I got a reply from Scottrade...
Here are the important chunks from the letter. I plan to call the Compliance Supervisor today, so I don't want to post all of it at this point.
----------------
On July 28, 2005, I sent you another email in response to the
numerous emails I had received from you on the status of the
issue. I informed you that GVRP would be changing names to
Media Magic Inc and that all entitled shareholders had been
credited with the forward split shares, however, there was a
reverse split that had been announced and we were waiting for
instructions from the transfer agent on how these shares were
to be exchanged and if these shares were DTC eligible,
(meaning that they could be exchanged electronically through
your account). If we determined that the shares could not be
processed in this manner, the shares would have to be sent
directly to the shareholders. In your case, since the
account you purchased the original shares in was an IRA, we
could not issue the certificate since it would be considered
a distribution. Therefore, we were able to exchange the
shares in your account.
While we certainly understand your frustration in this
matter, corporate actions such as these are not within
Scottrade's control. We are required to abide by instructions
from regulatory bodies in connection with corporate
reorganizations. The inquiries you have made with regard to
the legality of this reorganization and the comments made
that Scottrade should refuse to process the shares is not an
action that Scottrade can take. Further, Scottrade does not
regulate the companies in which you choose to invest, nor are
we responsible for any losses that you may incur in
securities that decline in price. As you are aware the SEC
suspended trading on this issue on May 31, 2005 at Gluv
Corporation's request since the amount of shares that
reflected as outstanding was incorrect.
When you initially purchased your XXX shares of GVRP on May
17, and May 18, you were entitled to the forward split. On
May 3, the company declared a dividend of a forward split
made payable on May 20th. The record date was May 13, 2005
and the ex-dividend date of May 23, 2005. Therefore, you
were entitled to the dividend. On July 6, it was announced
that GLUV Corporation was changing is name to Media Magic,
Inc., symbol MAMG. On July 8, 2005, it was announced there
would be a reverse split of 3,000,000 to 1, which would
complete the restructuring plan of this security.
At this time, you have XXX shares of Media Magic held in your
account, which is in accordance with the reorganization terms
that took place as described above. According to the market
makers that we contacted, there is no market for this
security nor is it listed on the Pink Sheets as originally
released in the press releases. We can send you written
verification that the shares are worthless for tax purposes
upon your request. Scottrade is not responsible for the loss
you incurred on your original investment of $XXX
(including the $7 commission charge for each lot purchased).
...
We are unable to address further questions and comments with
regard to the legality or your opinions in your email, since
this was not an action taken by Scottrade. As a discount
brokerage firm, we do not recommend any stocks that you
choose to invest in. We cannot make any determinations if a
corporate action is legal. Furthermore, we cannot comply
with your request to not allow the reverse split to
transpire.
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