Sunday, October 28, 2012

Paying off the "insiders"

Mr. Lim (not his real name) invested in several plots of land in Canada. During the first two years, the local agent who sold the plots to him provided good service and kept him informed about developments in the project. After the Canadian company got into financial difficulty, the agent continued to update him on the developments.

Recently, the agent stopped updating him and even discouraged him from pursuing his trying to seek legal advice. The agent told him that "all is lost" and it is best to write off the loss. Mr. Lim wanted the agent to give him the names of other investors who had bought similar plots of land, as he wanted to contact them to take joint action.

The agent  refused to give the names of these investors to Mr. Lim and claimed that they do not wish to pursue their claims. The behavior and non-cooperation of the agent surprised Mr. Lim.

I told Mr. Lim that the agent, being an insider, had probably been paid off by the promoter and in return had probably signed an agreement not to provide further information to the investors. It is easy for the promoter to pay off a few "insiders" who had the information to round up the unhappy investors.

Mr. Lim agreed with my assessment. He regretted placing his trust in the agent earlier.

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