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When is a ‘common stock offering’ a worthless piece of paper?

On Behalf of | Jan 14, 2022 | Securities Fraud |

We would all like to get in on the ground floor with a promising stock, but that’s easier said than done. How do you know what’s likely to take off in value? What makes a stock promising?

Perhaps the first thing you should check is whether you’re actually getting stock at all.

Late last year, the Green Bay Packers football team began issuing what it called a “common stock offering.” “Shares” cost $300 plus a $35 handling fee. However, these “shares” cannot be traded or sold, have no equity, do not appreciate or pay dividends, and offer “voting rights” that do not provide any meaningful say over operations. They don’t even come with tickets or preferential access of any kind.

This is not stock. Stock represents partial ownership in a corporation. The Green Bay Packers’ “stock” involves no ownership of the team – or anything of much value. According to the team, these “shareholders” receive nothing but an invitation to the annual meeting and a chance to buy exclusive merchandise.

The Packers’ web page actually says, “Common stock does not constitute an investment in ‘stock’ in the common sense of the term.”

The Packers plan to sell a total of 300,000 “shares” to their fans. The money will be pure gravy to the team, as the “shares” come with no obligations on the part of the team. The money will be used to fund upgrades to Lambeau Field.

Aren’t the Packers publicly owned? How does this ‘stock’ affect the owners?

Although historically the Green Bay Packers were owned publicly, they are not currently operating as a publicly-owned team, according to Above The Law. Today, they are essentially no different from any other NFL team. They are an immensely profitable enterprise with a $400-million reserve fund.

The sale of this “common stock offering” has no legal effect on any actual shareholders.

Isn’t this securities fraud?

Potentially, it could be. Usually, securities fraud involves a material misrepresentation of some kind that leads an investor to make an investment. The Packers are being pretty up-front about their “stock” not being stock in the conventional sense of the word.

To determine whether a material misrepresentation has occurred, we may ask whether a reasonable person of ordinary intelligence, but no special knowledge of securities, would have been fooled by the scheme.

On the one hand, the Packers had already sold 126,000 “shares” in the first few days of their sale in November. That’s a lot of people buying a legally worthless vanity “stock.” But were those people under the impression that the “stock” could grow in value, could be traded on a stock market, or could provide them with preferential benefits? If they were, the buyers might have a legitimate securities fraud claim.

No reputable securities trader would sell this ‘stock’

Securities traders generally must vet the stock they buy on behalf of their clients, at least to determine whether the stock is an “appropriate investment.” The Green Bay Packers’ “stock” is not and could never be an appropriate investment for anyone, as it has no legal or market value.

If you’re a Packers fan and this buying this “stock” helps you feel you are supporting your team, fine. Just know that it isn’t worth anything but a chance to see an annual meeting and buy restricted merchandise.

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