posted on February 13, 2002 07:26:08 PM new
I have been investigating Paypal's Money Market (Mutual Fund) and have discovered evidence that indicates that any time Paypal involuntarily redeems invested shares of an account holder that they are violating their Prospectus on file with the US Securities Exchange Commission. Here is a link to Paypal's filings:
You can begin accumulating shares of the Fund as soon as you register as a
PayPal user and have deposited funds in your PayPal account. Your share price
will be the NAV next determined after the Fund receives your deposit of funds,
which normally will be $1.00 per share.
Fund shares are automatically purchased for PayPal users who have completed the
steps outlined above. Any unused cash balance in your PayPal account will be
automatically invested in (or "swept" into) shares of the Fund. Similarly,
shares of the Fund in your account will be automatically redeemed (or "swept"
from your account) in order to pay for
--------------------
FOOTNOTE * The staff of the Securities and Exchange Commission (the
"Staff" has informally indicated its view that the Fund may
not involuntarily redeem your shares if you revoke your consent
to receive shareholder documents electronically or fail to
maintain an e-mail account. However, should the Staff's
position on this issue change, the Fund intends to
involuntarily redeem your shares under such circumstances.
12
<PAGE>
any transaction that you have authorized, including purchases, payments and
other electronic fund transfers. The automatic sweep occurs once a day as all
transactions for that day are reconciled. The prospectus for the Fund is
readily available for viewing and printing on the PayPal website
(WWW.PAYPAL.COM)."
It is clearly laid out that in the definition of "any transaction that you have authorized" defined as purchases, payments and other electronic fund transfers does not include involuntary (non authorized ) transactions or any transaction that the account holder did not initiate. Also the footnote clearly indicates the negative opinion of the staff of the Securities and Exchange Commission concerning the involuntary redemption of shares. If my interpretation is correct then any time Paypal allows involuntarily redeems funds to satisfy chargebacks or any involuntary transaction after funds have been sweep into shares of the Money Market fund then they are in breach of the fund Prospectus. My opinion and of course I am not a lawyer is that is that anyone who has funds frozen in a Paypal account and has them invested in the Money Market account or anyone who has suffered a chargeback where Money Market shares have been involuntarily redeemed to satisfy the account balance has reason to seek legal recourse against Paypal for breach of their Prospectus.
posted on February 14, 2002 01:24:57 AM new
The money market fund these funds are invested in is operated by Barclays, a well known investement company/bank.
I do not believe your funds are swept from your account into this fund.
Funds in your paypal account are floating in accumulation with other users account balances into the sum total of the money market fund.
Sellers who have their paypal funds swept into their bank accounts daily are clearly not participating in the money market fund.
Those of us that leave an active balance......by doing so are participating in the money market fund.
I do not keep large sums of money in my account. I am not a high volume seller by any means and I have the debit card and buy groceries with my debit card The debit card number is also my Ebay fee payment account.
Quartly I get my investment share of this money market fund. Granted it is pocket change........but it relates to my average daily balance in my paypal account. When I have more than $50 in my account I am off to the supermarket lol.
posted on February 14, 2002 05:30:28 AM new
"The money market fund these funds are invested in is operated by Barclays, a well known investement company/bank."
Yes you are right about that part.
S:"I do not believe your funds are swept from your account into this fund."
A:Yes they are. Read the Prospectus for the fund on the website or the filing with the US Securities and Exchange Commission. It clearly defines that for those who have joined the Money Market Fund that "Any unused cash cash in your Paypal account will be automatically invested in (or "swept" into) shares of the Fund.
S:"Funds in your paypal account are floating in accumulation with other users account balances into the sum total of the money market fund."
Ance you sign up for the Money Market Fund the money in your Paypal account is used to purchase shares in your name. The prospectus defines that Funds Distributor, Inc a registered broker-dealer. If you don't believe me, read the prospectus and the Posting on Paypal where they outline the "Safety of your Money". Specifically read the portion under "Your Own Separate Investment" which states "Your investment in the Money Market Reserve Fund is not held by Paypal and is not a "Paypal" investment. Rather, your money is held in your name in the Money Market reserve Fund..."
S:"Sellers who have their paypal funds swept into their bank accounts daily are clearly not participating in the money market fund."
A:Who said anything about bank accounts. I don't even think they still offer that kind of service. Too hard to chargeback from a REAL bank account. I was clearly talking about sellers that have have shares automatically redeemed to cover unathurorized transactions such as in chargebacs that occur after account funds have been used to purchase fund shares in a users name. The prospectus on file which defines how the fund operates does not have any provision that is considered legal by the SEC to involuntarily redeem shares for any transaction not specifically authorized by the owner of the shares.
S:"Those of us that leave an active balance......by doing so are participating in the money market fund."
A:Sure thing. That is obvious.
S:"I do not keep large sums of money in my account. I am not a high volume seller by any means and I have the debit card and buy groceries with my debit card The debit card number is also my Ebay fee payment account."
A:You are wise to keep it that way or get rid of paypal altogether or risk getting a couple hundred dollars frozen in your Paypal account if you are lucky. Me and another guy I know have over $30,000 locked in our two accounts. The one good things is that mine account is still active in Money Market.
S:Quartly I get my investment share of this money market fund. Granted it is pocket change........but it relates to my average daily balance in my paypal account. When I have more than $50 in my account I am off to the supermarket lol.
A:Wise thing to do and hope you never get any "suspected fraudulent funds" that freezes your $50.00 before you get to the grocery store.
has informally indicated its view that the Fund may
nce you sign up for the Money Market Fund the money in your Paypal account is used to purchase shares in your name. The prospectus defines that Funds Distributor, Inc a registered broker-dealer. If you don't believe me, read the prospectus and the Posting on Paypal where they outline the "Safety of your Money". Specifically read the portion under "Your Own Separate Investment" which states "Your investment in the Money Market Reserve Fund is not held by Paypal and is not a "Paypal" investment. Rather, your money is held in your name in the Money Market reserve Fund..."
