Jul 09

Samuel DelPresto and how to run big pumps and dumps

I never got around to blogging about this but did follow the case closely and had uploaded the plea agreement and indictment in this case. A good summary of the case is here. So here are the links:

Samuel DelPresto guilty plea agreement (PDF)

From the plea agreement:

If DELPRESTO enters a guilty plea and is sentenced on this charge, and otherwise fully complies with all of the terms of this agreement, this Office will not initiate any further criminal charges against DELPRESTO for his involvement in stock market manipulation schemes between in or about 2007 to in or about 2013 involving the publicly traded stock of the following companies, among others: Kentucky USA Energy, Inc., (“KYUS”); Mesa Energy Holdings, Inc. (“MSEH”); Bioneutral Group, Inc., (“BONU”); Clear-Lite Holdings, Inc., (“CLRH”); NXT Nutritionals Holdings, Inc., (“NXTH”); Empire Post Media, Inc. (“EMPM”); Mustang Alliances, Inc. (“MSTG”); IDO Security, Inc. (“IDOl”); Brainy Brands Co., Inc. (“TBBC”); Premier Brands Inc. (“BRND”); and LTS Nutraceuticals, Inc. (“LTSN”).

That is a very impressive list of pump and dumps.

Charges against Samuel DelPresto (PDF) — For some reason this is not called an indictment but it reads like one. It has a good explanation of how the pumps and dumps worked.

The SEC also filed a civil lawsuit against DelPresto.

Interestingly in light of the recent plea deal by the former head trader at BMA Securities (market maker BMAS on the OTC), the accounts listed for forfeiture include one account at BMA Securities. I have no evidence indicating anyone at BMA Securities was involved with DelPresto.

 

Disclaimer. I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Jul 08

Greg Mulholland: Penny stock manipulator extraordinaire, gone but not forgotten

This post is a few months late, but I have included a few more recent details at the bottom. See the DoJ press release from May 9th.

From the press release:

Between 2010 and 2014, Mulholland controlled a group of individuals (the Mulholland Group) who together devised three interrelated schemes to: (1) induce U.S. investors to purchase stock in various thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (2) circumvent the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA); and (3) launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through five offshore law firms.  Through these schemes, the Mulholland Group laundered more than $250 million in fraudulent proceeds.

To facilitate the interrelated schemes, the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm.  This structure was designed to conceal the Mulholland Group’s ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enabled the Mulholland Group to engage in more than 40 “pump and dump” schemes.  For example, this structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK.  Using aliases such as “Stamps” and “Charlie Wolf,” Mulholland was intercepted on a court-authorized wiretap on May 15, 2014, admitting to his ownership of “all the free trading” or unrestricted shares of CYNK.  Prior to this conversation between Mulholland and his trader at Legacy, there had been no trading in CYNK stock for 24 trading days.  Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no assets.

Mulholland used the services of a U.S.-based lawyer to launder the more than $250 million generated through his stock manipulation of CYNK and other U.S. companies – directing the fraud proceeds to five law firm accounts and transmitting them back to members of the Mulholland Group and its co-conspirators.  These concealment schemes also enabled Mulholland to evade reporting requirements to the IRS.

The plea change is here (PDF) although the details are not yet available. Mulholland’s sentencing is scheduled for August 23, 2016.

You can see some of the nice toys Mulholland has agreed to forfeit here (PDF), including a Dassault Falcon 50 private jet, a $5 million house in West Vancouver (3630 Mathers Avenue), multiple other properties in Belize in Canada, all funds in 26 different bank and securities accounts in Belize, Denmark, Cayman Islands, and the USA.

The original indictment of Mulholland and many others came back in September 2014.

Disclaimer. I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

Jun 17

Fake (or just dumb) tender offer PR leads to brief Freeseas $FREEF spike

Yesterday Havensight Capital LLC put out a press release announcing a tender offer for the shares of FreeSeas (FREEF), a distressed shipping company. For posterity the press release is quoted in full below. As of the writing of this post the PR has been removed from Yahoo Finance but is still on the OTCMarkets website.

Havensight Capital makes Tender Offer for Free Seas Inc. and Launches theSuperMallofWebsites.com

Jun 16, 2016
OTC Disclosure & News Service

CHRISTIANSTED, United States Virgin Islands, June 16, 2016 (GLOBE NEWSWIRE) — Havensight Capital LLC makes tender offer for 85% of the outstanding common shares of Free Seas Inc. (FREEF) for U.S. $0.43 a share, commencing on July 25th, 2016, and ending November 25, 2016. Havensight Capital LLC will serve as the paying agent. Mr. Benjamin Woodhouse, Director, Havensight Capital LLC said, “Global transportation logistics are a critical component to the World economy, we are very excited about the potential to now capitalize on growth trends in this market.”

Havensight Capital LLC also announced the launch of the Super Mall of Websites.com. The Super Mall of Websites.com offers world class website design, hosting, and maintenance, all, for one low published rate. Customers can access the Super Mall of Websites.com team by going to www.thesupermallofwebsites.com and placing an order online. Mr. Benjamin Woodhouse, Director, Havensight Capital LLC said, “we have been pleased with the incredible global demand for our soccer brand, St. Thomas F.C., www.stthomasfc.com, and we are now capitalizing on such momentum, by adding a leading technology service provider to our portfolio.”

About Havensight Capital LLC

Havensight Capital LLC is a leading private equity firm, which is based in the U.S. Virgin Islands. The Firm specializes in investing in stellar consumer product companies that have, either, a technological advantage, or, have the potential to be exceptionally disruptive in their respective markets. The Firm seeks to actively maximize the potential of each, and every investment. Currently, Havensight Capital LLC owns, and operates, St. Thomas F.C. soccer brand, St. Thomas G.C. golf brand, Creditcard2cash.com, Coffee Ostrich consumer products, and the Super Mall of Websites.com.
Contact:

Ben Woodhouse
Director
Havensight Capital LLC
5030 Anchor Way
Christiansted, VI. 00820
(805) 478 1958
Copyright © 2016 GlobeNewswire. All Rights Reserved

Unfortunately I was away from my computer for 20 minutes when the press release was put out otherwise I would have shorted into the stock’s spike. With the clarity of hindsight I can say now that I should have shorted even after it had already dropped because it was likely to completely erase the gains from that press release. Below is a one-minute chart of the stock.

There were a few things about the press release that struck me as odd and made me suspect that it was a fake. First, Havensight Capital is a no-name firm and their website lists their portfolio companies (also no-name companies) and includes Freeseas (when they have never filed a 13G or 13D or form 4 to indicate ownership of Freeseas stock). Also, the tender offer is way higher than the current stock price of FreeSeas and with the company’s troubles (all shippers have had a hard time the last few years) it would not make sense to me to buy the equity. Anyone interested in Freeseas could likely buy its debt at a steep discount and then take over after the company enters bankruptcy. For me though the biggest indicator that the press release was not serious was that half the press release was about Havensight Capital’s other companies; I have never seen anything like that before in a tender offer or buyout offer press release.

This morning FreeSeas put out a press release calling the Havensight Capital LLC tender offer “false and misleading.” The full press release is below:

FreeSeas Inc. Responds to Havensight Capital Misleading Press Release

Athens, June 17, 2016 (GLOBE NEWSWIRE) — FreeSeas Inc. (FREEF) (“FreeSeas” or the “Company”), a transporter of dry-bulk cargoes through the ownership and operation of a fleet of Handysize vessels and an owner of a controlling stake in a company commercially operating tankers, responded today to a press release published yesterday afternoon by Havensight Capital LLC (“Havensight”).

In its press release, Havensight indicated that it was making a purported tender offer to acquire 85% of the Company’s common stock at a price of $0.43 per share.  FreeSeas was not aware of Havensight’s intention to issue such a press release and did not authorize Havensight to use the Company’s name and symbol so that the press release would appear in the FreeSeas’ news feed.  Further, upon learning of the press release, the Company reached out to regulatory authorities to alert them to the actions of Havensight.

FreeSeas believes that the Havensight press release is false and misleading, in that it failed to disclose material facts.  In particular, the Havensight press release fails to disclose that Havensight has not made the necessary filing with the U.S. Securities and Exchange Commission in order to commence a tender offer.  Such tender offer filing would require Havensight to provide significant disclosures about itself, its financial position, the source of the funds in order to complete the tender offer, among other required disclosures.

Unless and until a valid tender offer is made, the Company will not comment further regarding the actions of Havensight.  The Company believes Havensight may continue to disseminate false and misleading information. Public investors are urged to rely only on information authorized for dissemination by FreeSeas.

About FreeSeas Inc.

FreeSeas Inc. is a Marshall Islands corporation with principal offices in Athens, Greece. FreeSeas is engaged in the transportation of drybulk cargoes through the ownership and operation of drybulk carriers and also is an owner of a controlling stake in a company commercially operating tankers. Currently, it has a fleet of Handysize vessels. FreeSeas’ common stock trades on the OTCQB Market run by OTC Markets Inc. under the symbol FREEF. Risks and uncertainties are described in reports filed by FreeSeas Inc. with the SEC, which can be obtained free of charge on the SEC’s website at  http://www.sec.gov . For more information about FreeSeas Inc., please visit the corporate website, www.freeseas.gr.

Forward-Looking Statements

This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company’s growth strategy and measures to implement such strategy. Words such as ”expects,” ”intends,” ”plans,” ”believes,” ”anticipates,” ”hopes,” ”estimates,” and variations of such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels; competitive factors in the market in which the Company operates; risks associated with operations outside the United States; and other factors listed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.

Contact Information:

At the Company

FreeSeas Inc.
Dimitris Papadopoulos, Chief Financial Officer
011-30-210-45-28-770
Fax: 011-30-210-429-10-10
[email protected]
www.freeseas.gr

The one big question I am left with at this point is why Havensight Capital LLC would put out such an obviously misleading press release. I have seen fake tender offers and buyouts before but they are usually from fake companies. Havensight Capital is real (see for example their lawsuit against Google from a year ago). Either they put out a fake PR to manipulate the stock (in which case they will be quickly sued and sanctioned by the SEC) or they actually intend to buy those shares (there aren’t many outstanding), in which case they are complete morons because their ownership position will be highly diluted by convertible shares and warrants already outstanding:

As of May 10, 2016, we had 1,832,807 shares of common stock issued and outstanding, convertible notes outstanding that may be converted into an estimated 138,774,955 shares of common stock at current market prices and outstanding warrants to purchase 7.346 shares of our common stock that could result in our issuance of 131,262,660 shares of common stock based upon the exchange formula contained therein at current market prices. Although the investors may not convert their secured convertible note and/or exchange the Series C Preferred Shares if such conversion or exchange would cause them to own more than 4.99% of our outstanding common stock, this restriction does not prevent the investors from converting and/or exchanging some of their holdings and then converting the rest of their holdings. In this way, the investors could sell more than this limit while never holding more than this limit. There is no upper limit on the number of shares that may be issued which will have the effect of further diluting the proportionate equity interest and voting power of holders of our common stock. The conversion or exercise of our outstanding convertible securities could result in substantial dilution to our existing holders, and the sales of such material amounts of our common stock issued upon conversion or exercise could cause the market price for our common stock to decline.

The above is from Freeseas’ most recent 20-F (annual report) filing.

Disclaimer. I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

Jun 16

Cantabio Pharmaceuticals $CTBO promoted on purported Alzheimer’s cure

A recent low-volume landing page pump and dump is of Cantabio Pharmaceuticals. See landing page here: http://biosciencereport.com/ctbo/main/ctv1.php

ctbo

Disclosed budget: $150,000 per week
Promoter:  Biosciencereport.com / KyIne Ltd
Paying party:  Ikon Media
Shares outstanding: 26,805,270
Previous closing price: $2.27
Market capitalization: $60 million

Disclaimer (emphasis added by me):

IMPORTANT NOTICE AND DISCLAIMER: This stock profile should be viewed as a paid advertisement. The BioScience Report is published by Kylne Ltd. In an effort to enhance public awareness of Cantabio Pharmaceuticals Inc. (“CTBO”) and its securities through the distribution of this advertisement, Ikon Media has provided the publisher with a weekly budget of approximately $150,000 to cover the costs associated with creating, printing and distribution of this advertisement. The publisher will retain any excess sums after expenses as its compensation. The publisher has not undertaken to determine if Ikon Media is, or intends to be in the future, directly or indirectly, a CTBO shareholder as it has no meaningful way to verify such facts. Readers should take this into consideration in evaluating bias. The name Cooper Stevens is a pseudonym for the editor who was paid $5,000 for his/her contributions to the report. If successful, this advertisement will increase investor and market awareness, which may result in increased numbers of shareholders owning and trading the common stock of CTBO, increased trading volumes, and possibly increased share price of CTBO’s common stock. This publication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. This publication, its publisher, and its editor do not purport to provide a complete analysis of any company’s financial position. The publisher and editor are not, and do not purport to be, broker-dealers or registered investment advisors. This publication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC filings. Investing in securities, particularly micro cap securities such as CTBO, is speculative and carries a high degree of risk. Past performance does not guarantee future results. This publication is based exclusively on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the publisher cannot guarantee the accuracy or completeness of the information. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured company and/or industry. The publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the company’s actual results of operations. Factors that could cause actual results to differ include the size and growth of the market for the company’s products and services, the ultimate degree of success in the company’s gaming apps in the near term and long term, etc. The BioScience Report is the publisher’s trademark. All other trademarks used in this publication are the property of their respective trademark holders. The publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the publisher to any rights in any third- party trademarks.

Copy of pump landing page (PDF)

Disclaimer. I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Jun 06

Life Clips $LCLP: The biggest recent landing page pump & dump

With the SEC and DoJ cracking down on illegal stock promotions (it is possible to legally promote a stock but misleading statements and manipulation are more effective) over the last couple years the number of effective pumps has declined tremendously. The number of hard mailer pumps with good volume has decreased from dozens per year to just one last year (Nugene NUGN) and none so far this year.

The only landing page promotion so far this year that has gotten much volume has been Life Clips (LCLP) and it is ongoing. I have been short Life Clips for awhile and it looks to be slowly fading now. The promotion landing page can be found at http://techstockinsider.com/wp-content/landing-pages/sitefiles/index.html and there is also a PDF version of the promotion: http://fliphtml5.com/nueh/ehcc

Life Clips is one of the few pumps actually paid for by the company itself.lclp_chart

Disclosed budget: $150,000
Promoter:  Midam Ventures LLC / Techstockinsider.com
Paying party:  Life Clips, Inc
Shares outstanding: 53.332.576
Previous closing price: $0.643
Market capitalization: $34 million

Below are a few ads for Life Clips that I have seen.

lclp_ad

Banner ad for LCLP on Ad Choices network on a stock trading website:

LCLP_ad2

LCLP disclaimer:

© 2016 TECHSTOCKINSIDER.COM. ALL RIGHTS RESERVED. PLEASE NOTE WELL: THIS LCLP STOCK REPORT IS A COMMERCIAL ADVERTISEMENT AND IS FOR GENERAL INFORMATION PURPOSES ONLY. WE ARE ENGAGED IN THE BUSINESS OF MARKETING AND ADVERTISING COMPANIES FOR MONETARY COMPENSATION. MIDAM VENTURES, LLC OWNER AND OPERATOR OF TECHSTOCKINSIDER.COM WAS PAID AN ADVERTISING FEE OF $75,000 CASH PER MONTH & ZERO RESTRICTED COMMON SHARES BY LIFE CLIPS, INC. (LCLP) FOR VISUAL SPONSORSHIP OF TECHSTOCKINSIDER.COM AND FOR VISUAL PLACEMENT LIFE CLIPS, INC. (LCLP) WITHIN WRITTEN MATERIALS. FOR A DURATION OF 30 DAYS BEGINNING 5/4/2016. & ENDING 11/3/2016 * PLEASE NOTE WELL: TECHSTOCKINSIDER.COM AND ITS EMPLOYEES ARE NOT A REGISTERED INVESTMENT ADVISOR, BROKER DEALER OR A MEMBER OF ANY ASSOCIATION FOR OTHER RESEARCH PROVIDERS IN ANY JURISDICTION WHATSOEVER AND WE ARE NOT QUALIFIED TO GIVE FINANCIAL ADVICE. TECHSTOCKINSIDER.COM WILL NEVER SELL, TRADE, BARTER, GIVEAWAY AND OR LOAN ANY INFORMATION PROVIDED TO TECHSTOCKINSIDER.COM. BY FILLING OUT THE ABOVE FORM YOU GIVE TECHSTOCKINSIDER.COM EXPLICIT PERMISSION TO CONTACT YOU. * OUR WEBSITE AND NEWSLETTER ARE FOR ENTERTAINMENT PURPOSES ONLY. THIS NEWSLETTER IS NOT A SOURCE OF UNBIASED INFORMATION. NEVER INVEST IN ANY STOCK FEATURED ON OUR SITE OR EMAILS UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. THE DISCLAIMER IS TO BE READ AND FULLY UNDERSTOOD BEFORE USING OUR SITE, OR JOINING OUR EMAIL LIST. FULL DISCLAIMER CAN BE READ AT

 

PDF copy of pump.

 

Disclaimer. I am short LCLP and may close out or add to that position at any time. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

May 25

Algos for everyone: Interactive Brokers’ adaptive algo could be a great tool

Recently I wrote about customizing IB’s smart routing. Particularly for larger orders though it is desirable to break orders into smaller chunks so as not to give the market too much information which can lead to other traders front-running large orders. Iceberg orders work fine but are so-so at best at limiting information leakage — any trader watching time and sales on a stock will quickly notice if a small bid/offer keeps filling many more shares than are displayed. One solution is simply to send multiple different small orders by hand. This can be slow and increases the probability of fat-finger errors (selling/buying too many or too few shares by accident).

IB has multiple different algorithmic order types but until now they have been relatively esoteric and not geared towards the smaller trader. But with the introduction of IB’s adaptive algorithm order real power is given to small traders. Just tell the algorithm your limit price and how aggressive you want it to be and it will take care of the rest for you, splitting your order up, attempting to offer price improvement and good fills.

I tried the adaptive algo for the first time today with the patient setting on a short sell limit $0.42 for 3,000 shares of CJES. I had earlier sold 3,000 shares on the offer through NSX, getting an easy fill with low cost ($3.78 net commission).

Here is the chart of the stock as I was selling short:
adaptive-algo

Here are my fills:
cjes

One trade is not enough to draw any conclusions but the algo did a good job at splitting up my order and filling on the offer. I look forward to getting a chance to try the aggressive settings on this algo.

 

Disclaimer: I am short CJES. I have no relationship with any parties mentioned above (other than IB being one of my brokers). This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

May 25

SEC Obtains asset freeze of trader who filed false $IDT takeover filing

On April 12th Nauman A. Aly made an SC-13D SEC filing indicating that a group of investors had taken a 5.1% stake in IDT Corp (IDT) and was offering to take over the company at a 65% premium to the then-current stock price. Soon after, a revised filing showed that the group had sold a number of call options and was no longer attempting to take the company over.

The SEC was able to identify the alleged perpetrator of the scheme, who used the same IP address to make the SEC filings as to access his trading account. And prior to the first filing he had bought a large number of short-dated out of the money calls that he quickly sold for $425,000 in profits (on a $18,500 initial investment). The SEC was able to freeze Aly’s brokerage account so the profits could not be withdrawn.

According to the SEC:

  • At 12:08 p.m., Aly filed a form known as a Schedule 13D on the SEC’s EDGAR system and falsely stated that his group of investors had a 5.1 percent beneficial ownership of IDT and had sent a letter to the board of directors offering to acquire all of the company’s shares for a price that represented a 65 percent premium.
  • The market reacted quickly to the filing, and IDT’s stock price increased by more than 25 percent in less than 10 minutes.
  • At 12:18 p.m., Aly sold all of the options for the illicit $425,000 profit.  He then filed another Schedule 13D stating that his group of investors no longer owned more than 5 percent of IDT after his options sales.
  • Aly used the same IP address for the options trades that he used to make the false filings.
  • Aly’s group of investors never actually owned 5.1 percent of IDT and never contacted IDT to buy all of its shares.

This is not the first time someone has filed a false SEC filing to manipulate the market and it won’t be the last. Aly’s alleged actions were stupidly obvious but the next market manipulator might not be so dumb. Rather than acquiring short-dated out of the money call options, a smarter trader could wait until his false filing spiked the stock before then buying a bunch of short-dated out of the money put options. Still, to generate a significant profit the trade size would have to be large and those large and highly profitable trades would be a huge red flag, particularly if done in an account that has not made many similar trades.

Here is a 1-minute intraday chart of IDT showing the stock’s reaction to the false filings (click to embiggen):2016-4-12 IDTI 1m fake buyout 13D

As you can see from the little green and red arrows I shorted IDT after it had already dropped most of the way back down. I regret being so slow to react to the false filings.

Disclaimer: I have no position in any stock stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

May 20

SEC Suspends trading in NuTech Energy Resources (NERG) due to potentially fraudulent tender offer

Today the SEC suspended trading in NuTech Energy Resources (NERG):

because of questions that have been raised about the accuracy and adequacy of information in the marketplace about the company’s operations and the company’s recent public announcements concerning an unsolicited tender offer.

SEC trading suspension (PDF)
SEC trading suspension order (PDF)

When I first saw the tender offer I immediately concluded that it was almost certainly fraudulent:

nerg_warning

Why was this? Well, a quick look at OTCMarkets.com showed that the company had a total of 42,761,863,781 shares outstanding (42.7 billion shares). The buyout offer was for a price of $0.025 per share, which would value NERG at $1.07 billion. That is an absurd price to pay for a company with total assets of $5.7 million.

These kinds of fake buyout offers on sketchy OTC companies seem to happen one or two times per year. I can’t recall the last time I saw a sketchy OTC buyout offer that actually occurred so my default assumption on these is that they are fraudulent. In the world of OTC stocks, that is a very good assumption. There are occasionally real buyouts of OTC companies but those companies are invariably ones with real businesses with assets in proportion to the buyout price.

 

nerg_chart

Disclaimer No position in any stock stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

May 11

Get SMART: Customizing Interactive Brokers’ smart routing

Interactive Brokers has been one of my main brokers since 2007. Yet I didn’t realize until today that you can customize the smart routing of orders. I was trying to figure out how to set a hotkey to set a market/ECN destination (route) and stumbled across the smart routing configuration which is even better than what I was looking for. Read IB’s description of how it works.

The simple explanation is that you can set the smart router to prioritize execution (in various ways) or prioritize ECN rebates. This only affects orders where you are adding liquidity (when you are taking liquidity the smart routing always prioritizes execution). For someone who trades a lot of low-priced stocks, ECN fees and IB’s per share commissions add up fast. By setting my smart routing to always go to the highest rebate venue I will dramatically lower my trading fees on low-priced stocks. Simply put, I should have looked into this long ago and saved thousands of dollars in commissions.

For the record, for adding liquidity on Nasdaq stocks under $1, the best route is NSX, which offers a rebate of 0.25% of the trade value.

Here is a screenshot of how I have my smart routing configured now:

SMART

Disclaimer: No position in any stock stock mentioned above. I have no relationship with any parties mentioned above except that Interactive Brokers is one of my brokers. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

May 09

Code Rebel $CDRB SEC suspension: Only 2nd ever SEC suspension of listed stock

On May 5th the SEC suspended trading in Code Rebel (CDRB) for two weeks. The stock will resume trading on May 20th on the grey market. Code Rebel had been promoted multiple times by stock promoters and was most recently promoted on May 2nd. The reason for the trading suspension as given by the SEC:

The Commission temporarily suspended trading in the securities of Code Rebel Corporation because of questions regarding the accuracy of statements in CDRB’s Forms 10-Q for the quarters ended June 30, 2015 and September 30, 2015, and the Form 10-K for the year ending December 31, 2015, concerning the company’s assets and financial condition.

SEC trading suspension (PDF)
SEC trading suspension order (PDF)

What is most interesting is that this is only the second time the SEC has suspended trading in a stock listed on a stock exchange. Normally if the SEC is investigating a listed stock the exchange will halt the stock and then the stock will be suspended by the SEC only after the stock has delisted.

The only other stock to have received an SEC trading suspension while listed on an exchange is Forcefield Energy (FNRG). Of note, there was also a criminal case against individuals involved in FNRG, and in the case of FNRG the Nasdaq had halted trading a day prior to the SEC trading suspension.

 

cdrb

Disclaimer from most recent email promotion of CDRB:cdrb_pump

Disclaimer No position in any stock stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Older posts «