Neteller Suspends shares as ex execs arrested

Iago

LONDON (Reuters) - Online money transfer firm NETeller said on Tuesday two of its former directors and founding shareholders, Stephen Lawrence and John Lefebvre, had been detained by U.S. authorities on Monday.

It said neither Lawrence nor Lefebvre had any current position with or connection to the company, other than as shareholders.

The company (NLR.L: Quote, Profile , Research), which has grown fast alongside the rapid rise in online gambling, also said the group had not received any communication or correspondence from any U.S. authority regarding the matter and the board had sought immediate temporary suspension of its shares.

Shares in the Isle of Man-based firm closed at 176 pence on Monday, valuing it at around 211 million pounds.



The shares have fallen 60 percent since early September, hit by the arrests in the United States of executives from British companies involved in online sports betting and passage in October of a U.S. law barring banks from transactions involving Internet gambling.

The passage of the U.S. law has led most operators to withdraw from the U.S. Internet gaming market.

Lawrence resigned as a non-executive director of the group in October 2006, having stepped down as non-executive chairman in May, while Lefebvre resigned as a non-executive director in December 2005.

Lawrence is the majority beneficial owner of Corvina, which owns 5.91 percent of NETeller and Lefebvre is the beneficial owner of Eagle Medallion Fortress, which holds 5.54 percent of the company.

Lafortezza

Sucks to be a US online player these days.

El Stuntman

lafortezza wrote:

Sucks to be a US online player these days.

will it suck for me to have funds sitting in neteller?

Lafortezza

El Stuntman wrote:

will it suck for me to have funds sitting in neteller?

I'm not an expert but I doubt it, you're details are based in Ireland, Neteller is offshore and so are all the poker sites you're using so there's no connection to the US.
I doubt Neteller would cut off all gambling related transfers since they'd be cutting off a huge amount of customers from outside the US, where the financial regulations have no impact. Hopefully.

hotspur

El Stuntman wrote:

will it suck for me to have funds sitting in neteller?

No. We don't know why the guys were arrested yet, Neteller haven't done anything contrary to US law yet. It's probably just a random shot across the bow to let Neteller know that the rumoured plan involving delisting and continuing to faciliate US online gamblers as a private company is a bad idea. Also it could be a gentle nudge to ensure that they comply as a public company with the regulations soon as they have benefited from Firepay's withdrawal of services to US online poker customers.

Imposter

from egaming review:

Neteller founders Stephen Lawrence and John Lefebvre have been charged with money laundering offences by the US Attorney General in the Southern District of New York.

A statement from the office of Michael Garcia added that Lawrence and Lefebvre had been arrested in connection with the “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of various internet gambling companies located overseas”.

Lawrence and Lefebvre were arrested in the early hours of Monday morning, January 15. Lawrence was arrested yesterday in the US Virgin Islands and will be presented in federal court in St Thomas by tomorrow. Lefebvre was arrested in Malibu, California, and will be presented in a Los Angeles court later today.

Neteller suspended its share price this morning as the news broke.

In a statement released earlier today, Neteller said neither Lawrence or Lefebvre had any current position within the company. The statement added: “The group has not received any communication or correspondence from any US authority regarding this or any related matter.”

Lebebvre left Neteller in December 2005 while Lawrence left in October last year, just after the passing of the Unlawful Internet Gaming Enforcement Act (UIGEA).

The news of the Neteller arrests spelt more bad news for those operators that have not exited the US.

Said one legal source: “It’s a warning shot across the bows for those still taking money from the US.”

He added: “They are aiming their strategy at the finance provision. It is consistent with the UIGEA. It is a more effective strategy than going after the operators themselves, such as PokerStars. When you get the money providers, you get the portfolio of operators.”

One leading operator suggested this was particularly bad news for those poker operators that remain in the US market. “This could be terminal for the poker business in the US. The average punter will not be willing to jump through the hoops (to get their payments through).”

Ollieboy

thats interesting, Pokerstars yesterday suspended logdements using Netteller etc.

My problem with Netteller is its not answerable to anyone, so if they closed down, take the money and move to Brasil, what the hell happens, nothing I'm guessing....

As for poker in the US, I've heard from one or two people they expect the numbers for the main event to be 1/2 this year in the World Series and there's not a sign of Pokerstars starting there online qualifiers yet.....

RoundTower

NETeller is answerable to the FSA who are the equivalent of the Financial Regulator in the UK. It's also a publicly traded company which is answerable to its shareholders and to the London Stock Exchange. They're about as likely to "take the money and move to Brasil" as AIB, and I'd feel my money is safer there than on any of the big privately owned poker sites.

shoutman

I agree with RT.

There is no way that Neteller would get away with doing something like that, and tbh I think the owners are wealthy enough to not need to do this.

ArmaniJeanss

RoundTower wrote:

NETeller is answerable to the FSA who are the equivalent of the Financial Regulator in the UK. It's also a publicly traded company which is answerable to its shareholders and to the London Stock Exchange. They're about as likely to "take the money and move to Brasil" as AIB, and I'd feel my money is safer there than on any of the big privately owned poker sites.

RT, I wouldn't be quite so confident (though I wouldn't panic either).

BUT, if there were ever a court case for “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of various internet gambling companies located overseas”, and Neteller were hit with the sort of $Billion+ fine which US courts can hand out, then a plummeting share price could lead to them going belly-up quite quickly.

At that stage shareholders and customers would be firmly at the bottom of the liquidators list when it came to dispersing the assets.

I also assume that like any bank they don't have all the customers money to hand at any one time, its being used for expansion/advertising/investments etc so in theory if everyone panicked and looked to withdraw their money at once then they would have a major problem. If this looks like happening then I'd advise anyone to be at the front of the queue.

Thats all a worst-case scenario situation though.

hotspur

Neteller aren't being indicted though are they, it's 2 founding directors and shareholders who are said by Neteller to have no current role in the company. Anyway how can Neteller be hit with a punitive fine? It has no base within US jurisdiction.

Also Neteller is very unlike any other bank and what ArmaniJeanss suggested is wrong. People don't invest money into neteller accounts and they don't give out loans. Actually they are a very cash rich company and have over €100m in cash beyond any customer money. The idea of Neteller going belly up is laughable unless Nick Leeson has wormed his way in and is using their cash reserves as a poker bankroll to bust Ivey and Antonius.

Interestingly when the shares get unsuspended and tank it may be a hell of a time to pick them up cause Dermot Desmond has been nosing around and it may lead to a takeover. Unless something extraordinarily unlikely comes out of the farce of the US prosecution it's still a hell of a sound company and could be a nice earner for you. Um, do any any of you actually invest in the stockmarket?

nicnicnic

As likely to take your money as AIB hmmmmm now I'm worried

TacT

El Stuntman wrote:

will it suck for me to have funds sitting in neteller?

nobody's bankroll will go walkabout after a Neteller 'sudden bust' newspost has hit the streets, please try to remain calm ladies and gentlemen as we deal with these very difficult and testing times.

El Stuntman

TacT wrote:

nobody's bankroll will go walkabout after a Neteller 'sudden bust' newspost has hit the streets, please try to remain calm ladies and gentlemen as we deal with these very difficult and testing times.

I've screwed on my stiff upper lip for the occasion and stiffened my spine with a steel rod

hurts but it's worth it

brianmc

hotspur wrote:

Um, do any any of you actually invest in the stockmarket?

That's gambling. We're poker players.

Ollieboy

RoundTower wrote:

NETeller is answerable to the FSA who are the equivalent of the Financial Regulator in the UK. It's also a publicly traded company which is answerable to its shareholders and to the London Stock Exchange. They're about as likely to "take the money and move to Brasil" as AIB, and I'd feel my money is safer there than on any of the big privately owned poker sites.

I guess you dont remember that AIB when bust in the mid 70's and people nearly loss all there money, except for the govt bailing them out at the time...? Money which the Irish govt never got back either....

Currently Pokerstars is not taken Netteller, the last thing I would be doing is buying shares in this company and they might be register with FSA, but if there outside there jurisdiction, there's not much they can do, these things do happen..... Ask Enron employees?

But I do aggree this is very unlikely, but things can go wrong and people should be aware of it, keeping large amounts of money in a offshore banking system throught a online system, isn't smart to me. but thats just my 2 cent.