Wall Street has long used fees to make a lot of money. Here’s an example of one.
Equitable Life Insurance was once a mutual company, then it went private, then some smoke and mirrors turned it into AXA, a French Company, and the shares became ADRs. Anyway, AXA recently issued some rights to shareholders. Rights are options to buy the stock for a fixed price at some future date. I think a right is the same as a warrant but don’t hold me to that. I first got into the stock market by buying some warrants after studying the warrant market for nine or ten months. The stockbroker agreed that I had picked a good one but suggested I take a look at another one he thought might be worthy of my first investement. I bought the one he suggested and sold it a year later at about the same price I paid. Meanwhile, the one I had originally intended to buy increased in value 4o percent. That experience taught me my first lesson in stocks – stockbrokers are often less informed that I am on a paticular stock or in this case, a warrant. But I digress, back to AXA.
The rights were not issued to ADR holders because, “the rights were not registered under the United States Securities Act of 1933.” Instead, the ADR holders received a check for the proceeds of selling their rights on the French market. BNY Mellon of Hackensack, NJ handled the distribution and only charged two cents per ADR. Cheap, right? Hardly as there are 2.3 billion shares of AXA. Do the math and you get a total fee for BNY Mellon of $46 million.