Today's blog is late because of a crisis with my brokerage, e-trade.

E-trade? B-trayed?

Yesterday's closing prices in London led me to attempt to place an order for a part sale of a share in the model portfolio. The stock trades on the Alternative Investment Market, part of the London Stock Exchange (LSE), but for smaller capitalization companies.

My company covers this nook of the bigger market in order to give our readers investment information available nowhere else, among other things to improve our marketing results with a unique selling proposition. I have local journalists who can, for pay, write up relatively obscure stocks trading in Singapore, Hong Kong, Osaka, Sydney the London AIM, or Toronto. Some of them have been working for Global-Investing for years, but others are hired to look into a specific stock.

The one I was trying to unload part of yesterday was written up by Hong Kong-based Vivian Ng (who shares my first name but not my nationality). With Hong Kong in upheaval I could not reach Ms Ng. But from a London website I subscribe to I learned that Naibu Global International Co plc, NBU on the LSE, was the 6^th best performing share in London yesterday, up 11.22% in sterling. So I hit the global trading site in E-trade to lighten my holding.

Big mistake.

I got a message saying to call the platinum group to place the trade manually. Then after about 4 hours of back and forth I received the following message by e-mail about NBU shares I had purchase with e-trade early this year. The message was about 3 shares but I left out the other two:

“reference number 3416694

“Customer Service Message:

“Dear Ms. Lewis,

“This message is regarding your E*TRADE account XXXX.XXXX.

“You recently expresssed concern with the ability to place trades on the following securities:

“….NBU:LN (Naibu Global International)

“Due to changes in the way that these securities trade we are not able to accept electronic trades on these securities. These securities now trade on the AIM as 'Good for Schedule', this means that these securities only trade 4 times in each session in an acution [sic] style.

“As we discussed we are still able to assist you in liquidating these positions. This process would require that the shares be transfeered [sic] to your Domestic US Account and a manual process trade be placed through a broker. We do apologized for the inconvenience this causes and express our appreciation to you for choosing E*TRADE.”

The first thing to note is that the NBU price rise does not show up in the table on E-trade. So just to test if this was a roach motel, I pretended to place a buy order. I got the same message as with the sell yesterday. I also tested other shares held in this account which were not blocked, including :

“Orders for this security cannot be accepted online at this time. For assistance with placing this order, please call Customer Service at 1-800-387-2331”

Well at least the blockage is for both buys and sells.

Less liquid London-traded shares are traded on an electronic system called SETS which matches buy and sell orders fixing the posted price at the last trade. Less liquid shares, probably including our NBU, are traded on the SEAQ or Stock Exchange Electronic Trading Service Quotes and Crosses (SEETSQX) system. SEETSQX holds 4 electronic auction rounds daily at 8 am, 11 am, 3 pm, and 4:35 pm (London time). New York is open when the last two crosses are taking place.

In the interval between these crosses, marketmakers are supposed to offer continuing buy and sell quotes. The quotes are provided to brokers for retail clients who have placed trades by phone or online. The system for Britons costs about £5 per trade. E-trade charges £9.99 per London trade, double the UK norm. Moroever it charges a hefty fee if you exchange dollars into sterling to buy one of these Crosses.

Today I followed up with a call to Jersey City where the global trading desk is. I spent hours on hold. I learned that Credit Suisse,E-trade's LSE partner, had closed down the AIM continual trading facility for E-trade customers seeking a cross-trade between SEETSQX rounds, seeking fees for this service E-trade balked at paying.

By moving the foreign securities to a US account I will not be able to track them on the brokerage site, which means trades would be done blind unless (as I do) I had other pricing sources. But for most customers this would not work. I have a budget for tracking stocks we cover.

This morning I sought information on other markets where my global trading account allegedly operates, where I also hold shares. I got nowhere. I tested trades in these markets individually. I was told specifically that any funds I owned would not be tradable, but testing two exchange-traded funds I hold this way did not get blocked this morning. I asked E-trade for a list which they said I had to seek in writing. So I wrote.

For the record, I think I am in part responsible for this mess. Chatani. I have sinned. I failed to spell out to my readers that these are thinly-traded shares in mini-cap markets. I looked into them from London last winter, my interest triggered by articles by Simon Thompson in The Investors Chronicle, a publication of from The Financial Times not normally distributed in the USA.

Thompson does little follow-up on his numerous picks so I found a Hong Kong reporter and MBA, recommended by her predecessor who changed jobs, to get a proper write-up. But I should have included a “black label warning” that these are illiquid shares. I didn't. So this note means I have one less sin to atone for over Yom Kippur Friday-Saturday this weekend. From now on I will send a smoke signal if a stock has a market cap of under $150 mn. It will be a buy-and-hold however defined.

And I will remove these shares from the model portfolio which also needs another correction over my fat fingers.

Japan this morning suffered a “fat finger” trade which caused $617 bn in cancelled sales of 42 stocks. The largest was for $116 bn sells of Toyota shares, equal to 57% of the shares outstanding in the carmaker according to Dow-Jones.

Telmex (part of American Movil, owned by the world's 2^nd richest man, Carlos Slim Helu) was fined a relatively modest 49.3 bn Mexican pesos ($3.3 bn) for setting up pop-up screens to block long-distance phone users of telco rival Axtel. This is only step 1 in the Mexican crackdown on Movil.

Gene Therapy

*Compugen reported on another novel candidate its in silico (database) research found which panned out in vitro (test tubes) rather than in mice like the last one reported. CGEN-15049 is now a cancer immunotherapy candidate because when the immune checkpoint cells were tested against tumor cells from melanoma patients, they inhibited anti-tumor antigen-specific cytotoxic T cells (effector cells) which fight cancers. The same checkpoint also exists in other cancer cells: lung, ovary, breast, colorectal, gastric, prostate, and liver. So finding a therepeutical monoclonal antibody against this target will be a dramatic step in treating or eliminating cancers if it works in mice and eventually human beings. Oncology drugs are desperately needed and CGEN, of Israel, is moving in a novel area.

*GlaxoSmithKline did another genetic mutations diagnosis deal for tests to find cancer cells, this time with GE for its Clariant healthcare diagnostic services. It announced another deal earlier this week with Thermo Fisher Scientific. I own both GE and TMO in my US portfolio. The GE lab tests will look for metatstaic melanoma and go operational early next year. Later it will add tests for BRAF, V600E, and V600K mutations.

*The outflows are higher than I expected from Pimco mainly because of pension plans and other institutions having to react to rating changes. Both Mercer andMorningstar downrated Pimco Total Return, the former Bill Gross-managed bond fund from top level to level 2, triggering some sales. Our buy for Pimco parent Allianz yesterday was at $16.12 per share, and the stock fell another half percent today. It is now $16.03. To quote the Wall St. adage, they don't ring a bell at the bottom... but it is close.

Allianz is trying to corral some of the exiting money for its new stock investing arm, which among other wise advisors employs my former Paris China hand equity analyst source (then at State St.'s SSgA, but since Mohammed El-Erian left at Pimco). AZSEY owns Pimco. It wants to expand its equities business, and argues that the Total Return Fund “does not define Pimco.” And it is playing up teamwork over rainmakers like Gross.

*Novartis is dropping out of the hepatitis C race and turning back to Enanta of Watertown MA the rights to a drug called EDP 239 on which it has already spent $36 mn. The problem of EDP-239 is that it may trigger fatal pancreatitis in combination with NVS's lead hep-C drug, alisporivir. Another reason may be that France, right across the Swiss border, plans hefty taxes on hep C meds if govt spending tops euros 450 mn per year ($567 mn) in the first year after licensing and then rising by euros250 mn per year in subsequent years. The target is Sovaldi from Gilead costing $84,000 per patient for a 12-week regimen which cures hep C.

*Banco Santander is selling a tiny slice of its Bank Zachodni WBK SA to comply with new Polish regs. Selling 2% of the bank it owns 71.4% of will enable SAN to meet new regs.

*Smaller Spanish banks are being offered a chance to buy the relic of Banco Espirito Santo, Novo Banco, but SAN is not a likely bidder. This will help our Portugal Telecom which is owed money by BES holdings. The PT share will not do anything until the Brazilian elections take place Sunday when the crazy pricing of Oiwill settle down.

Le bacon et les oeufs avec champignons, pommes frites, toast, et baked beans

*Like all good things, the all-day breakfast diners on UK motorways at all hours of the day or night are an anachronism. Now Delek Group gave notice that it has sold 100% of Roadchef Ltd., one of the diner chains, to Antin Infrastructure Partners, aFrench private equity fund. Le bacon et les oeufs avec champignons, pommes frites, toast, et baked beans. DGRLY needs the £153 mn proceeds of which 22% is profit to invest in Israeli offshore gas.

*Our Hikma Pharmaceutical closed Sept. at $57.06/sh, as London trading offset the decline of Dubai. HKMPY is Jordanian with a London GDR and its primary listing on the Gulf.

*Veresen was raised to buy from hold by GMP, a Toronto brokerage. VSN up north and FCGYF on the pinks for us. The company is close to nailing all the permits needed to build a natural gas liquefaction plant in Washington State linked to pipelines in Canada. Martin Ferera who likes finding obscure utes in safe markets (also Australia) is our writer on this stock

*Again Investor's Digest has quoted this non-Canadian about a share, this time Computer Modelling, CMDXF. This stock advisory has access to the full wisdom of Canadian analysts and I am chuffed that I am becoming a favorite source. This follows a note about CAE used in the last issue of the Canadian version of Barron's

*The other un-tradable shares I own listed on AIM are the relic of Camkids, CAMK, and China Chaintek, CTEK. Readers who own them with other brokerages should tell me what happens with them.

Fund notes:

*ETF EPOL should buy the Bank Zachodni WBK SA shares SAN is selling.

*Aberdeen Asia Pacific Income Fund, FAX, has Australia govt bonds accounting for 8 of its top 10 holdings and 40.7% of its total portfolio in Australian bonds. It used to be called First Australia Prime Income Fund. The last 2 bonds of its top 10 are 1.3% each from Malaysia and India but its largest holdings outside Oz are from China and South Korea, at 13.4% and 9.7% resp.

*Aberdeen Global Income Fund is similarly weighted with 20.6% of its total portfolio Down Under and another 15% in New Zealand. Its top 10 is more diversified, with two UK gilt issues ahead of its first Oz bond. Gilts are UK Treasury bonds. It used to be called First Commonwealth Income Fund.

*Aberdeen Japan Fund NAV fell 0.4% since we bought it but its stock price only lost 0.3%. Both beat the Topix index which is down 1.9% for Sept. We bought JEQ as a large cap alternative to our Japan Small Cap (JOF) which used to be called Japan OTC Fund. We also wanted to get the rest of you into my favoritie Japanese share, robot maker Fanuc, which is 4% of JEQ. I bought it as a test and it has done so well I didn't think I should recommend it.

*Africa Opportunity Fund, AOF: UK or AROFF, no longer is on the lowest rank of the AIM. But it is small and illiquid. Black box warning has been posted.

*Raven Rus, also in London, is over the size limit. RUS:UK is a REIT invested in warehouse and logistics facilities.

*Eaton Vance Tax-Managed Global Diversified Equity Income Fund EXG again will distribute only investment income (which is taxable) this month.

*Oops. New Oriental Education, EDU, which was under SEC investigation for over 2 years, has been cleared of any wrongdoing. It was our concern about whether the schools run by EDU really existed and really earned the money claimed that led your editor to drive our former China hand, Fei Chen, to stop coverage. Fei is a Chinese-American. She eventually got a new job which made writing a conflict of interest. Hence Vivan NG, another Chinese lady with an MBA, but not an American, who wrote up Naibu in the first place.

Trades (two half sales):

*A day after we sold half, Paddy Power plc rose 2.64% to euros 57.5. PDYPF was sold at $71.25, the day before. We paid $84.33 to buy it.

*Yandex which cost us $26.3/sh was sold at $28.3 which produced barely anything at all after commish.