Trading in FusionPharm (FSPM) was suspended by the SEC back on May 16th. It reopened for trading on the Grey Market on June 2nd. In a press release prior to the market open that day FSPM announced that the stock would begin trading again and added this nice tidbit in the second paragraph:
On May 16, 2014, a search and seizure warrant was executed at the Company’s offices located in
Commerce City, Colorado as part of an ongoing investigation of potential securities law
violations. In executing the warrant, federal authorities seized company records, computers and
approximately $200,000 in funds from one of the Company’s bank accounts.
I shorted FSPM multiple times at Centerpoint Securities over the next couple days and made some money but I was impatient because of the $0.013 per share daily borrow fee so I covered before the drop below $0.90. The stock is currently at $0.70 and is quite illiquid. My thesis was simple: the seizure of records and money is a huge negative (it is exceedingly rare for a company to be investigated for criminal stock fraud and many times executives go to prison in these cases) and the legal risk to the executives means that they likely won’t be putting out any more press releases.
Here are two of my trades on FSPM:
Of course, there are plenty of people who disagree with me, and I am glad that they do so that someone will buy the shares I sell short. For example:
— WoLf~MoNsT3R (@MuRk_MoNsT3R) June 3, 2014