Stockholder wrongs

I'm going to go slightly off-topic today in that while REFR is a participant in this particular fraud upon the investment community, they are far from alone.

It is about these so-called Stockholder Rights plans. In most cases, to be fair, the most misleading part of the whole business is the name. This is nothing about protecting the shareholders and everything about protecting the company itself, and especially, the company management.

Back in the wild and wooly days of the 1980's, corporate raids grabbed the headlines, as the likes of Carl Icahn, Irwin L. Jacobs and Henry Kravis would make "hostile takovers" of companies, effectively seizing control by buying 51% of the company, then either making wholesale changes to the company, or in some cases simply liquidating it.

The rightness or wrongness of the practice can be debated endlessly, but it all became moot with the advent of the "poison pill". Without going into details, what it amounts to is an emergency clause that permits the board of directors to issue new shares to dilute any attempt at consolidation of a 51% position, long before anyone can get close to such a level. Of course, the board can waive the clause at will, thus still permitting "friendly" buyouts.

The bottom line for all of this, as far as REFR shareholders are concerned, is that the "shareholder rights" plan gives them the right to be stuck with the same management, which has ripped them off for four decades, for as long as they can continue to raise new funds to keep it going.

And that's just wrong.