Friday, November 29, 2019

This Company's Idea of, "Owning," Part of a Comic or Other Objects Just Sounds Dumb and Borderline Scammy

Courtesy of sometimes-interesting and sometimes-clickbaity/dumb website Bleeding Cool we have a new article that is interesting but about really dumb idea. Basically, this company called, "Otis," does a thing called, "Alternative asset ownership," where people buy a, "Share," of a physical object and then as that object theoretically gains in value or (possibly?) gets sold for a profit you get some money for your share.

They've done this with vintage comics, apparently, making it possible for people to buy shares of one. This seems really stupid to me. You either own a comic or someone else owns it, it is a singular object. Saying, "100 people share ownership of this thing," seems like trying to take some stock market concepts (and the stock market itself is arguably one big con game that has some very real examples of how it has caused great harm--e.g. the Great Depression) and apply it to things you can't really do such a thing with. I mean, I guess pizza is an object in that you can literally carve that up and share it in the form of slices...but how do you engage in that with a comic?

Even if this works, I have questions. Suppose a majority of shareholders in this comic want it sold for a profit, can they vote on it and have that done, or does the investment company that truly has the comic in its hands maintain the full rights to actually sell it? Would it even do so considering it could just take a bunch of money from suckers for their, "Shares," and then store it in a warehouse assuring people their money is safe whilst the company spends it on whatever it wants? I wish I had answers, but the Otis website and is really threadbare and provides no reassurance to how this whole thing functions. It sounds dumb for sure and quite possibly like a scam. The bit of information I could find on the website after digging in their FAQ section indicates they and only they can sell any items people own shares in or Otis can choose to display it for money somewhere, and they then give you any potential profit pro-rata. Until something gets a check for being on display or sells, however, all your wealth is just theoretical shares...yuck. Oh, and one segment, in particular, worries me in the FAQ I found on my deep-dive. It goes as such...
"[Disclosure] There is currently no public trading market for our Interests, and an active market may not develop or be sustained. There is no guarantee that appropriate regulatory approval to permit such secondary trading will ever be obtained. If an active public trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your shares at any price. Even if a public market does develop, the market price could decline below the amount you paid for your shares. Please refer to our offering circular for more details regarding potential distributions."
In other words, once you buy a share you are stuck with it despite reassurances they are working on a way to sell and trade shares (with a service fee, of course). You can't sell your share to someone else, and if the object somehow loses value or becomes impossible to ever sell due to declining interest in the market for that comic (or other stuff they offer buying shares in like--I shit you not--expensive shoes) then you are out those dollars.

You know, in the stock market if you buy a stock and it starts bombing you at least have the option to sell it before it is totally worthless, you at least, "Own," some rights to that paper. With this business concept Otis has, however, the investor seems to basically be giving them money with no oversight or safeguards. If the stock market is arguably one big con game that at least supposedly has rules, what does that make something with virtually no guidelines to how they handle your money? For real, in my research I did I found Otis said how they are exempt from any SEC oversight as pursuant to, "Regulation A of Section 3(6) of the Securities Act, for Tier 2 Offerings." They only are operating on a, "Best efforts basis," which sounds encouraging, we all give our best effort, right? Well, if you break-down that phrasing it just means...
"An agreement between an underwriter and an issuer in which the underwriter agrees to place as much of an offering with investors as possible, but is not responsible for any portion of the offering it fails to sell."
Again, you are giving Otis your money, and they essentially have no responsibility to ever actually handle your money appropriately or sell any of the comics, sneakers, purses, etc. you are giving them funds to own these theoretical shares in. That is not good.

To review, Otis is this, "Investment," concept where you supposedly own a share of a physical object, but can't actually do anything with your so-called share and they have zero oversight from the SEC which makes sure that people's securities (and money) are exchanged in legal and controlled ways. If someone were to bring this idea to me on a show like, "Shark Tank," it would take me less than a second to say, "Yeah...I'm out." Should anyone try to encourage you to invest in this Otis thing run away, run away as fast you can.

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