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Red Hat Software Businesses

Red Hat Affinity Offer Extended Until Friday 148

Posted by Roblimo from the it's-never-too-late dept.
Just a fast note: if you're one of the Linux developers who got left out of the "give back to the community" chance to get in on Red Hat's IPO yesterday, you have a second chance. We have heard, and I have called E*Trade and confirmed, that you now have until 3 p.m. EDT tomorrow (Friday) to get in on the deal. Clarification - From an E*Trade VP who called me at 6:10 p.m. EDT: You must have already met the offer requirements, and have already submitted your conditional offer if you're still going to get in on the deal. If you have, please call 650-331-5856 to reconfirm by the Friday 3 p.m. deadline. I personally believe everyone's heart is and was always in the right place on this whole thing, but, as they like to say in government, "mistakes were made." Update: Red Hat CEO Robert Young is now worth $472 million, according to this Globe & Mail story.
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Red Hat Affinity Offer Extended Until Friday More

Red Hat Affinity Offer Extended Until Friday

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  • Not everyone can sell their stock at any price to the public (otherwize I can think up lots of ways
    to scam the public).

    There are many securities laws on the books that require stock transactions to be recorded at
    fair market value, so even if someone bought it at 14 and sold it to you at 15, the seller would
    have to pay taxes as if they sold it to you at 70... Then if you turned around and sold it to
    someone at 20, you would have to pay taxes on the $5 gain and still wouldn't be able to write off
    the $50 difference (although there are some exceptions for gifts)...

    Alas, stocks aren't as simple as dollars and cents...

    More likely RH is taking advantage of securities laws that allow up to 3 days to close the IPO
    and are taking these share from the overallotment reserve that usually comes with each IPO
    registration. Normally these shares are used to cover "rounding-errors" created when trying
    to match stock lots between large institutional investors to percentages from the allocation
    formula. Often the left overs are just distributed to the broker/partners of the large
    institutional investors.

    So in this case the small guy is making out instead of the wall street suits... yea!
  • I'd personally say that giving him 1% of the total outstanding shares would be fair. That's worth about $50M today... Quite a lot compared to the $84M they raised on the IPO.

    -- Roger.
  • Well, I've gotten in to every single stupid phracking window timeperiod phone call whatever...jumped thru every burning hoop held over every vat of radioactive medical waste...spent hours on the phone...

    And STILL nobody knows my status or if I'm getting any damn shares! Looks like I got entered into the system twice on two different superspecial lists or something....

    I give them until their stupid deadline tomorrow. If I don't get my shares after all of this, all I can say is...they lost a customer AND gained an active enemy. GRRRRRRRRRRRRRRRRRRR....

  • The following is an excerpt from an update that I just posted to my web site, giving what I think is the *REAL* reason E*TRADE extended this so-called "offer". The URL to my web site is in my sig.

    The terms of the original IPO gives the underwriters an option to reserve some additional amount of shares at the offering price, for the purpose of "covering overallotments". I believe that this is what E*TRADE's doing. In reality, it's not costing them anything, because they're simply selling additional shares, under the original terms. So the mechanics of how this is being done seems to be rather simple.

    I believe what happened is that someone at E*TRADE suddenly realized that they are now facing a likely possibility of having to deal with several hundred (if not thousand) complaints going to NASD and SEC. When you have so many complaints thrown at you, something usually sticks. Despite repeated assurances from E*TRADE that they are only following all those nasty NASD and SEC regulations, they obviously do not wish to attract any regulatory attention to this mess.

    It's also possible that Red Hat gave them an earful about it. This might be a factor but I believe that the potential for regulatory complaints was their main reason.

    Although E*TRADE's eligibility requirements did not appear to be very consistent, many people who are now in the affinity program have moderate or high net worth. Oh sure, the backhanded hints from E*TRADE might've encouraged many people to provide misleading information regarding their financial status, but, in any case, many people in the program are probably very well off, financially. Getting several hundred complaints about them from wealthy and intelligent investors somehow didn't appeal to E*TRADE very much. You can't really blame them for that.

    Furthermore, many people were kicked out of the process due to a surprise reconfirmation requirement, that E*TRADE unilaterally imposed in the wee hours of August 11th. If these people had the same reaction as I did to RHAT's steep climb in valuation, this must've motivated many of them into seeking action beyond just complaining to regulators. At the time I'm writing this, I am seriously considering going to arbitrarion as soon as I'm fairly sure that NASD has the ball rolling on the regulatory side. But now, I'm not going to wait for NASD to act, and I will be making some strategic preliminary moves immediately. I haven't reached a firm conclusion just yet, but right now I'm more leaning towards arbitration than I ever was, for reasons that explained below.

    This latest development appears to be a rather brilliant move by E*TRADE. The more you think about it, the more sense it makes, from E*TRADE's perspective.

    First of all, they're not using any of their own money here, since it's likely that they are getting shares by excersizing the overallotment option.

    The people who stand to benefit the most from this move are the people who have applied for the minimum 100 shares from E*TRADE. These people will get everything they wanted in the first place. Well, almost. RHAT's price appears to have already peaked, and it's possible that they won't get the actual shares until the price has dropped somewhat.

    Furthermore, I do not know for sure but it appears that people will get only the minimum 100 shares, if they apply for this extension. That's how it lookes to me, and this is consisted with the Wired story. I think it's rather unlikely that people will get all the shares that they initially applied for. E*TRADE is betting that people who applied for a larger amount of shares - 1,000 and more - will be satisfied with getting the minimum 100, and that will discourage them from complaining or going to arbitration. These people are the ones most likely to complain to NASD/SEC, or to seek arbitration.

    It is not clear yet what happens to people who do not have sufficient funds to purchase 100 shares due to the IPO being repriced.

    So, the interesting question is what will happen to people who've sent $10,000, or as much as $90,000 to E*TRADE, expecting to get thousands of shares? Are they going to be satisfied with getting their a few shares, and shutting up?

    In essence, this appears to be very much like an offer of compromise. It remains to be seen if E*TRADE can pull this off. I believe that if someone accepts the 100 shares, they can still pursue some regulatory action or arbitration, but if they do, it's pretty safe to say that this reduces the chances of them prevailing. The transaction for 100 shares can be interpreted as a compromise that relieves E*TRADE of any liability. It's very much like a settlement in a court of law.

    Some people got very teed off at E*TRADE. It is possible that they've already sent their complaints before E*TRADE back-pedaled. It is also possible that their reaction would be 180 degrees different, and that they would be offended at this apparently blatant attempt to calm down the barbarians storming the gate. Stay tuned.


    --
  • I called e-trade and tthey said I have no chance of opening an account and getting stocks by 3 pm est tomorrow. So.. if you don't have an e-trade account its too late. Hey Redhat extend this by next friday for us lazy people would you?
    I have that late homework feeling for some reason. :-)
  • I just wish I had made my name more visible. As it was, the one RPM of my stuff got taken out after RH 4.2...
  • this brings up, to me, an interesting point...not that it would have affected me in any way, but I am curious about the procedure Red Hat used to compile the 'affinity list'...does anyone know? (or care?)... from the comment above, one would presume that they were using a 'current' list of some sort (maybe)
  • ..when it was called Red Hat Affinity Offer Extended Until Friday.
  • I believe that you can set any price to sell your own stock. I think this would be RedHat selling stock that they still retain at a loss. After all, you can give stock away, so I don't see why you couldn't sell it at a loss if you feel like it. It's just that you usually wouldn't because you (in theory) can get a lot more.

    I however know next to nothing about stocks so someone feel free to prove me wrong.

  • Only 10 percent of Red Hat stock was made available in the IPO. Presumably RedHat is making a few more shares available at the original price to the affinity group. (I'm just guessing, no firsthand knowledge.)

  • Hm, how come I posted this while logged in (and I can see my name right next to the Log Out option) and it shows up as an AC?

    Very interesting. Oh Rob....

    (chromatic, logged in on the Reply screen)

    --
    QDMerge [rmci.net] -- data + templates = documents.
  • Sheesh.

    You flip the stock and then want more? You sold out your ownership for a few measly bucks?

    I hope when I finally pick them up at mid-20s and hold them till retirement, travelling around the world and enjoying the good life, that you reflect on how a few shiny dollars made you lose your ideals.

    ;-)

  • I personally believe everyone's heart is and was always in the right place on this whole thing,

    Nonsense. I am positive that E*TRADE was hell bent on kicking out as many affinity customers as possible, so that they can hoard all the shares for themselves.

    It was obvious that the IPO was going to go up, but nobody expected it to go through the roof the way they did, so E*TRADE ended up with a whole bunch of people REALLY pissed at them and ready to write complaints to NASD and SEC, instead of just mildly pissed.

    The last thing E*TRADE wanted was several hundred complaints sent to NASD and SEC. When you have so many complaints thrown at you, something's gonna stick. So, they came up with this as a way of calming down the barbarians storming the gates. They simply excersized the option that was mentioned in the prospectus: the right for them to purchase additional shares at the offering price in order to cover any "overallotments". This is costing them nothing, and potentially averting a shitload of complaints to NASD.

    Of course, all you people who put in for 1,000 shares or more, you'd be lucky if you get more than the minimum 100. You're also pretty much giving up the right to take them to arbitration, since the extension will be interpreted as settlement of any claim you might have against E*TRADE.
    --

  • Agree totally. Major, major kudos to Red Hat, who not only tried to do the right thing, but insisted that it be done. I am very happy that my two Linux servers I bought last month have Red Hat, and I'm very glad that some people are showing that their principles are important to them.

    Too many people forget them when dollar signs flash before their eyes.

    I don't know if I'll get any IPO shares, even though I do belong to that non-Letter group which qualified for the first but was given an impossible task in responding to the second, especially given the 15+ minute waits on the phone lines and the Data Not Found errors on the web pages, but when I get them I'm holding on to them.

  • OK, I just called a rep. Here's what you did (assuming you filed a (rejected) indication of interest before the deadline)

    Login your account. Click on Account Services. Click on "Send us an email". Fill out the email form. For subject, type "RedHat IPO Confirmed" For the message body, repeat the subject and add your account number (8 digits).

    Don't forget to press SEND!!!!!! Deadline is NOON Pacific Time Friday.

  • Surprise, surprise ...

    Just got through to a broker. Who admitted that the SEC has required them to redo the entire IPO.

    Not sure if that means someone's going to handle my shares. But I'm on hold now, anyway.

    Gonna switch over and finish some code.

  • The affinity group are those involved in the directed shares program. Ask yourself "Did I get _the_letter_?" If yes (and you put in a conditional offer in the first round) - woohoo you're part of the Affinity group. If no - you're SOL, and buy at market value.
  • Well, isn't that cute. But it's WRONG!
  • Comment removed based on user account deletion
  • All of us mere developers whose code Red Hat ships every day, but who didn't make it onto the short list are still out in the rain. I guess a couple of Perl modules and Gimp plug-ins just didn't cut it ;-)
  • Well, at least RHAT did involve an e-trading company in the IPO so they helped drive the network technologies which helped create them.

  • Yes. (Score:1)

    by Tim ( 686 )
    This is de facto compensation of Open Source coders, thus providing an alternate incentive to write GPLed code (as opposed to those motives which have driven the movement for years now). The only problem with this type of incentive is that not everyone has millions to throw around at programmers. Red Hat gains a rather perverse advantage in the marketplace, because it can now hire coders w/o really hiring people. Plus they can suck coders away from other projects because, after all, they decide who gets shares.

    If there is a way to turn Red Hat into Microsoft, this proposal is it.
  • Yeah, me too. I mean, I talked with a broker and reconfirmed at $12-$14 and discussed pricing at $14, so I was happy in Pacific Coast doze time while they tried to screw us over ...

    Hey, don't knock the SEC. They may not be fun at parties, but if it weren't for them, small and moderate players would get rolled over by insiders and big guys every day of the week. I mean, I've handled more than a million, but until you have more than $100 million, you're still fairly small.

  • Ah. Well, in hindsight you probably wish you had, but at the time you probably made the same decision I would have.

    And now you can say to your wife: "See, honey, you're more important to me than all the riches in the world."

    Major bonus points.

  • What the hell are you smoking?

    The market has spoken? The only thing the "market"
    has done is cashed in on a well-hyped tech IPO...
    like dozens or even hundreds of others the past
    2 years.

    The stock market is rarely a good indicator of real life ... especially on IPO's.

    -WW

    --
    Why are there so many Unix-using Star Trek fans?
    When was the last time Picard said, "Computer, bring
  • I mean, I like owning. It's fun to fly to board meetings on St. Kits, take in the sun, and write it off. It's neat to vote the stocks and blackball anyone who ever served on the Trilateral Commission (which I have done) and vote against all the multi-board members and for most of the women. And you get cool toys sometimes.

    Face it, Red Hat is a very small fraction of my total investment portfolio. It's my risk money.
    My bet on the future.

    So, I think I can afford to get emotionally attached to this.

    Actually, the first rule is, never count a profit or a loss until you actually close the sale and include the commissions on both ends and then extrapolate the capital gains ... ;0)

  • Yeah, that fits. The SEC basically told them (guess) that if you passed the first hurdle which screened out improper indications of interest (which they DO have to do, but not so stringently as they did with Affinity), that you're still in the game, since the second hurdle was practically impossible for a large majority of qualified IPO participants.

    Good call by the SEC. Fair too.

  • Exactly. This is a VERY expensive lesson for them. The sad thing is, I'm not sure they've quite sussed that it's not just the Affinity people, but the true believers who put their cash in just for this one IPO (e.g. me). And that some of us have the time, the energy, the resources, and (if I have to escalate to that level) the connections to make things get even more warm in the frying pan.

    Publicity usually costs money. Customers cost money. But bad publicity from determined people who have stared major multinational corporations down and are quite willing to use every legal means in their power, it's priceless.

    Which story? Check out all the old threads. Mine is the many posts encouraging people to contact the SEC. I usually prefer to be more in the background, but post what you will.

  • Seriously. I know it's stupid, but "Industry Analysts" say that Linux must be good because the Red Hat IPO did so well. Baaaaa. Baaaaa. Baaaa.

    So, look for lots more companies to suddenly push getting a Linux version out the door and a lot of CIO/CEO doors swinging open instead of being shut (not that it stopped us).

    Some people, like Laura who I talked to today at Microsoft (I know, I know, but she's cute, single, and likes politics ...) don't get it yet, but the bell has just tolled. We all know this has nothing to do with the real merits, but did MSFT have anything to do with the real merits?

    Salut, mes copains! Nous sommes les juges de la futur!

  • Are we ever going to get an explanation for the disappearance Wed. evening (U.S. east coast time) of the "Red Hat IPO Update" story from the main page?

  • But what defines a fair market price? Aren't stocks prices simply the speculation of the value of the company, based on what somebody is willing to pay for a percentage of said company? If I own some stocks, and I decide to sell them, and I set the ask to 50% of current market value, and somebody accepts it, how is that not fair? Sure, it'll probably drop the overall price of that particular stock down for awhile, but since nobody else is going to be selling for the price, it probably won't affect the closing price in anyway.

    The same goes for buying stock. If I put in a bid for 1,000 @ $10.00, and the stock is currently trading at $20, more than likely I'm not going to get anything, BUT, assuming that somebody did accept my bid, then they are choosing to sell at a possible loss. How is this unfair?

  • I don't think Red Hat really has anything to worry about. Everyone's barking at E*TRADE, not Red Hat. I reckon I've been screwed out of about $55K-$65K by now, but it's E*TRADE's head on the plate that I want. E*TRADE really did a thorough ream job on me, and I'll end up with zippo no matter what happens. I was slightly pissed at Red Hat initially, but right now I don't care about them, since I intend to eat E*TRADE's balls for breakfast. The only thing that Red Hat might possibly worry about is people being distracted from hacking because they have to deal with this crap. I'm sitting on about 2 megs worth of uncompressed source code that hasn't seen the light of day yet, and that will have to be postponed while I spend a small fortune on certified mail, and on chopping trees to feed the bulging contents of said certified mails. Plus, there's plenty more where that came from...

    But you're right about one thing. This latest move probably pulled out most of E*TRADE's chestnuts out of the open fire. All they'll have to deal with, from now on, are a handful of cranks like me, who've they personally butt-slammed. That's much better than having to deal with a large angry mob.

    E*TRADE's better be praying to their favorite deities that the stock doesn't tank before everyone finally gets their shares. Otherwise, not only will the mob get only a hundred out of a thou, or two, that they applied for, but they'll also miss their chance to sell out while they were at the top. If THAT happens, you'll *REALLY* see people howling.

    I've missed Mr. Affleck's story, while plowing through all the stuff here. I've seen Dax Kelson's claim of being jerked off after sending them $90K, but I missed Mr. Affleck. If Mr. Affleck would contact me from the web site in my URL, I'll be happy to add his piece to my web site, right next to Mr. Kelson's.

    I sure hope that E*TRADE realizes one thing. They've already lost the VA Linux IPO. E*TRADE's gonna lose more money, when all is said and done, than they could've possibly gained by screwing around like that. I reckon that at least a few dozen (if not hundreds), Linux shops will go public in the next 3-5 years. E*TRADE has lost every one of them. Every bleeping last one. I hope that they realize that.
    --

  • No I did not give up, E*TRADE pretty much jerked me off completely. I've tried to work with them, but they decided to blow me off. There was nothing I could do. They slammed the door in my face, so the only option I had left was closing the account, and move the funds back to my current broker. I was certainly not going to do additional trading with E*TRADE after they treated me the way they did. Screw them. I prefer to send my commissions to a broker who wants it, thankyouverymuch.

    Thank goodness I didn't move my entire brokerage account to E*TRADE, instead of just sending them some loose change. Otherwise, my entire portfolio - instead of measly cash - would be stuck in limbo right now, while those clowns are picking their collective noses.

    I'm done venting tonight.
    --

  • What about the FSF? I think the whole Gnu-Linux naming war is silly, but they've probably contributed far more software to RedHat's flagship product than Linus himself and it would be too bad if they weren't rewarded as well.

  • The numbers don't add up. 6000*400=2.4 mil shares, while only 800,000 were allocated for the affinity program.

    Furthermore, you cannot have any class action lawsuit here, because the terms of the trading account agreement force you to use NASD's arbitration, instead of any other legal proceeding, but IANAL.
    --

  • > Furthermore, I do not know for sure but it appears that people will get only the minimum 100 shares

    If that's the case, I think they still can complain. As several posters pointed out, myself included, the allotment for those lucky & persistent enough to make it to the first round was 400 shares. Thus, if the people of the second round get anything less than 300, they can rightfully complain.

  • I'm not sure that contacting the SEC is a good idea, right now. E*TRADE is a NASD member. NASD has certain regulations that members must follow. Enuff said.
    --

  • RedHat doesn't *need* to give anybody any shares as a gift! Neither to Linus nor GNU. Yes, RedHat does/did not develop most of Linux. And Yes, I can freely download RedHat Linux or order the Cheapbytes CD for $1.99 + shipping. RedHat is in the business of support and distribution the way I see it. Is their contribution of developers and Linux advocacy not enough?
  • I flipped mine too (at $70), and will buy back twice as much shares when they'll drop to the mid $30's (I don't think they'd go lower than $30). In the meantime, I'm stashing the money into APLX and CORL, the two other Linux companies.
  • Well, it doesn't look like etrade got to screw the affinity program people (It certainly looked like they were trying). I got 200 shares, and am absolutely thrilled, not because the stock price is good, but because I got in from the beginning.

    I feel that etrade needed to have better communications with their customers, but I don't intend to trade with them anyways (EVER AGAIN).

    It would be nice if they would let us in on the reasons the messages were conflicting, and how they intend to make sure somthing like this doesn't happen again.
  • If you paid attention, the affinity offers came out of RESERVED shares. so they didn't go to any institutional investors. This just means that "members of the open source community" were able to get 400 shares instead of maybe 300.
  • >Is their contribution of developers and Linux >advocacy not enough?

    That's just plain business sense. They need to have some say in the base product that they make their ultimate $$$ from, after all.
    Giving the bucks directly to Linus and/or the FSF is just a nice corporate citizen kinda thing, and great PR to boot. Like I said in my original message, if they boned Linus, I'd just stop using their product. So long as I know they slipped him a nice deal, I'm happy.

    ...not as happy as I'd be if I owned some RHAT myself right now, but that's another point entirely... :-)
  • Maybe E*Trade will eat the losses? Would serve them right. But then, how much will everyone get? 400? Now, what would happen if now zillions of people apply? And out of what pool will those shares come? It can't be the same pool as for the first round, as supposedly those have already been distributed. Questions, questions.
  • Wow, wish I *hadn't* called yesterday to confirm my shares. Talk about a gift!

    I guarantee that there won't be many of the following conversations with E*Trade:

    "And how many shares would you like to confirm?"

    "Gee, I dunno, this could be a risky proposition... I better just do 100."

    "Ok, golly, good luck! I sure hope they do well. But you never know..."
  • No, not the IPO, me.

    See, somehow I got on the list and recieved the email. But I was on my honeymoon and didn't get it until the 28th, when the original deadline was. So I forgot about it.

    On the 6th, I discovered that the deadline had been extended, but that I didn't know, and I'd missed it again.

    Now I hear about all these extensions... oh, the pain.....
  • I got the Red Hat letter, which apparently means I'm what they call an "affinity member". I filled out my profile at first going through the URL in the Red Hat letter being very conservative and was denied. So when they let all the regular E*Trade customers in on it I just went that way, and filled out my profile again not being so conservative, and was granted. I didn't get in because of the $12/$14 thing, and now they tell me "Sorry, you did the Wrong Thing by going through the other way, and you're no longer an affinity member." Hearts in th.. *mumble*
  • Guess that means RFY is now worth about $663 million (at least at this very minute). Must be fun to have your net work vary by $100k for every basis point of stock fluctuation...
  • I have at least a couple of pieces of software that I was a major contributor to that Red Hat ships, namely libpng, the Linux/Unix support for POV-Ray 3 and PVMPOV (on Extreme Linux at least, not sure of normal dist). Am I to assume that I should have been sent an email about this, or what are the exact "qualifications" for being considered a developer? I've always thought that I would like to own Red Hat stock from years ago, but it was always privately held, and now that it goes public, I'm screwed.

    If I had heard earlier that developers were in on the game, I would have made an effort to get on the list. I thought it had only been for certain Red Hat customers, and I haven't installed Linux on my home box since Slackware 2.x days (1995), so I don't think Red Hat was even a name back then.

    I guess my instincts about going with Debian for my next installation were right...

  • Amazing as it may sound, I've never had any problems with brokers up till now, and I've had a few. Sure, a couple glitches, but most people (E*TRADE excepted) will admit mistakes that were made on their end. Full service, discount, and electronic brokers.

    So, since I've never had to do it (but know I can), exactly how do we file with NASD? I knew the SEC would be useful RIGHT THEN, but now that I've helped everyone defend their rights, it looks like I may have to file for my own rights. Yes, I know, the teeny print probably said something about binding arbitration, but it would still be nice to have a web page (and email) pointing us to those wonderful complaint mechanisms.

    You'd think E*TRADE would start figuring out that we don't roll over and we DO know about computers and the Net. But no, it feels like pulling teeth.

  • Yeah, I've tried to be reasonable with them, following the ten steps that the SEC says to do. Time to escalate to the next level, which is NASD, I guess. I talked with a broker's supervisor and he said he'd talk with his manager. I think it says you need to send a written letter to the brokerage firm (E*TRADE) next, and then it's NASD complaint time.

    They have until this weekend. When I do these steps I'll post them, since I seem to have a knack for getting responses sometimes. Depends on if I'm busy on dates this weekend too.

    Aside: $82 and counting ... maybe I might have to buy when it dips to the 30s ... not sure it will go back to the 20s.
  • Yep, today, RedHat Inc. surpassed Microsoft Corporation in terms of Ask/Bid price for most of that day, in fact (still trading)! It's quite likely they will remain close (last check they differed by less than a point) for at least a little while, but I do expect a market correction soon. Just in case though, I still hung onto 10 shares or RHAT... :)

    Will buy back at around $40 to $50... :)
    (Which is where MSFT was around 8 October last year...)
  • Hmm. Well, all they would admit (over the phone) to was 100 shares. I know if it has to go to arbitration, I'm certainly not settling for less, but that's what they told me.

    Wonder if they realize that some of us have a lot of free time to contact media sources over the weekends? Naah. Personally, I'd rather be mucking with my servers, but ...

  • I mean, if I have to go to arbitration, I'm going for full allocation. And I chose not to put that $51,000 in Schwab (to get their premier line qualification, with my other accounts there) but with them, all for the IPO.

    Their call.

  • Not ALL IPO's dive after their initial public offering. Some just keep going up. Check out these recent IPO's: Redback(RBAK), Juniper(JNPR). If a company has the potential to create a paradigm shift, such as Red Hat, you DO NOT want to bet against it. Fund managers do not want to miss out on the next big thing and they might continue to accumulate these shares at higher, and seemingly outrageous prices. Remember that ANYTHING can happen on WallStreet!
  • First, I'd send E*TRADE an email. Then I'd send a full chronology of events, including any live telephone conversations with account reps and brokers (important to say which, and note that conversations are recorded, so they know who).

    Send it to the SEC branch nearest you.

    If no reasonable resolution, time to file a complaint with the NASD.

    When do you think they'll clue in that we're going to stand up for our rights and are not gullible about exactly HOW technology works ...

  • There is actually a formula for determining market price depending on the spectrum of active bids
    and asks

    Unlike options trades, there is a certain matching requirement for bids. The reason it's not allowed
    is because if you sell at 50% of market, you are not allowed to say who buys the shares. To be
    fair you have to match your ask with someones bid which is probably not the bid of the person who
    you were trying to sell to.

    Think of it this way. If you ask $10 and someone else asks $40, the top bid is $50 and the next
    bid is $30, what is the fair way to do this? Do you sell all of your $10 shares to the $50 guy?
    Or do you sell your shares to the $50 guy for $50? Or should the $30 guy get to buy some shares
    if you agree to split the difference?

    What keeps a middle man from bidding $51, getting your shares for $10 and selling it to the old
    top bidder for $50 and pocketing the difference? Not so simple huh? And these are simple problems
    compared to having 1000s of bid and 1000s of ask and limit orders etc, etc...

    Non-market trading of public companies is highly regulated because the of the fraud potential.
    When the difference is 1/4 point, millions of dollars can be made or lost by the way you select
    how the orders match up. The market makers are accused on a daily basis that they manipulate
    things by placing a whole bunch of strategically priced orders on the books.

    Just think if you made an ask 50 points below market or a buy 50 points above market...
    Who gets to benefit from that transaction? Things could get really complicated...

    Now if you have a private company, you can pretty much do whatever you want... no need to be fair...
  • I've heard _nothing_ from them. Had anyone heard anything about Friday allotments??? (cc me directly, pls.)
  • According to the rep on the phone said she walked over to the broker section, they have not allocated the affinity shares yet, but will be doing so within the next 24 hours.
  • Well, if you don't want me to pay attention, why don't you just give back your shares?

    I don't claim to be an expert on IPOs. I just know through my experiences in trading stocks, bonds, mutual funds, options (hate them, but I get them from stocks sometimes and have to sell or exercise them), etc.

    And I know when someone's trying to rip me off.

  • Well, think about all the working people who are going to watch Wall Street Week on Friday. On Monday they'll be phoning their brokers to buy Red Hat.

    Which means up for Monday, maybe Tuesday. Wednesday is stale and maybe down Thursday and Friday. Close week around $60-$80 range.

    So, guess end of August, beginning of September for $30 range.

    And then back up we go ...

  • Yeah, and he's suddenly legitimized your skill set to all the CEOs and CIOs who slam the door in your face whenever you talk Linux.

    Now they want to pay a $5000 to $10,000 salary bonus for Linux skills.

    Get a life ...

  • Right, this isn't all too different from an 'option' in the sense that it doesn't really matter what the market valuation of the stock is, just the amount of money the stock issuer will take in exchange for the certificate.

    For example, my company grants me 1000 shares of stock at an option price, lets say $20, but the option isn't 'exercisable' for 2 years, then I have a limit of 10 years after that to buy the stock.

    If in three years the stock is being traded at $50 on the open market, I can exercise my options at $20x1000 shares if I can scrape up $20,000. Of course I can sell these the same moment on the open market or hold them, the company doesn't really care. They don't buy the shares on the open market and sell them to me at a loss. They hold these shares in reserve until someone exercises an option, at least that's how I think it works.

    The same would hold true here. RedHat isn't buying back shares at open market value of $70 and selling them to you for $14. These shares are being held either by the company or the underwriters. It is a fairly good gesture of goodwill that they are popping these out to those who missed out. Its gotta be a small percentage of the total stock, but I'm sure its cheap insurance against lawsuits or (even worse) pissed off contributors.

    (and I doubt this comes out of e-trade's hide as someone else posted)

  • I only wish they would have included RHCEs in on the IPO. I am one, so that obviously explains why I feel this way, but I think it would have been fair. I went after an RHCE pretty much as soon as I found out the Cert was available. I did this out of support for Linux, and my strong belief in it. I don't think we should be allowed as much as the actual developers, but throw us a bone.

    Oh well. Nothing lost I suppose, other than a few thousand dollars. :)
  • 14% of 69 million stocks at $72.625 each, so it's like $700M now. Funny how these large amounts of money that are so ridiculously large I can't even understand how large they really are change so much in just a few moments...
  • If we're not Affinity group, it looks like they think we'll go away. Which is mildly amusing, seeing as I didn't get into Who's Who by rolling over for anyone, and I'm not about to start.

    Of course, you realize filling all those shares from either the aftermarket or the float must have cost them $30 million to $48 million in unrealized profit. So let's not get too greedy out there.

    And again, remember, you now OWN Red Hat. If you go and flip it, you just gave away control to the Bill G's of the world. If you hold it, you'll have a nice UNTAXED investment which you can retire on. Me, I always buy for long term, and Red Hat is one of the few that is going to do well long term, as we go forward into the Naughties.

  • I'm in basically the same boat. I even deleted the original email after I missed the *second* deadline. My question is, is it still possible to get in on this? If so how? I called 1-888-REDHAT3 but it didn't have any useful information.

    Help!!!
  • You are holding a ticket with a probable value of $24,000 (400 shares * $60 more or less).

    You are about 300 miles from e*trade's physical office in Braintree, MA.

    Get on the phone and call the affinity number. Then get on a plane. Work your credit cards. Get the trade on.
  • C'mon, why should Red Hat pony up shares? E*TRADE had the shares and gave them away to other investors, probably institutionals, when they shouldn't have. Which is not ok, and the SEC got involved. So now they're using their float (which they maintain) of shares as an underwriter to fill these IPO priced shares for all you coders. Since NASDAQ has regs about how much they have to maintain, they have to refill the float on the aftermarket (instinet, other markets) to maintain sufficient float to cover friction.

    And, since the SEC is scrutinizing them like a hawk, they can't just call in favors to fill up the quota and cancel other filled orders, like they would probably try otherwise.

    Think I'll go check my account and see if they came to their senses yet. I'd hate to have been at the E*Trade board meeting or any of the videoconferences with the other underwriters. Or hanging around Bill G today. Talk about screamfests ...



  • I think it says you need to send a written letter to the brokerage firm (E*TRADE) next, and then it's NASD complaint time.

    I don't think that this necessarily have to be the case. This might be appropriate in your case, but I consider my case to be of a purely regulatory nature. I believe, based on the evidence that I have, that there might be several violations of certain NASD rules here, and I have written NASD presenting my evidence, and asking them to initiate a formal investigation. I am simply documenting the facts as they appear to me, and let NASD take the ball from that point on. I'm not accusing E*TRADE of anything, but I am bringing up certain facts, that may reasonably be interpreted as rule violations, and requesting NASD to conduct an investigation, which I hope that they do.

    I think that this is a completely different ball of wax than a situation where you have to show a good-faith attempt to mitigate the dispute with the broker. Here, we're talking about an internal dispute concerning your trading account, that may not, in itself, be a rule violation. It could only be a rule violation if the broker repeatedly, or willfully, continues to engage in this pattern of behavior. Mistakes happen, and even if those mistakes are technically rule violations, the broker has to be given an opportunity to make things right. In this case, you should reasonably give the broker the benefit of the doubt, and try to work with the broker to resolve the dispute.

    But, when you have a reasonable belief that an arbitrary party is purposefully violating NASD rules, well, that's something compleeeetely different.

    Furthermore, if you go to NASD Regulation's web site, www.nasdr.com, and follow the link to "complaints", it says somewhere over there that NASD does accept anonymous complaints. For obvious reasons. I don't personally know if this is true, I'm just telling you what I read on their web site. Presuming this to be true, clearly it's rather difficult to remain anonymous, yet document to NASD that you've tried to mitigate the dispute with the broker. And, NASD claims that they do, at times, act on anonymous complaints.

    Now, I do not obviously know the details of your case, so it might as well be that you are approaching it from a trading account dispute perspective, instead of a regulatory angle. Now, if you believe that you've witnessed someone breaking the law, say stealing a bicycle, do you then come up to the guy, tap him on the shoulder, and say "Excuse me, would you mind putting that back where you found it?"

    No, you call the cops, that's what you do. Same principle here, in my case.

    Of course, my case can also be pursued from the dispute angle as well. I've returned to the post office to send out more certified mail today. The certified mail being, in fact, a written letter to E*TRADE, requesting them to investigate the issues that specifically involve my situation. This line of approach might eventually wind up going to arbitration perhaps, but it is going to be a completely separate thing, in addition to my regulatory complaint.

    Hit 'em from both sides.

    P.S. I had an extensive chat with a reporter for a very respectable, and a well known, financially-oriented business publication. Next week's gonna be fuuuuuuuuuuuuuun fun fun. I tried to tell the reporter I talked to that the fingers should be pointing to E*TRADE, I got the feeling that they're looking at Red Hat instead, which somewhat concerns me, but I think I got the message accross.

    Furthermore, the mail logs on my mail server show a second very well respectable publication attempting to contact me. Unfortunately, they've sent mail to the Email address I'm using here, which is heavily filtered against spam E-mail, and sometimes my mail filters block non-spam mail by mistake, especially when a message does not have a properly-formatted Subject: header. Oh well. If you're reading this, just send me feedback from my web site, that's all.

    The bottom line, though, is that the mainstream media is smelling a scandal here. P.P.S. I suggest that you start keeping a diary. Every time you check the stock quote for RHAT, write down the time, and what it was, and what you would've done had you had the shares. This way, if you ever end up in arbitration, this will make it easier to peg a monetary sum on your losses. Hear that, E*TRADE? By the time this is over, I'll know exactly how much you screwed me over. Down to the last bleeping penny.
    --

  • I did... they seem to come in the day after you reconfirm. What's even cuter is Etrade got 2 conditional offers from me (through misinformation on their IPO bulletins and screwups on their end)... I got one block of shares in the morning and sold them... then another a few hours later and sold them. Then 3 minutes before market close etrade sends out an alert... ooopppss we really didn't mean to give those to you, what our system told you was incorrect (the shares were in there, the buy order cleared -- but is now not listed in the activity logs -- , the selling system thought they were there, the account positions thought they were there, and it made logical sense based on the calls I got from Etrade this week)... this should be interesting... and I'm not the only one.
  • Tsk. Tsk.

    Look, I know what the chances of getting an IPO are, if you try through a broker who is not one of the underwriters. But E*Trade (E*Offering) IS ONE OF THE UNDERWRITERS. So, suddenly, my chances got from 1 to 2 percent up to 50 percent or higher.

    I have other brokers. I know what that means.

    So, if I were a nasty guy, I would have said: "Hmmm, looks like they screwed the affinity guys out of shares. Cool, more for me." - and then I would have done things to get the SEC to redo the IPO only for my class of investors, NOT for the Affinity group.

    I've done things against my own economic self-interest before, whether we're talking AT&T and cable access, or many other stock holdings. This is a common behaviour in my family - we care about justice, not just for us, but for all. You may have heard of a Oliver Wendell Holmes, and he's pretty average amongst my relatives in the Holmes, Affleck, Asch, and Whitesell families. Numerous relatives have done the right thing in the face of fierce pressure to conform to the powers that be, and they even named the Asch Phenomenon after a great-uncle - that's where you get a crowd of people and have at least five people tell an obvious untruth - and people will believe it ...

    When you have walked a mile in my shoes, you can criticize me. E*Trade has been deserving of all criticism, Red Hat has gone above and beyond the call of duty to help us out, and the SEC has done it's job, no matter what E*Trade will tell you.

    When E*Trade can't even get their stories straight, lights should go on in your brain. If they didn't, you should NOT be investing. At some future date you will probably be snookered, and let's hope the perpetrators left an audit trail, or you're SOL.

    OK?

  • Update (Score:2)

    by jafo ( 11982 )
    After speaking with my e-trade broker, you can *ONLY* get in if you got an indication in before the deadline. I tried quite a while and read the quote to the broker, but was unable to get in because I hadn't made the indication before the deadline.


    So, if you didn't fill out the form with your trading history on it before the normal deadline (several days ago), you can't get in.


    It's probably worth calling them and bugging them just in case you are on their magic affinity list (affinity members who "indicated before the deadline").


    Sean

  • If the process is confusing, it's not your fault as an investor, it's E*Trade's. E*Trade would like you to go away, but insist on talking with a supervisor (after you get to a broker), starting each conversation with "I am an Affinity member".

    Just because they goofed and misclassified you and told you to do the wrong thing, it's not your fault.

    email sanfrancisco@sec.gov


  • So, I'm curious. How many shares did Red Hat mail to Linus as a gift? I'd be pretty pissed if they pimped the big L on this one. I'd have to think they could give him at least a couple K of shares as a nice gesture...
  • On the second day of trading prices have shot up again! They (Robert Young and Marc Ewing) both own over 600M in stock now......

    Roger.
  • I just called e*trade and was told that this extension is ONLY for those people who placed an indication of interest at $10-$12, and then missed the 10 minute re-confirmation window when the IPO was repriced at $14.

    So if that's you, get on the phone.

    Those of us who received "Offer not suitable" from the screening page are still out of luck.

    All in all, a very interesting and educational experience.

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