t happen to others.

This is obviously a case of an honest mistake but unfortunately, there is limited recourse available.

Another example of a “strikeout” that could occur is if you use a joint-bank account to subscribe and you didn’t use the atm card issued in your name.

When in doubt, always consult your stock broker or call the hotline given by the company.

Even though you can adopt the spirit of “Let’s move on, it was an honest mistake“, ultimately you will still have to bear whatever financial losses that results from it.

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5 comments

george says 14 years ago

Can i check some issue regards rights issue. Let say, if i buy rights in market. That means apart paying for the right, I also need to pay for the price of issue right. Is that right? Thanks

lioninvestor says 14 years ago

Hi George,

After buying the rights, yes, you still need to pay the subscription price to convert them to rights shares.

wy says 15 years ago

I haven’t tried subscribing to rights using ATM before.

Just wonder whether the problem is due to lack of user-friendliness of the process..

Say if someone has both individual & joint CDP account.
A more user friendly process will be:
1. the user chooses on either individual or joint CDP account
2. shown the amount of rights under the respective account
3. user keys in amount to subscribe
4. confirm

In this way, at step 2, the user would have known that whether he inadvertently chooses the wrong account.

lioninvestor says 15 years ago

Hi wy,

There’s a part where the CDP number is shown when you apply though the ATM.

That’s the part one needs to be careful about.

wy says 15 years ago

Thx. Will bear that in mind if next time subscribe using ATM.

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Be Careful of Rights Technicalities

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