Vivendi Delisted From U.S. Stock Markets

Despite the success of subsidiary Blizzard's World of Warcraft, Vivendi Universal has delisted itself from U.S. stockmarkets in an effort to cut costs. 1up reports: "Just because they're moving off the American stock market, however, doesn't mean Vivendi Universal won't seek, rely on or utilize US investors. 'Vivendi Universal intends to maintain and develop its business operations in the US, but wishes to reduce financial costs,' says the company's statement."

Comments

Investors beware...

[general_re]

Just because they're moving off the American stock market, however, doesn't mean Vivendi Universal won't seek, rely on or utilize US investors.

Yeah. The problem for those investors is that Vivendi's reporting and disclosure requirements just got a whole lot looser. Better get a real close look at their books if you're planning on sending any money their way.

Re:Investors beware...

[MindStalker]

Exactly my thoughts. The article does say "he company has vowed to stand by the US Securities Exchange Act of 1934 and will continue to comply pending their eventual deregistration." But the doesn't mean they are going to be complying with newly enacted reporting requirements, or even anything required since 1934.. :) They arn't legally bought to the act either way. Though I'm sure the European exchange does have its rules, I couldn't help but think new requirements like full disclosure of Executive perks to be a primary reason.

Re:Investors beware...

[Dachannien]

Sarbanes-Oxley would be the most likely reason for a company to do something like this, probably so that they don't have to pay for the audits. Of course, the whole reason beyond the Act was to make companies accountable to their shareholders and to the public in general, so if you invest in VU, you should (as the previous posters have said) be aware that you have one less safety net available.

Re:Investors beware...

[DerekLyons]

Just because they're moving off the American stock market, however, doesn't mean Vivendi Universal won't seek, rely on or utilize US investors.

Yeah. The problem for those investors is that Vivendi's reporting and disclosure requirements just got a whole lot looser. Better get a real close look at their books if you're planning on sending any money their way.

Do keep in mind that, contrary to popular belief, buying stock in a company (other than at IPO) sends no money to the company. The money you pay, less brokerage fees, goes to the previous owner of the company.

IANAL, but 'not listed on a public exchange' != 'not being a publically traded stock'. They aren't closely held, so they still come under the same disclosure and reporting requirement as well as supervision by the SEC. A stock exchange provides a place to trade stocks - and a level of supervision above and beyond that of the SEC, but it does not replace the SEC.

There's no legal requirement that you list your stock on one of the big exchanges - but there is a practical one, most brokers won't touch a stock not so listed, or charge an additional fee to do so, as the trade must take place outside of the exchanges network which the broker is connected to. (In theory there is no reason why you cannot open your own exchange.)

Re:Investors beware...

[general_re]

The article does say "he company has vowed to stand by the US Securities Exchange Act of 1934 and will continue to comply pending their eventual deregistration."

That sounds like a forward-looking statement, which cannot be guaranteed :)

Though I'm sure the European exchange does have its rules...

I'm sure they do too, but US listing rules are just about the toughest in the world. I don't know much about French requirements particularly, but I do know that companies can be perfectly compliant with listing requirements in Frankfurt, and yet still have it be damn near impossible to parse out things like whether or not they're actually profitable. Trivial things like that ;)

Re:Investors beware...

[general_re]

Do keep in mind that, contrary to popular belief, buying stock in a company (other than at IPO) sends no money to the company.

Of course, but the advantage to investing in exchange-listed stocks is that the disclosure requirements and SEC filing requirements give potential investors far more information than what is required of delisted or unlisted companies. If you plan to hit the pink sheets, be my guest, but that's not much more than high-stakes gambling, IMO :)

Re:Investors beware...

[DerekLyons]

Do keep in mind that, contrary to popular belief, buying stock in a company (other than at IPO) sends no money to the company.

Of course, but the advantage to investing in exchange-listed stocks is that the disclosure requirements and SEC filing requirements give potential investors far more information than what is required of delisted or unlisted companies.

Not true. You can only avoid the reporting requirments if you have less than 500 investors and less than 10 million (US) dollar in assets. (One suspect Vivendi fails to meet that requirement.) Go past those limits and you are required to meet the same reporting requirements as Boeing or General Foods. (This is why Google went public for example - they were being forced to start reporting, which they had been (illegally) avoiding. Do no evil my ass.)

If you plan to hit the pink sheets, be my guest, but that's not much more than high-stakes gambling, IMO :)

It's only gambling if you go with the microcaps (I.E. those that fail to pass the test above).

Re:Investors beware...

[EVil Lawyer]

You're right. News like this makes me sad :(

Re:Investors beware...

[general_re]

I think you misunderstand me - what they don't have to do is abide by the disclosure requirements in their NYSE listing agreement. Nor do they have to follow the exchange rules on corporate governance, or otherwise meet the minimum standards for listing. Perhaps this French thing has similar requirements, but I'm inclined to seriously doubt it.

Re:Investors beware...

[DerekLyons]

I think you misunderstand me - what they don't have to do is abide by the disclosure requirements in their NYSE listing agreement.

I never claimed otherwise. But the disclosures required by the NYSE are just pretty window dressing on top of the one required by the SEC.

Nor do they have to follow the exchange rules on corporate governance, or otherwise meet the minimum standards for listing.

The minimum standards for listing aren't all that impressive, and the oversight rules of the exchange are toothless eye candy. The big (US) exchanges in practice provide almost no oversight - even though they claim to protect the investor. Even as Enron was collapsing and the SEC was investigating them - their shares continued to trade.

Re:Investors beware...

[general_re]

And yet Vivendi apparently finds them troublesome. Hmmm...

Stock no longer public?

[smbarbour]

Does this mean that their stock is no longer available to purchase publicly? If so, if they decide to relist, would that be a SPO (Second public offering)?

Re:Stock no longer public?

[Fred Or Alive]

There stock is still availible to purchase, just not on the American markets, it's still listed in Paris

Re:Stock no longer public?

[smbarbour]

I'll admit that the joke was a bad pun, but a troll? I think someone is either bored or has a chip on their shoulder.

Pink Sheet

[the eric conspiracy]

Investing in something on the pink sheets (unlisted stocks) is so risky that even hucksters like Jim Cramer recommend against it.

Re:I hope they rely on US investors

[ShibaInu]

GE owns NBC. See http://finance.yahoo.com/q/pr?s=GE.

What this all means

[nelsonal]

The company will get a new shiny 5 letter ticker, and will trade on the pink sheets (home to Cadbury, Nestle, Mitsubishi (not the bank), Samsung) and other big relativly safe foreign companies as well as tiny insanly risky domestic stocks. The one unifying feature of trading on the pink sheets is that you do not have to meet SEC filing requirements (which is a feature for the small companies) the big foreign companies usually meet a similar level of disclosure although the accounting rules can differ from domestic ones. This is likely due to the very high costs of becoming Sarbanes-Oxley complient and if they do not need to why spend the money. Big fund holders are unlikely to sell due to this change, since there will still be liquidity enough to allow them to trade.

Re:What this all means

[ClamIAm]

DISCLAIMER: I have little knowledge of financial markets and the legalities involved.

The question I thought of when reading your post was: how easy is it to trade on a foreign market? Aside from things like time zones and language barriers, is this difficult to do?

Re:What this all means

[Anonymous Coward]

The single biggest issue with foreign investment is currency. I'm an Australian. If I buy shares that are listed on an Australian stock exchange (we have several; the Australian Stock Exchange, aka ASX, is just the main one), I need to settle the transaction in Australian dollars, drawn upon an Australian bank.

If I wish to buy shares on (for example) a US stock exchange, on the other hand, I need to settle the transaction in US dollars, likely drawn upon a US bank. Yes, I can buy a US dollar cheque in Australia and send it off, but there are time restrictions on how long I have to get the cleared money to the broker which complicate things.

So that takes care of buying the shares. As for selling, it's much the same story. But there's the added fillip: when deciding whether or not you've made a loss or profit on the stock, you have to take into account the currency movements. For example: if I buy $US1,000 in shares when $US1.00 = $AU0.50, and then sell those same shares for $US1,500 when $US1.00 = $AU0.80, I paid $AU2,000 for the shares, and sold them for $AU1,875. In the context of the US market, I made a profit, but in the context of Australian currency, I made a net loss. It can also work the other way around, of course.

In short: when you're doing foreign investment, there are at least two levels involved that make the investment riskier (and note that I use the word "risk" in the financial sense, meaning uncertain, not dangerous per se). Unless you have serious money to invest, it's not worth the hassles, IMO.

Re:What this all means

[nelsonal]

My background is with pension funds where our foreign investments were managed by regional fund managers. It depends on your broker, the big houses (Goldman, Merrill, Morgan etc) can do it but it will generally cost you. If you aren't a high 6 figure account the commissions will probably make it too costly. Most of the online brokers I've dealt with don't do much more than Canada. There are a surprising number of foreign companies that trade either on the pink sheets or listed on one of the major exchanges. www.adr.com has great info about both the foreign market and domestic certificates.

I have second hand experience with a Norwegian company they would put in their order one day, and if it filled they would learn the next day. No language barrier since they placed the order with the local office of the firm that did the trade. The broker must have access to a trader on the local exchange to make the trade work. Happily most of the medium and bigger European companies list on several bourses so it's likely that if they have any European operations, you can get your trade done.

Re:What this all means

[nelsonal]

Sorry about the double reply, but the global ETFs are getting focused enough to allow investments in most countries and several industries. Trading costs are much lower for these than trying to trade the equities on the foreign market.

Re:I hope they rely on US investors

[ShibaInu]

Hey, that's pretty cool, the GP asks a legit question, I give a short answer and we get modded as Trolls! Someone just wasted some mod points, I guess.

Re:I hope they rely on US investors

[Fred Or Alive]

Well, now your original post has been modded up... and your second one has been modded down. :-)

You were slightly wrong, NBC's parent company is now NBC Universal, which is owned 80% by GE, and 20% by Vivendi Universal.

Re:I hope they rely on US investors

[Anonymous Coward]

Buying stock, outside of an IPO, is NOT sending investments to that company. If I sell you 2000 shares of FooBar Industries for $10 a share, I get $20000. The compant gets nothing. You are not giving them any new funds.

Technically true, but you're discounting corrolary benefits. There are a number of reasons why a company will want to keep its stock doing well, e.g., the prospect of another round of financing.

Ticker Symbol is "V"

[Agent Green]

It's not in TFA, which is disappointing.

And the last month in trading is just slightly down, despite a recent drop.

Sierra

[chaotropic agent]

Vivendi destroyed my favorite game company, so I'm not shedding any tears.