The Secret Broker: We didn’t sign up for this.

After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

Well, well, well.

There has been some military muscle-flexing going on recently, as the army of lawyers and bean counters at ASIC and the ASX join together to roll out some pretty heavy artillery.

Something on a scale I don’t think I have seen ever before in Australia.

The country company that they declared war on is isignthis (ASX:ISX) and their shareholders have now become war refugees, caught in the nightmare ‘no man’s land trading halt’ war zone; something they definitely did not sign up for.

Both ASIC and the ASX have missiles homing in on the recent automatic issue of milestone shares, just before their issuing date was due to expire.

Read more Secret Broker>>>

To give you an insight on how the war is shaping up, the latest onslaught of enemy rapid-fire questions required a 34-page announcement of defence (which again must be some sort of first), to simply reply to a Pauline Hanson-style ‘please explain’ letter.

The shares in question are worth a very cool A$300m and both sides have gone to war over the revenue calculation that allowed these shares to be automatically issued, as per their prospectus.

This is not the first time a company has been accused by regulators of stretching figures to enable a financial event and history shows they will not be the last.

There was Bre X Minerals in 1997, who cooked up their drilling results and Enron in 2001, who’s cooking antics were so bad that their auditor Arthur Anderson (remember them?), the 5^th largest accountancy firm in the world, now no longer exists.

In 2002, World Com came unstuck when they were found to have recorded everyday expenses (pens, paper, pencils etc) as investments in the future. $US3.8bn was the amount of ‘future investments’ recorded before they were exposed.

Over here we recently had Big Un in the kitchen, baking up an array of financial fattening cookies and doughnuts to feed to their auditors.

As the isignthis business model is based around offering payment services to companies who find it hard to get traditional providers involved (like PayPal) they are always going to attract some scrutiny. Offering payment solutions for adult services, binary options, CFD platforms and gambling websites always comes with risks.

Teenage boys are notorious for stealing Dad’s credit card to pay for these types of services and then having the cash refunded when the charges are queried or, as in my case, a cheeky waiter who nearly got me divorced by racking up a fortune using my black Amex for a naughty late-night website service.

Honestly, it wasn’t me. The IP address was different.

Now talking of risky gambling, we have the Melbourne Cup coming up next week and although I do not really follow the GG’s and my sweepstake consists of just me, I always have a small wager on the overseas entries. I figure that if someone wants to pay for them to be flown in, they must have a good reason.

Remember this though.

If you bet on just one horse to win, you are betting that all the other horses will lose and I hope that just like investing in the market, you spread the risk around and don’t go all out putting everything on the nose of just one horse.

PS — An isignthis quinella shareholder Melbourne Cup special could involve combining the aptly named Irish cup entries, ‘Twilight Payments’ at 20 to 1 with ‘Magic Wand’ at 50 to 1.

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected].

Feel free to contact him with your best stock tips and ideas.