"The catch is that Darwin typically short-sells shares of the listed company in the open market just before a draw down occurs. It then gives the short-selling proceeds to the listed company in return for shares, and then closes out its short position with the new shares issued by the company. The end result is often something what Darwin’s chief executive, Anand Sambasivan, calls "risk neutral", whereby Darwin has limited or no exposure to shares in the listed company despite just giving them hundreds of thousands of pounds in exchange for an equivalent amount in shares. Darwin profits by taking a percentage cut of the transaction, plus whatever it can make from the spread between the short-selling price and the issued price of the new shares. In addition, Darwin is usually issued warrants when signing the EFF, so if the listed company’s share price were to rise afterwards, then it could make money on those, too." The actual sale price of the shares is entirely irrelevant (to Darwin). They make money regardless.
IF the above is correct then manipulation is alive and well!! Oh for a Regulator and Regulator.
OEX Price at posting:
13.0¢ Sentiment: None Disclosure: Held