HaHaHa, Ahahaha

So, the Kodak thing.

The stock is pumped and dumped as a result of the loan from the Feds.

The turbulent trading began on July 27, as news of the loan seeped out. Kodak’s stock opened at $2.13 and closed at $2.62, with 1,645,700 shares traded—more than 20 times the volume of previous days. On July 28, with the word now out officially, the stock opened at $9.63, hit a high of $11.80, and then dropped to $7.94, which was an almost four-fold gain from the start of the previous day, with a whopping 284,666,800 shares traded. The next day, July 29, was crazier. Kodak shares started at $18.43, and at one point reached an eye-popping peak of $60. Its low that day was $17.50, and it closed at $33.20, with 276,020,100 shares in play. But then investors realized that Kodak’s agreement was not yet a done deal, and over the next few days, the stock declined and stabilized in the $15 region.

But it’s damned difficult to do the dumping part. Thin markets, there’s a trouble in trying to move major amounts of stock. Except:

In the middle of this spree, Karfunkel, a major investor in Kodak, and his wife, Renee, donated those 3 million shares to an entity called Congregation Chemdas Yisroel, according to an SEC filing. They did so on July 29, the day the stock price hit $60, so those shares could have been worth as much as $180 million at the time of the gift. If the donation was executed at the end of the trading day, its value would have been $99.6 million. Given that Congregation Chemdas Yisroel is registered as a tax-exempt religious organization, the Karfunkels will be able to claim this donation as a tax deduction. That means they could pocket a deduction between $52.5 million and $180 million for a bloc of stocks that two days earlier was worth $6.39 million.

That’s one way to do it, sell the stuff to Uncle Sam who has to buy in any volume.

That’s pretty cool actually. Yarmulkas tipped to the operator there…..

17 thoughts on “HaHaHa, Ahahaha”

  1. I recall a tax scam based on a similar concept based in the channel islands.

    Shares listed there were pumped, them dumped on unsuspecting charities, the aim being high tax deductions for the participants and worthless shares in the hands of charities.

    HMRC did a pretty good job of catching those involved and IIRC the scheme originators were prosecuted.

  2. But, Mr C, what have the pumpers/dumpers done here that is wrong/criminal?

    Have they not just latched on to the taxpayer spunk spray gun and made out with it ahead of the rest of the crowd?

    Btw, I’d thought Kodak died years ago …

  3. When I get one of those, “You are posting comments too fast, slow down” thingies, as I just did, I always think of the old joke:

    Q: What do you do if your girlfriend starts smoking?

    A: Slow down.

  4. “registered as a tax-exempt religious organization”: on my reading of the Holy Constitution that would be unconstitutional.

  5. “What Difference, At This Point, Does It Make?” was famously asked by a political scoundrel whose wicked actions had deliberately killed lots of people. At least our shower are incompetent rather than murderous.

    Personally I’m inclined to put much of the blame on the people they consulted: the charlatans of mathematical modelling, and the dud scientists.

  6. Presumably this wouldn’t work in the UK:

    Chapter 5.21: How to value different kinds of qualifying investment

    5.21.1 Shares or securities quoted in the London Stock Exchange Daily Official List.

    You should use either the:

    * lower of the 2 quotations on the day in question plus 1 quarter of the difference between those 2 amounts

    * mid point between the highest and lowest prices on which bargains were done on the day, except for bargains at special prices whichever is the lower

  7. @ Edward Lud

    I wasn’t commenting on the Kodak situation, just commented that the ‘giving to charity’ thing had been used in the UK.

  8. This abuse shows again why tax deduction for charitable donations – Gift Aid in UK – should be abolished

    Similar scams go on here and they sky-rocked when tax was 50%

    Furthermore, it forces everyone to effectively donate to all charities:
    Ed Davey donates £10k to Greenpeace, deducts £4.5k from tax bill
    Taxpayers have donated £4.5k to Greenpeace

    @dearieme
    +1 and that was one of more minor crimes against humanity to line her own pockets

  9. The most famous Jew of all time said something like “render unto Caesar the things which are Caesar’s”. Obviously Kartoffel, his wife and the Congregation Chemdas Yisroel are not fans.

  10. Sod wot’s seezar’s. Aw wot ‘e finks’ is ‘is.

    ‘E can’t even secure the fahkin bawdahs.

    Secure the fahkin bawdahs, seezar mate.

    Then, cumantellmewossyaws.

  11. @AndrewM I presume you meant this wouldn’t work in the US (Not UK)

    But something like it would have to happen. A donation is, by definition, not a trade. So no price has been discovered as a result of it. So for a valuation of the stock at transfer, you have to get a value from somewhere. It will be from prices traded on the day. And a valuation should reflect what the shares would have realised in the market. Hence that 1/4 up from the spread shown in the List. Point worth noting: highest & lowest prices on the day are not bids & offers. Each price is both bid & offer, as each is a unique transaction between buyer & seller. That’s subtly different from “market price” which can refer to bids & offers not satisfied.

  12. Exciting thunderstorm here again tonight – any where you are?

    Rumbles never stop and lightning every ~10 secs, heavy rain & hail too. Over an hour now

    Dogs not bothered

    PS One strike woke me at 4am, thought I was back in NI and bomb

  13. It occurs that some interested party might be arguing about this. Any valuation is fantasy bollocks. Because it’s saying how much would be realised by a sale when no sale has taken place. Trying to unload 3 million shares into that market would no doubt have moved the price. The sum actually realised would have been considerably less than a small scale sale at the same time. So do we take the fantasy or try & guess what reality would have been?

  14. Out of interest – what does this do to the charities books?

    In normal times, getting a donation worth 180 million, and then losing 172 million of it on the stock market might get you something of a pickle with the charities commission, would it not (particularly if 180 million represents several times a normal annual turnover).

  15. Bongo,

    Ur, yeah, kinda by definition they’re not fans. If they were they’d call themselves Christians, not Jews.

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