I was very excited to hear that cash was finally being delivered to brokerage accounts for FragranceNet.com (FGNT). You’ve probably forgotten all about that transaction that went to completion this past summer, unless you also owned that stock. I had a funny feeling by the end of the summer that I wouldn’t see cash from FragranceNet.com until the holidays. The CEO was not at all responsive to my calls and he would not allow any one else answer questions about the going private transaction.
Just before Thanksgiving, FragranceNet.com delayed the cash tender to partial share holders by making everyone fill out and sign a form confirming that we wanted to be cashed out. I think this form is what is causing problems with my account at BrownCo.
This afternoon I checked my account with BrownCo and I discovered that I finally received cash for my 499 shares of FragranceNet.com. But wait, I discovered that not all the shares were cashed out. My account history indicated that:
REORG FRGNE FRAGRANCENET.COM *CONTRACUSIP: CASH OUT* FRGNE UNACCEPTED SHARES
I was confused a bit, so I called up BrownCo. It took me 5 calls to finally make it through to customer service, since I kept getting disconnected by BrownCo’s phone system.
When I finally got a representative, I explained the problem of the 124 shares not being cashed out. He indicated that they did not receive cash for those shares, so my account was not credited with cash for those shares. I told him that those were not the terms of the transaction as explained in the SEC regulatory filings. The representative indicated that he could not do anything about it. This was not at all like the response I got from Firstrade regarding Refocus Group.
I am not at all pleased. I also sent an email to BrownCo indicating that I wanted cash for all 499 shares of FragranceNet.com or I will be transferring my account to another broker. I’ll let you know what kind of response I get tomorrow. If this issue doesn’t get resolved, I think I will be sending a message to the NASD and SEC regarding this issue. I think Etrade will be loosing a lot of BrownCo customers if this is the kind of treatment individual investors get.
My guess is that not all holders of FragranceNet.com filled out and sent to BrownCo that FragranceNet.com form in November for the cash tender. BrownCo, therefore, probably only got three quarters of the cash for the reverse split shares from the transfer agent. They probably didn’t keep track of which customers sent in the forms, so they are just proportionately allocating the cash that they received from FragranceNet.com. If that is what happened, then it is completely unfair to the shareholders that jumped though all the hoops to get their shares cashed out. On top of it all, BrownCo had the nerve to charge a $25 fee for this mess. BrownCo needs to straighten this out right away and they should refund the $25 fee considering how poorly this transaction has gone so far.