Update on Eros International v. Short sellers litigation

It has now been eight months since Eros International (EROS) sued a large number of short sellers for defamation after they publicly criticized the company. Anyone can see the court docket and download files for free at the New York County Supreme Court website (the case is 653096/2017). So far a not much has been decided in the case, with the majority of the defendants having responded having filed motions to dismiss and Eros attempting to move to discovery. The plaintiffs and defendants (specifically,  the Mangrove Defendants, the GeoInvesting Defendants, and the ClaritySpring Defendants) wrote to the judge (read the letter) on May 4th, 2018 to argue whether it was proper to move to discovery prior to the judge considering the motion to dismiss. The judge has not yet decided those issues.

A number of subpoenas were served on third parties by Eros’ counsel to attempt to ascertain the identity of John Doe defendants and this has taken up a lot of time. On February 22nd the judge ruled that Eros had until June 1st to properly serve remaining John Doe defendants. See doc 161 (pdf) for ruling.

On February 14th, 2018 the judge granted Eros’ motion for default against Manuel Asensio and Mill Rock Advisors for failing to respond to the complaint. See doc 160 (pdf) for ruling.

A copy of the docket (direct-linking to documents at the court website) is below:

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To view details, click on the Doc # link
Doc # Document Type
Information
Status Received Date
Filing User
View
 1 SUMMONS WITH NOTICE 
Summons with Notice
Processed 06/06/2017
Bowe, M.
Confirmation Notice
 2 SUMMONS – SUPPLEMENTAL (PRE RJI) 
Supplemental Summons
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 3 COMPLAINT 
Complaint
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 4 EXPARTE ORDER (PROPOSED)  (Motion# 001) 
(Proposed) Ex Parte Order to Extend Time to Serve John Doe Defendants Nos. 1-20
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 5 AFFIDAVIT OR AFFIRMATION IN SUPPORT OF PROPOSED OSC/EXPARTE APP  (Motion# 001) 
Affirmation in Support of Motion to Extend Time to Serve John Doe Defendants Nos. 1-20
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 6 EXHIBIT(S)   – A  (Motion# 001) 
Original Summons with Notice
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 7 EXHIBIT(S)   – B  (Motion# 001) 
Supplemental Summons with Notice
Processed 09/29/2017
Bowe, M.
Confirmation Notice
 8 RJI -RE: OTHER EX PARTE APPLICATION  (Motion# 001) Processed 09/29/2017
Bowe, M.
Confirmation Notice
 9 ADDENDUM – COMMERCIAL DIVISION (840C)  (Motion# 001) Processed 09/29/2017
Bowe, M.
Confirmation Notice
 10 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 11 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 12 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 13 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 14 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 15 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/03/2017
Bowe, M.
Confirmation Notice
 16 DECISION + ORDER ON MOTION  (Motion# 001) Processed 10/06/2017
Court User
Confirmation Notice
 17 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/10/2017
Bowe, M.
Confirmation Notice
 18 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/10/2017
Bowe, M.
Confirmation Notice
 19 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/10/2017
Bowe, M.
Confirmation Notice
 20 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and Notice of Comm(..)
Processed 10/10/2017
Bowe, M.
Confirmation Notice
 21 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit Of Service Of Notice Of Commencement, Summons With Notice, and Supplemental Summons And Co(..)
Processed 10/11/2017
Bowe, M.
Confirmation Notice
 22 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit Of Service Of Notice Of Commencement, Summons With Notice, and Supplemental Summons And Co(..)
Processed 10/11/2017
Bowe, M.
Confirmation Notice
 23 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of Notice of Commencement of Action Subject to Mandatory Electronic Filing, Sum(..)
Processed 10/13/2017
Bowe, M.
Confirmation Notice
 24 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavit of Service of Notice of Commencement of Action Subject to Mandatory Electronic Filing, Sum(..)
Processed 10/13/2017
Bowe, M.
Confirmation Notice
 25 AFFIRMATION/AFFIDAVIT OF SERVICE 
Supplemental Affidavit of Service of the Supplemental Summons, Summons with Notice, Complaint, and N(..)
Processed 10/13/2017
Bowe, M.
Confirmation Notice
 26 STIPULATION – OTHER – ( REQUEST TO SO ORDER ) 
Stipulation Extending the Time to Respond to the Complaint
Processed 10/23/2017
Asaro, M.
Confirmation Notice
 27 NOTICE OF APPEARANCE (POST RJI) 
Patrick L. Rocco for ClaritySpring, Inc., ClaritySpring Securities LLC and Nathan Z. Anderson
Processed 10/27/2017
Rocco, P.
Confirmation Notice
 28 NOTICE OF APPEARANCE (POST RJI) 
Susan M. Davies for Defendants ClaritySpring, Inc., ClaritySpring Securities LLC and Nathan Z. Ander(..)
Processed 10/27/2017
Davies, S.
Confirmation Notice
 29 STIPULATION – SO ORDERED Processed 10/30/2017
Court User
Confirmation Notice
 30 STIPULATION – OTHER – ( REQUEST TO SO ORDER ) 
Stipulation Extending Time to Respond to Complaint
Processed 10/30/2017
Davies, S.
Confirmation Notice
 31 STIPULATION – SO ORDERED Processed 11/06/2017
Court User
Confirmation Notice
 32 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 002) 
For pro hac vice admission of Stephen Ryan, Jr.
Processed 11/16/2017
Davies, S.
Confirmation Notice
 33 Deleted
 34 AFFIRMATION 
Affirmation of Susan M. Davies
Processed 11/16/2017
Davies, S.
Confirmation Notice
 35 STIPULATION – OTHER 
Stipulation to Admission Pro Hac Vice
Processed 11/16/2017
Davies, S.
Confirmation Notice
 36 AFFIDAVIT OR AFFIRMATION IN SUPPORT  (Motion# 002) 
Affidavit of Stephen Ryan, Jr.
Processed 11/16/2017
Davies, S.
Confirmation Notice
 37 AFFIDAVIT OR AFFIRMATION IN SUPPORT  (Motion# 002) 
Affirmation of Susan M. Davies
Processed 11/16/2017
Davies, S.
Confirmation Notice
 38 STIPULATION – OTHER  (Motion# 002) 
Stipulation to Pro Hac Vice Admission
Processed 11/16/2017
Davies, S.
Confirmation Notice
 39 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 003) 
Proposed Order to Show Cause for Pro Hac Vice Admission of Bryan A. Wood
Processed 11/16/2017
Davies, S.
Confirmation Notice
 40 AFFIDAVIT OR AFFIRMATION IN SUPPORT  (Motion# 003) 
Affidavit of Bryan A. Wood
Processed 11/16/2017
Davies, S.
Confirmation Notice
 41 AFFIDAVIT OR AFFIRMATION IN SUPPORT  (Motion# 003) 
Affirmation of Susan M. Davies
Processed 11/16/2017
Davies, S.
Confirmation Notice
 42 STIPULATION – OTHER  (Motion# 003) 
Stipulation to Pro Hac Vice Admission
Processed 11/16/2017
Davies, S.
Confirmation Notice
 43 AFFIRMATION/AFFIDAVIT OF SERVICE 
Affidavits of Service re: ClaritySpring Securities LLC
Processed 11/17/2017
Bowe, M.
Confirmation Notice
 44 DECISION + ORDER ON MOTION  (Motion# 002) Processed 11/27/2017
Court User
Confirmation Notice
 45 DECISION + ORDER ON MOTION  (Motion# 003) Processed 11/27/2017
Court User
Confirmation Notice
 46 LETTER / CORRESPONDENCE TO JUDGE 
Letter requesting page limit enlargement
Processed 11/28/2017
Wise, T.
Confirmation Notice
 47 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 005) Processed 11/30/2017
Asaro, M.
Confirmation Notice
 48 MEMORANDUM OF LAW IN SUPPORT  (Motion# 005) Processed 11/30/2017
Asaro, M.
Confirmation Notice
 49 AFFIDAVIT OR AFFIRMATION IN SUPPORT OF PROPOSED OSC/EXPARTE APP  (Motion# 005) 
Affirmation of Jessica A. Fitts in Support of Defendants Mangrove Partners’ and Nathaniel H. August'(..)
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 50 EXHIBIT(S)   – 1  (Motion# 005) 
October 30, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 51 EXHIBIT(S)   – 2  (Motion# 005) 
November 10, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 52 EXHIBIT(S)   – 3  (Motion# 005) 
November 13, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 53 EXHIBIT(S)   – 4  (Motion# 005) 
November 20, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 54 EXHIBIT(S)   – 5  (Motion# 005) 
October 23, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 55 EXHIBIT(S)   – 6  (Motion# 005) 
October 26, 2015 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 56 EXHIBIT(S)   – 7  (Motion# 005) 
October 23, 2015 article
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 57 EXHIBIT(S)   – 8  (Motion# 005) 
“Alpha Exposure” tweets through September 29, 2017
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 58 EXHIBIT(S)   – 9  (Motion# 005) 
August 14, 2017 report
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 59 EXHIBIT(S)   – 10  (Motion# 005) 
Complaint
Processed 11/30/2017
Asaro, M.
Confirmation Notice
 60 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 004) 
Proposed Order to Show Cause to Dismiss the Complaint Pursuant to CPLR 3211(a)(1),(7)
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 61 AFFIDAVIT OR AFFIRMATION IN SUPPORT OF PROPOSED OSC/EXPARTE APP  (Motion# 004) 
Affirmation of Michael de Leeuw In Support Of Order To Show Cause To Dismiss The Complaint Pursuant (..)
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 62 EXHIBIT(S)   – 1  (Motion# 004) 
Exhibit 1 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 63 EXHIBIT(S)   – 2  (Motion# 004) 
Exhibit 2 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 64 EXHIBIT(S)   – 3  (Motion# 004) 
Exhibit 3 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 65 EXHIBIT(S)   – 4  (Motion# 004) 
Exhibit 4 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 66 EXHIBIT(S)   – 5  (Motion# 004) 
Exhibit 5 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 67 EXHIBIT(S)   – 6  (Motion# 004) 
Exhibit 6 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 68 EXHIBIT(S)   – 7  (Motion# 004) 
Exhibit 7 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 69 EXHIBIT(S)   – 8  (Motion# 004) 
Exhibit 8 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 70 EXHIBIT(S)   – 9  (Motion# 004) 
Exhibit 9 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 71 EXHIBIT(S)   – 10  (Motion# 004) 
Exhibit 10 to de Leeuw Affirmation
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 72 MEMORANDUM OF LAW IN SUPPORT  (Motion# 004) 
Memorandum of Law in Support of Order to Show Cause to Dismiss the Complaint Pursuant to CPLR 3211(a(..)
Processed 11/30/2017
Deleeuw, M.
Confirmation Notice
 73 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 006) 
for Dismissal of All Causes of Action Against ClaritySprings, Inc., ClaritySprings Securities LLC an(..)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 74 AFFIRMATION  (Motion# 006) 
Affirmation of Susan M. Davies re Briefing Schedule
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 75 EXHIBIT(S)   – 1  (Motion# 006) 
Davies Exhibit 1 (Order Entered 11/6/2017 NYSCEF 31)
Processed 11/30/2017
Rocco, P.
Confirmation Notice

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To view details, click on the Doc # link
Doc # Document Type
Information
Status Received Date
Filing User
View
 76 EXHIBIT(S)   – 2  (Motion# 006) 
Davies Exhibit 2 (Order Entered 10/30/2017 NYSCEF 29)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 77 AFFIDAVIT  (Motion# 006) 
Affidavit of Stephen Ryan, Jr.
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 78 EXHIBIT(S)   – 1  (Motion# 006) 
Ryan Exhibit 1 (ClaritySpring Inc. Twitter Page)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 79 EXHIBIT(S)   – 2  (Motion# 006) 
Ryan Exhibit 2 (ClaritySpring Inc. Tweet 3/9/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 80 EXHIBIT(S)   – 3  (Motion# 006) 
Ryan Exhibit 3 (ClaritySpring Inc. Tweet 3/17/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 81 EXHIBIT(S)   – 3A  (Motion# 006) 
Ryan Exhibit 3A (ValueWalk Article “GeoInvesting Now Says Eros Facing ‘Very Real Liquidity Crisis'”)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 82 EXHIBIT(S)   – 4  (Motion# 006) 
Ryan Exhibit 4 (ClaritySpring Inc. Tweet 3/31/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 83 EXHIBIT(S)   – 4A  (Motion# 006) 
Ryan Exhibit 4A (“Quoth the Raven” Tweet)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 84 EXHIBIT(S)   – 5  (Motion# 006) 
Ryan Exhibit 5 (ClaritySpring Inc. Tweet 6/26/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 85 EXHIBIT(S)   – 6  (Motion# 006) 
Ryan Exhibit 6 (ClaritySpring Inc. Tweet 7/21/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 86 EXHIBIT(S)   – 7  (Motion# 006) 
Ryan Exhibit 7 (ClaritySpring Inc. Tweet 7/27/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 87 EXHIBIT(S)   – 8  (Motion# 006) 
Ryan Exhibit 8 (Hindenburg Research Article “Eros Earning Review: An Abundance of Red Flags”
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 88 EXHIBIT(S)   – 9  (Motion# 006) 
Ryan Exhibit 9 (Hindenburg Research Article “Eros’s Latest Buyout Rumors Seem Suspect”
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 89 EXHIBIT(S)   – 10  (Motion# 006) 
Ryan Exhibit 10 (Hindenburg Research Article “Eros International: New Receivables Accounting Red Fl(..)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 90 EXHIBIT(S)   – 11  (Motion# 006) 
Ryan Exhibit 11 (Hindenburg Research Tweets 8/1/2017)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 91 EXHIBIT(S)   – 12  (Motion# 006) 
Ryan Exhibit 12 (Hindenburg Research Tweet 8/4/2017 at 10:32 am)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 92 EXHIBIT(S)   – 12A  (Motion# 006) 
Ryan Exhibit 12A (Article “Film Artists Working Abroad Shown as Exports to Evade Tax: CAG”)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 93 EXHIBIT(S)   – 13  (Motion# 006) 
Ryan Exhibit 13 (Hindenburg Research Tweet 8/4/2017 at 10:18 am)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 94 EXHIBIT(S)   – 13A  (Motion# 006) 
Ryan Exhibit 13A (Document from Indian Ministry of Corporate Affairs)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 95 MEMORANDUM OF LAW IN SUPPORT  (Motion# 006) 
Memorandum of Law in Support of Motion To Dismiss All Causes of Action Against ClaritySpring Inc., C(..)
Processed 11/30/2017
Rocco, P.
Confirmation Notice
 96 ORDER TO SHOW CAUSE  (Motion# 004) Processed 12/01/2017
Court User
Confirmation Notice
 97 ORDER TO SHOW CAUSE  (Motion# 005) Processed 12/01/2017
Court User
Confirmation Notice
 98 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 007) 
(Proposed)Order To Show Cause
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 99 MEMORANDUM OF LAW IN SUPPORT  (Motion# 007) 
Memorandum Of Law In Support Of Plaintiffs Motion For Default Judgments Against Defendants Manuel P.(..)
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 100 AFFIDAVIT OR AFFIRMATION IN SUPPORT OF PROPOSED OSC/EXPARTE APP  (Motion# 007) 
Affirmation Of Michael J. Bowe In Support Of Plaintiffs Motion For Default Judgments Against Defenda(..)
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 101 EXHIBIT(S)   – A  (Motion# 007) 
Asensio Nail and Mail Affidavit of Service
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 102 EXHIBIT(S)   – B  (Motion# 007) 
Asensio Doorman Affidavit of Service
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 103 EXHIBIT(S)   – C  (Motion# 007) 
Asensio & Co SOS Affidavit of Service
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 104 EXHIBIT(S)   – D  (Motion# 007) 
Mill Rock SOS Affidavit of Service
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 105 EXHIBIT(S)   – E  (Motion# 007) 
CPLR_3215(g) Aff.
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 106 EXHIBIT(S)   – F  (Motion# 007) 
2017.11.20 Asensio Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 107 EXHIBIT(S)   – G  (Motion# 007) 
2017.11.22 Tountas Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 108 EXHIBIT(S)   – H  (Motion# 007) 
2017.11.22 Asensio Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 109 EXHIBIT(S)   – I  (Motion# 007) 
2017.11.24 Bowe Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 110 EXHIBIT(S)   – J  (Motion# 007) 
2017.11.24 Tountas Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 111 EXHIBIT(S)   – K  (Motion# 007) 
2017.11.25 Asensio Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 112 EXHIBIT(S)   – L  (Motion# 007) 
2017.11.28 Asensio Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 113 EXHIBIT(S)   – M  (Motion# 007) 
2017.11.29 Cantor Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 114 EXHIBIT(S)   – N  (Motion# 007) 
2017.10.20 Sorkin Email
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 115 EXHIBIT(S)   – O  (Motion# 007) 
2017.10.05 Alpha Exposure Tweets
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 116 EXHIBIT(S)   – P  (Motion# 007) 
2017.10.05 Asensio Tweet
Processed 12/01/2017
Bowe, M.
Confirmation Notice
 117 NOTICE OF APPEARANCE (POST RJI) Processed 12/03/2017
Cantor, M.
Confirmation Notice
 118 AFFIDAVIT OR AFFIRMATION IN OPPOSITION TO ORDER TO SHOW CAUSE  (Motion# 007) 
Affidavit in Opposition to Proposed OSC
Processed 12/03/2017
Cantor, M.
Confirmation Notice
 119 EXHIBIT(S)   – 1  (Motion# 007) 
November 20, 2017 email
Processed 12/03/2017
Cantor, M.
Confirmation Notice
 120 EXHIBIT(S)   – 2  (Motion# 007) 
June 12, 2016 Letter
Processed 12/03/2017
Cantor, M.
Confirmation Notice
 121 ORDER TO SHOW CAUSE  (Motion# 006) Processed 12/04/2017
Court User
Confirmation Notice
 122 ORDER TO SHOW CAUSE  (Motion# 007) Processed 12/06/2017
Court User
Confirmation Notice
 123 AFFIRMATION/AFFIDAVIT OF SERVICE  (Motion# 007) Processed 12/08/2017
Bowe, M.
Confirmation Notice
 124 STIPULATION – ADJOURNMENT OF MOTION – BEFORE JUDGE  (Motion# 007) Processed 01/12/2018
Cantor, M.
Confirmation Notice
 125 LETTER / CORRESPONDENCE TO JUDGE 
Letter to Justice Bransten requesting leave to file an omnibus opposition that does not exceed 60 pa(..)
Processed 01/16/2018
Tountas, S.
Confirmation Notice
 126 LETTER/CORRESPONDENCE – SO ORDERED Processed 01/17/2018
Court User
Confirmation Notice
 127 STIPULATION – ADJOURNMENT OF MOTION -IN SUBMISSIONS PART -RM 130  (Motion# 007) Processed 01/22/2018
Cantor, M.
Confirmation Notice
 128 MEMORANDUM OF LAW IN OPPOSITION  (Motion# 005) 
Plaintiff’s Memorandum of Law in Opposition to The Mangrove Defendants’ Order to Show Cause
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 129 AFFIDAVIT OR AFFIRMATION IN OPPOSITION TO ORDER TO SHOW CAUSE  (Motion# 005) 
Affirmation of Michael J. Bowe in Opposition to The Mangrove Defendants’ Order to Show Cause
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 130 EXHIBIT(S)   – A  (Motion# 005) 
Bloomberg News Feed
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 131 MEMORANDUM OF LAW IN OPPOSITION  (Motion# 004) 
Plaintiff’s Memorandum of Law in Opposition to The GeoInvesting Defendants’ Order to Show Cause
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 132 AFFIDAVIT OR AFFIRMATION IN OPPOSITION TO ORDER TO SHOW CAUSE  (Motion# 004) 
Affirmation of Michael J. Bowe in Opposition to The GeoInvesting Defendants’ Order to Show Cause
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 133 EXHIBIT(S)   – A  (Motion# 004) 
Letter from Tountas to Anderson
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 134 EXHIBIT(S)   – B  (Motion# 004) 
Bloomberg News Feed
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 135 EXHIBIT(S)   – C  (Motion# 004) 
GeoInvesting Mar. 8, 2017 Article
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 136 MEMORANDUM OF LAW IN OPPOSITION  (Motion# 006) 
Plaintiff’s Memorandum of Law in Opposition to The ClaritySpring Defendants’ Motion to Dismiss the C(..)
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 137 AFFIDAVIT OR AFFIRMATION IN OPPOSITION TO ORDER TO SHOW CAUSE  (Motion# 006) 
Affirmation of Michael J. Bowe in Opposition to The Clarity Spring Defendants’ Order to Show Cause
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 138 EXHIBIT(S)   – A  (Motion# 006) 
Letter from Tountas to Anderson
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 139 EXHIBIT(S)   – B  (Motion# 006) 
Hindenburg SA Profile
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 140 EXHIBIT(S)   – C  (Motion# 006) 
Bloomberg News Feed
Processed 01/23/2018
Bowe, M.
Confirmation Notice
 141 AFFIRMATION/AFFIDAVIT OF SERVICE Processed 02/01/2018
Tountas, S.
Confirmation Notice
 142 ORDER TO SHOW CAUSE ( PROPOSED )  (Motion# 008) 
Plaintiff Eros International PLC’s Order to Show Cause to Extend Time
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 143 AFFIDAVIT OR AFFIRMATION IN SUPPORT OF PROPOSED OSC/EXPARTE APP  (Motion# 008) 
Affirmation In Support Of Eros Second Motion To Extend Time To Serve John Doe Defendants Nos. 1-5 & (..)
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 144 EXHIBIT(S)   – A  (Motion# 008) 
Summons with Notice
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 145 EXHIBIT(S)   – B  (Motion# 008) 
Supplemental Summons
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 146 EXHIBIT(S)   – C  (Motion# 008) 
Decision and Order
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 147 EXHIBIT(S)   – D  (Motion# 008) 
Part 1
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 148 EXHIBIT(S)   – D  (Motion# 008) 
Part 2
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 149 EXHIBIT(S)   – E  (Motion# 008) 
StockTwits Subpoena Duces Tecum
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 150 EXHIBIT(S)   – F  (Motion# 008) 
Scribd Subpoena Duces Tecum
Processed 02/01/2018
Bowe, M.
Confirmation Notice

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Status Received Date
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 151 EXHIBIT(S)   – G  (Motion# 008) 
Twitter Subpoena
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 152 EXHIBIT(S)   – H  (Motion# 008) 
LinkedIn Subpoena
Processed 02/01/2018
Bowe, M.
Confirmation Notice
 153 ORDER TO SHOW CAUSE  (Motion# 008) Processed 02/05/2018
Court User
Confirmation Notice
 154 MEMORANDUM OF LAW IN REPLY  (Motion# 006) Processed 02/07/2018
Rocco, P.
Confirmation Notice
 155 MEMORANDUM OF LAW IN REPLY  (Motion# 004) 
Reply In Further Support of Order to Show Cause By Defendants GeoInvesting, LLC, Christopher Irons, (..)
Processed 02/07/2018
Deleeuw, M.
Confirmation Notice
 156 MEMORANDUM OF LAW IN REPLY  (Motion# 005) 
Reply Memorandum of Law in Further Support of Defendants Mangrove Partners’ and Nathaniel H. August'(..)
Processed 02/07/2018
Asaro, M.
Confirmation Notice
 157 STIPULATION – ADJOURNMENT OF MOTION – BEFORE JUDGE  (Motion# 007) Processed 02/14/2018
Cantor, M.
Confirmation Notice
 158 LETTER / CORRESPONDENCE TO JUDGE  (Motion# 005) 
Letter to the Honorable Eileen Bransten from Joseph L. Sorkin dated 2/15/2018
Processed 02/15/2018
Sorkin, J.
Confirmation Notice
 159 LETTER / CORRESPONDENCE TO JUDGE 
Letter to Justice Bransten, dated February 16, 2018, from Michael J. Bowe, in response to Defendant(..)
Processed 02/16/2018
Bowe, M.
Confirmation Notice
 160 DECISION + ORDER ON MOTION  (Motion# 007) Processed 02/26/2018
Court User
Confirmation Notice
 161 DECISION + ORDER ON MOTION  (Motion# 008) Processed 02/26/2018
Court User
Confirmation Notice
 162 LETTER / CORRESPONDENCE TO JUDGE 
Joint Letter to Justice Bransten dated May 4, 2018 requesting Preliminary Conference
Processed 05/04/2018
Bowe, M.
Confirmation Notice

 

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.

Never ever trust online reviews of mattresses or trading services

I just read this excellent story on Casper and the world of online mattress review websites and that made me of course think of stock trading services and what happens if you try to find reviews of them. Unlike with mattresses, where a $50 affiliate commission is quite common on sales, with stock trading services commissions of 25% to 33% are common and they can go much, much higher. Also, with mattresses, even if you end up not particularly happy (as I am not that happy with my Helix Sleep mattress) at least you end up with a functional, new mattress. If you sign up for many trading services you will end up trying to learn to trade from somebody who fakes their own trades or lied about their own trading record. Even if you find a trading service that has a good track record and the person running it knows how to trade successfully, the odds still favor you losing money — because trading successfully is very hard.

Did you read the article on Casper and Sleepopolis at Fast Company yet? If not, do so now. The problem with the mattress review world (and I think this is a general problem for any product where online reviews can make or break them) is that the incentive for mattress companies is to do whatever is necessary to get to the top of rankings, no matter how. They can do that by incentivizing the reviewer with higher affiliate payouts or by giving the reviewer extra payments, such as a consulting agreement or some other payment scheme. The reviewer is incentivized to direct more people to the company giving him or her the highest payouts. The result is that the reviews for mattresses become completely untrustworthy — some review sites might be slightly biased, others might be totally biased, but it is hard to tell the difference. Of course the solution to this is to get a subscription to Consumer Reports which doesn’t have these conflicts of interest (I’m a happy subscriber and have been for a decade). Here are their mattress recommendations.

Unfortunately, Consumer Reports does not rate trading services or Twitter traders. Tim Sykes started Investimonials.com for the purpose of getting traders’ reviews of trading services but really that site never took off and never got much beyond the penny stock niche. And of course user reviews can be gamed, most obviously on Amazon.com. Even without monetary payments, a service provider can urge satisfied users to write reviews and thus increase their rating. Still, there is useful information in user reviews sites like Investimonials (or Yelp) — the user just needs to expect a positive bias and seek out both positive and negative reviews and read them in detail. If there are no negative reviews then that is a red flag — even the best businesses leave some customers unhappy.

And of course, this is just talking about half the problem — service providers offering reviewers inducements for positive reviews. They can also threaten libel lawsuits to eliminate negative reviews. Or they can pay the review website to remove negative reviews. This is quite possibly a worse problem and will cause the most negative reviews to tend to disappear from the internet. It is impossible to know how big of a problem this is.

Of course, one way to get around the problem of fake or gamed user reviews and the threat of lawsuits is to have a convicted felon with a huge judgment hanging over his head that he can never hope to pay write trading website reviews. But such a site (which exists, but I won’t link to it for reasons I explain below) can still suffer from the tendency to give positive reviews to services that then advertise with it. And the specific website I’m thinking of, while doing a pretty good job of identifying many frauds, seems to think that some legitimate (in my eyes) services are complete frauds. For that reason I won’t link to or even name Emmett’s website.

Why don’t I write reviews of various trading services? I learned a bunch from Tim Sykes and a couple other trading services and I obviously wouldn’t be able to be bias free. That is why I have not reviewed trading services that I have tried; the only times I have written about trading services is when I recommended them (at some point), or had some other reason to write about them (such as when a trading service was owned by stock promoters).

What can you, an aspiring trader, do? First, never trust claims of good performance. Anybody can claim that they turned $3,000 into $10 million. Ask to see some sort of real proof. Even more, look at a person’s trades and verify that they were possible and weren’t in illiquid stocks. No matter how positive your initial impression of a trading service, search out negative opinions (luckily, there are plenty of those on Twitter about everyone) and weigh those against the positive opinions you see. There are plenty of invalid criticisms as well as valid criticisms out there.

Unfortunately, there are so many people looking to get rich through trading that you likely will have no luck if you ask for account statements or tax returns to prove a guru’s performance (but I have some). Even after looking at a number of trades, it can be hard to tell if someone is a good trader — particularly over a short period of time a trader can be successful just because of the niche they are in. In a crazy bull market most swing traders will look great. Caveat emptor and do your own research. Most importantly, never blindly follow another trader — no matter what guru you follow, even if he or she is talented, you are likely to lose money just due to slippage.

Unfortunately, the only way to decide with high confidence if a trading service is worthwhile is to subscribe to it for months and assiduously track the trades of the guru to confirm that they are realistic and that they are consistently profitable. I even subscribed to Anthony Davian’s trading service for two months before concluding that he likely knew less than I did. In addition to that, you need to analyze their trading strategy to determine that it makes sense and that you could conceivably implement it yourself.

 

Disclaimer: I have a long and deep business relationship with Tim Sykes; see my full disclosure. I own a Helix Sleep mattress and subscribe to Consumer Reports. I have left a number of reviews on Investimonials but haven’t written any in years. No position in any stock mentioned and I have no relationship with anyone else mentioned in this post. 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.

 

Leafbuyer Technologies (LBUY) Stock promotion continues

In a world where stock promotions rarely last more than a few weeks before fizzling out, whether because the stock is hit with a Caveat Emptor designation at OTCMarkets.com or because of an SEC trading suspension, one stock promotion just keeps going since starting in earnest in late July. That promotion is of the marijuana-related company Leafbuyer Technologies (LBUY). Despite a market cap of $70 million, as of the company’s most recent form 10-KT it has reported assets of only $197,000 and a book value of only $97,000.

Leafbuyer Technologies has been promoted by a landing page found at http://wallst-news.com/priceline-pot-game-changer-marijuana-industry-smart-investors-seeing-green/

Disclosed budget: $813,000
Promoter:  WallSt-News.com
Paying party: Bonita Equity Inc
Shares outstanding: 38,380,663
Previous closing price: $1.84
Market capitalization: $70 million

 

Disclaimer:

Disclaimer: This release/advertorial (“Advertorial”) is a paid commercial advertisement and is for general information purposes only. WallSt-News.com makes no recommendation that the securities of the companies profiled or discussed on this website should be purchased, sold or held by viewers that learn of the profiled companies through our website. This Advertorial was paid for by Bonita Equity Inc, a non-issuer third party (“Third Party”) in an effort to enhance public awareness of Leafbuyer Technologies, Inc and its securities. Though WallStreet-News.com has not been compensated for this creation of this article, as the owner of this publication, it has received compensation up to $813,000 USD as today’s date in connection with the effort of raising awareness of LeafBuyer Technologies, Inc. Neither WallSt-News.com nor its controlling person or owner currently holds the securities of Leafbuyer Technologies, Inc. and does not currently intend to purchase such securities. Third Party is not responsible for the endorsement or contents of the statements contained in this Advertorial, which are the sole responsibilities of WallSt-News.com. Third Party did not draft, edit, approve, or exert any ultimate authority over the endorsement or contents of the statements contained in this Advertorial. Third Party is not responsible for and performed no due diligence in connection with Leafbuyer Technologies, Inc. or its securities and makes no warranties as to the accuracy of the information contained in this Advertorial. This Advertorial is based exclusively on information generally available to the public and does not contain any material, non-public information. WallSt-News.com does not warrant the accuracy of such information. Certain statements contained in this Advertorial may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Exchange Act of 1934. Statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions, or future events or performance are not statements of historical fact. Forward looking statements may be identified through the use of such words as “projects,” “foresees,” “expects,” “will,” “anticipates,” “estimates,” “believes,” and “understands,” or by statements indicating certain actions “may,” “could,” or “might” occur. Forward-looking statements are based on expectations, estimates, and projections at the time the statements are made and involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. There is no guarantee that past performance will be indicative of future results. Differences in results can be caused by various factors including, but not limited to, the featured company’s ability to successfully complete planned funding agreements, successfully market its products in competitive industries, or effectively implement its business plan or strategies. Readers can review all public SEC filings made by the featured company at https://www.sec.gov/edgar/searchedgar/companysearch.html.LBUY 2017-10-16

WallSt-News.com is not a certified financial analyst or licensed in the securities industry in any manner. Please review all investment decisions with a licensed investment advisor.

PDF copy of promotion page

LBUY has also been promoted via emails such as by Marijuanastocks.com (which disclosed compensation of $20,000 in this September 26th email:

Disclaimer. I am short LBUY and I may add to or close this position at any time. No position in any other stock mentioned and I have no relationship with anyone mentioned in this post. 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.

 

 

Jason Napodano of Zacks Small Cap Research sued by SEC (and settles with them) and charged with criminal stock fraud for insider trading

Yesterday the SEC sued Jason Napodano of Zacks Small Cap Research as well as two other men, Bilal Basrai and Bryce Stirton. All three settled the civil suit without admitting or denying the allegations. See the SEC press release. In addition, the employer of all three men, LBMZ Securities (owner of Zacks), agreed to “pay a $240,000 penalty without admitting or denying the SEC’s findings that the firm failed to enforce policies and procedures designed to prevent its employees from misusing nonpublic information.”

The Securities and Exchange Commission today charged a stock market analyst with insider trading prior to the publication of research reports and articles he authored with the false disclaimer that he wasn’t trading in the companies being covered.  He agreed to settle the charges and be barred from trading in penny stocks for the rest of his life.

The SEC alleges that Jason Napodano, who headed a division called Zacks Small Cap Research within a larger investment research firm, misled investors in penny stocks by representing that he wasn’t trading or holding positions in the companies he was writing about while secretly trading the same stocks based on nonpublic information about the publication date of his research.  In an effort to evade detection, Napodano allegedly limited his profits from each illegal trade by taking small positions and closing the positions shortly after his reports and articles were published.

In addition to a permanent penny stock bar, Napodano agreed to pay full disgorgement of his insider trading profits totaling $143,865.48 plus interest of $17,620.87 and a penalty of $143,865.48.  The settlement is subject to court approval.

Basrai agreed to settle the charges by paying disgorgement of his insider trading profits of $39,668.37 plus interest of $4,617.89 and a penalty of $39,668.37.  Stirton agreed to settle the charges without admitting or denying the allegations by paying disgorgement of his insider trading profits totaling $2,218.87 plus interest of $257.43 and a penalty of $2,218.87.  Basrai and Stirton also agreed to be barred from trading penny stocks and from working in the securities industry, with Stirton having the right to reapply after five years.

The parallel criminal charges (one count each of stock fraud) were filed in the Northern District of Illinois (press release) against Napodano and Basrai. Stirton was not criminally charged. From the press release about the criminal charge:

JASON NAPODANO, a former Managing Director of a Chicago investment research firm, used material, non-public information he obtained while preparing equity research reports about companies to purchase and sell stock in those companies, according to a criminal information filed in federal court in Chicago. The illegal trading profits netted Napodano approximately $143,000, the information states.

In a related case, BILAL BASRAI, a former Managing Director of a Chicago investment banking firm, used material, non-public information to earn approximately $37,157 in illegal profits from the purchase and sale of stock in three companies.  Through his legal counsel, Basrai authorized the U.S. Attorney’s Office to disclose that Basrai has cooperated with the government’s investigation and intends to plead guilty to the charge contained in the information.

This case seems to signal increasing aggressiveness on the part of the SEC — while I do know that the SEC is more aggressive against insider trading than many other violations of securities laws, I cannot recall any other time that the settlement (for anything) has included a complete ban from trading penny stocks as opposed to just a bar from participating in penny stock offerings (“barred from trading in penny stocks for the rest of his life.”).

According to the Charlotte Observer, Jason Napodano is currently running a biotech newsletter called Bio5C:

According to LinkedIn, Napodano worked at Zacks from 2003 to 2015. He then came to Charlotte, where he started a company called BioNap Consulting, then Bio5C. His biography says he “has significant experience as a pharmaceutical and biotechnology stock analyst,” as well as degrees from Virginia Tech and Wake Forest.

The “code of conduct” page on the Bio5C web site includes this statement without attribution: “I have made terrible mistakes in the past when it comes to disclosure and personal trading. For these mistakes, I am truly ashamed and sorry. My mistakes, although now just public, were between 2013 and 2015. I learned a tough lesson. I’m committed to impeccable disclosure and ethics on Bio5C.”

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. 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.

Environmental Packaging Technologies Holdings $EPTI to resume trading on July 13th after SEC trading suspension

Not long (13 days) after I blogged about the hard mailer promoting Environmental Packaging Technologies Holdings (EPTI) and uploaded a scan of the mailer, during premarket trading on June 28th the SEC suspended trading in the stock. It will resume trading on the grey market (no market makers) at the market open on July 13th, likely gapping down 90% or so.

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

The reason given for the trading suspension:

concerns regarding: (i) the accuracy and adequacy of publicly available information in the marketplace
since at least June 9, 2017 regarding statements in third party stock promotion materials pertaining to Environmental Packaging’s 2016 revenues, projected 2017 revenues, and the company’s buyout potential; and (ii) recent trading activity in the security that potentially reflects manipulative or deceptive activities.

While I would love to take credit for the SEC suspension of EPTI, that “The Commission acknowledges FINRA’s assistance in this matter” means that some broker(s) likely submitted SARs (suspicious activity reports) about potentially manipulative trading and that was the prime reason for the suspension.

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. 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.

Environmental Packaging Technologies Holdings $EPTI promoted by 16-page mailer

The newest landing page pump out there is Environmental Packaging Technologies Holdings (EPTI). It has only been pumped for a week and volume is not great and it already crashed today but is bouncing back. A short seller such as I can only hope that the pump recovers and gets more volume so that it will be worth selling short (I currently have no position). The landing page is at: http://profitplaystocks.com/epti/index.html. Today I received a 16-page glossy mailer that I have scanned (pdf).

As of the company’s most recent 10-Q, filed on June 8, 2017, the company reported total assets of $475 and no revenues for the most recent quarter.

Disclosed budget: $1,000,000
Promoter:  Profit Play Stocks
Paying party: SVARNA LTD
Shares outstanding: 12,000,023
Previous closing price: $1.27
Market capitalization: $30 million

Disclaimer (emphasis added by me):

IMPORTANT NOTICE AND DISCLAIMER: DO NOT BASE ANY INVESTMENT DECISIONS UPON ANY MATERIAL FOUND IN THIS REPORT. This publication is distributed free of charge and does not purport to provide an analysis of a company’s financial position. The information contained herein has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company, including Environmental Packaging Technologies Holdings (EPTI). Environmental Packaging Technologies Holdings’ (EPTI) financial position and all other information regarding (EPTI) should be verified with the company. An individual should not invest in the securities of (EPTI) based solely on information contained in this advertisement. Information about many publicly traded companies, including (EPTI) and other investor resources can be found at the Securities and Exchange Commission’s website: www.sec.gov. Investing in securities is highly speculative and carries significant risk. It is recommended that any investment in any security should be made only after consulting with your investment advisor and only after reviewing all publicly available information, including the statements of the company. This mailing piece is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy securities, nor should it be construed as the provision of any investment related advice or services tailored to any particular individual’s financial situation or investment objective(s). Profit Play Stocks is a publisher of general and regular circulations offering impersonalized investment-related research to readers and/or prospective readers and is not an investment advisor or broker/dealer registered with either the U.S Securities and Exchange Commission (SEC) or with any state securities regulatory authorities. Profit Play Stocks is neither licensed nor qualified to provide financial advice. As such, it relies upon the “publisher’s exclusion” as provided under Section 202(a)(11) of the Investment Advisors Act of 1940 and corresponding state securities laws. Investing in companies like (EPTI) carries a high degree of risk. Do not invest in this company unless you can afford to possibly lose your entire investment. The “Company” featured herein appears as paid advertising, paid by a third party to provide public awareness for (EPTI). The publisher, Profit Play Stocks, understands that in an effort to enhance public awareness of (EPTI) and its securities through the distribution of this mail and online advertisement, SVARNA, LTD. paid all of the costs associated with creating, printing, postage, and distribution of this advertisement. The publisher was paid the sum of ten thousand dollars for its contributions. The marketing vendors will be managing a total budget of one million dollars, provided by SVARNA, LTD. for all mail and online advertising and marketing efforts and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services. If successful, the advertisement will increase investor and market awareness, which may result in increased numbers of shareholders owning and trading the common stock of (EPTI), increased trading volumes, and possibly increased share price of the common stock of (EPTI). The publisher has not undertaken to determine if SVARNA, LTD. Is, or intends to be, directly or indirectly, a shareholder of (EPTI). 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. The information contained herein contain forwardlooking information within the meaning of section 27a of the Securities Act and section 21e of the Securities Exchange Act including statements regarding expected growth of The Company. In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act, 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, but are not limited to, the size and growth of the market for the company’s products and services, the company’s ability to fund its capital requirements in the near term and long term, pricing pressures and other risks detailed in the company’s filed reports with SEC. To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided herein, or for any direct, indirect, consequential, incidental special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to; lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information.

*Projection: Profit projection based on Environmental Packaging Technologies (EPTI) potential to match their competitor’s (Kirby Corporation: KEX) price surge.

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.

Broker and OTC market maker Wilson-Davis Co. fined by SEC for Reg SHO violations

In an administrative proceeding released on April 26, 2017, the SEC issued a cease and desist order (PDF) to brokerage and OTC market maker Wilson Davis (Market maker ID: WDCO) for violations of Regulation SHO and ordered the company to pay $235,714.50 in disgorgement of profits and interest thereon and a $75,000 civil penalty. But the headline of a violation of short selling regulations obscures the fact that the trading in question was related to some of the biggest pump and dumps ever perpetrated, all promoted by AwesomePennyStocks.com or related websites.

There are a few details in the order that are key. First, Wilson-Davis had two separate trading groups. From the SEC’s order linked above:

WDCO was comprised of two trading groups: a retail trading group and a proprietary trading group. The activity that is the subject of this Order pertains to WDCO’s proprietary trading group. Traders in the proprietary trading group had agreements with WDCO under which the traders were allowed to use WDCO funds for proprietary trades of securities and would split their profits with WDCO in accordance with their agreements.

Not mentioned in the order is that one of the traders was Anthony Kerrigone, who has already been sanctioned by the SEC in December 2016 (PDF). From that administrative order:

Kerrigone, a proprietary trader at WDCO, is a WDCO representative who caused WDCO’s Regulation SHO violations by executing certain short sales of securities on behalf of WDCO without WDCO being engaged in bona-fide market making activity and without WDCO obtaining a locate prior to effecting the short sales. Kerrigone improperly relied on the bona-fide market making exception for certain short sale trades without having a reasonably sufficient understanding of the rule, without sufficiently discussing with anyone at WDCO whether such trading qualified WDCO for the bona-fide market making exception, and by conducting such trading in a manner that closely resembled examples explicitly identified by the Commission— years before the conduct at issue—as activity that generally is not bona-fide market making.

Anthony Kerrigone was ordered to pay disgorgement of profits (and interest thereon) of $550,000.50 and a civil penalty of $50,000. Prior to the SEC order, Kerrigone (CRD#: 2612581) was also cited by FINRA back in November 2015. From FINRA BrokerCheck (FINRA does not allow direct linking so you have to search for Kerrigone by his name):

Initiated By FINRA
Allegations
Without admitting or denying the findings, Kerrigone consented to the sanctions and to the entry of findings that he caused his member firm to violate Rule 203(b)(1) of SEC Regulation SHO when on occasions, Kerrigone placed orders to sell short low-priced stocks through the firm’s proprietary trading account and failed to locate the securities, claiming the market marker exemption to the locate requirements. The findings stated that the market maker exemption was not available to the firm because Kerrigone was not engaging in bona-fide market marking activities in these securities. The firm generated over $158,239 in profits from these short transactions.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount: $10,000.00
Sanctions
Suspension
Duration: six months
Start Date: 12/7/2015
End Date: 6/6/2016

Surprisingly, Kerrigone was able to get another job in the industry after that suspension and according to BrokerCheck he still holds it, working for BMA Securities, another OTC market maker (Market maker ID: BMAS).

The Pumps & Dumps

Listed in the SEC order are five examples of stocks where a trader or traders at Wilson Davis improperly sold short stocks using the market maker exemption while not acting as a bona fide market maker: Amwest Imaging (AMWI), North Springs Resources Corp (NSRS), Sunpeaks Ventures (SNPK), Great Wall Builders (GWBU), and Pristine Solutions (PRTN). AMWI was promoted in December 2011 by Crazypennystocks.com and related websites (a predecessor promoter to Awesomepennystocks). NSRS was promoted in January and February of 2012 by Crazypennystocks.com. See synopses of these and other big promotions of 2011/2012. SNPK was promoted in April 2012 by Awesomepennystocks-related websites. GWBU was promoted by Awesomepennystocks in June 2012. See also this article on GWBU manipulation. PRTN was promoted by Awesomepennystocks in September/October 2012. Infitialis wrote an excellent article on SeekingAlpha at the time alleging manipulation of PRTN.

That Infitialis article in particular does a great job of explaining some of how a trader at WDCO allegedly traded Awesomempennystocks pumps while at Wilson-Davis. From that article:

We also know that one specific broker dealer Wilson Davis & Company is continually engaged in showing abnormally large bid sizes on every single APS scam since 2010.

The most obvious question to ask is why? Why would WDCO go out of its way to display such larger orders if their true intention was to buy the shares. The obvious answer is that WDCO is not trying to buy shares they are trying to manipulate the stock while other market makers such as ATDF liquidate shares. These transactions occur simultaneously often serendipitously:

  1. APS Stock begins to decline
  2. WDCO shows up with an abnormally sized bid, stock stabilizes
  3. ATDF shows up on the offer and sells into the buying generated by WDCO.

This behavior is described in the SEC order as WDCO updating its bids for stocks but having a very high offer and then short-selling through other market makers (“While posting an offer quotation that was not at or near the best offer, WDCO executed short sales at prices that were substantially away from its posted quotation.”). Of course, that SEC order makes no mention of big bids, yet that is something that has been documented many times (most traders who traded Awesomepennystocks pumps will recall this and this is documented on numerous blogs and tweets). For example, here is a post about manipulation on GWBU that shows multiple screenshots of Wilson-Davis (WDCO) displaying huge bids. Here are screenshots of big bids by WDCO on NSRS. I have copied just two of those screenshots below in case the original website is taken down.

Note: None of this is to suggest that the firm approved of or ordered any trader to act in an unethical or illegal manner — all I know is that I have seen someone at WDCO posting large bids on many of these stocks.

Just for fun, here is WDCO showing absurdly large offers on a non-Awesomepennystocks pump (I make no commentary during the video so just mute it if you do not want to hear the music I was listening to at the time):

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. I traded (both long and short) most if not all of the stocks mentioned in this post at the time they were promoted. 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.

An Introduction to shelf registrations

Probably the most common kind of way of issuing and registering new stocks is a shelf registration. This is filed on SEC Form S-3 (F-3 if the issuer is a foreign company). These can be used with multiple types of offerings, including most commonly PIPEs, Private Investments in Public Equities, where the shares have been sold to an investor and the shares are now being registered so that investor can sell those shares; ATMs or At the Market Offerings (PDF), where a company sells shares into the open market from time to time; and registration of shares underlying warrants or convertible bonds.

Shelf Takedowns by Greenberg Traurig (PDF)
FAQs about Shelf Offerings by Morrison Foerster (PDF)

Besides the actual shelf registration statement, the company has to file a prospectus supplement within two days of whichever comes first, the offering being priced or the shelf registration being used. Also, just because a shelf registration is filed does not mean it can be used immediately — the registration needs to be declared effective after the SEC reviews the registration. This typically takes two to three weeks from when the registration statement is filed. When a shelf registration (or another registration statement) has become effective a form EFFECT will be posted. For example, here is a shelf registration, prospectus, and EFFECT for Diana Containerships (DCIX):

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. 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.

Who is behind Kalani Investments Limited?

[Edit 13 April 2017: a shipping industry magazine article has unmasked the Canadian investors behind Kalani]

 

Who is behind Kalani Investments Limited? The short answer is I don’t know. I thought it worthwhile to at least try looking the British Virgin Islands (BVI) company behind toxic financings of Dryships (DRYS), TopShips (TOPS), and Diana Containerships (DCIX). For $30 I found out only two things: the company was registered by TMF BVI Limted of Palm Grove House, PO Box 438, Road Town, Tortola, BVI (a registered agent / legal firm that specializes in this kind of thing) and it was registered on March 24, 2016. As expected, the filings didn’t reveal any of the people who actually own the company and run it. I have uploaded the documents I received from the BVI corporation register. Kalani’s company number is 1909877.

Registration details (PDF)
Certificate of Incorporation (PDF)
Articles of Association (PDF)
Pre-Incorporation transactions (PDF)

Per the most recent TopShips 6-K (page 27) John Gordon from Hassans is the representative of Kalani (and again, this is just a law firm to hide who owns and controls Kalani):

Kalani Investments Limited
Palm Grove House
P.O. Box 438
Road Town, Tortola
British Virgin Islands
Facsimile: +350 20077343
E-mail: [email protected]
Attention: John Gordon

and apparently Kalani’s law firm is Greenberg Traurig:

Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, New York 10166
Facsimile: (212) 801-6400
Email address: [email protected]
Attention: Anthony J. Marsico, Esq.
In a form 6-K from Diana Containerships John Gordon is also the signatory for Kalani and is described as a director of Kalani.

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. 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.

Catalysts in the trading of bankrupt companies and why Republic Airways $RJETQ is going to zero

The rule of thumb in bankruptcy is that 90% of the time shareholders get completely wiped out. Maybe 8% of the time shareholders get a tiny bit of equity in the new (post-bankruptcy) company or out of the money warrants to buy that equity. Only 2% of the time or less do shareholders get a large recovery. Of course, that 2% of the time is what gives hope to shareholders in the 98% of bankruptcies. General Growth Properties (GGP) is a good example from the 2008 financial crisis and American Airlines (AAMRQ at the time) is a more recent example from 2014. A current company in bankruptcy where it is possible that shareholders may get a meaningful return is Peabody Energy (BTUUQ); the current price values the equity at $250 million although the company still says that shareholders will be wiped out. Peabody has yet to file a bankruptcy plan; it has been granted an extension by the court until December 14th. [The above paragraph has been edited to specify that a meaningful return for equity holders is possible; a prior version said it was probable.]

There are a few key events in a bankruptcy proceeding that should drastically affect the stock. First, the bankruptcy filing, which almost always crushes the stock although in cases where that was expected the drop may be 30% rather than 80%. The next event is the formation of an equity committee (or rejection by the judge of an equity committee): this indicates a meaningful probability of shareholders receiving something and not getting completely wiped out. Next comes the filing of the bankruptcy plan, which lays out how much different classes of creditors and equity holders will get. For various reasons the bankruptcy plan is often changed or amended multiple times. Next comes the vote on the bankruptcy plan and approval by the judge: if the plan is approved then the bankruptcy will become ‘effective’ shortly thereafter. The effective date is usually not known more than a few days in advance and it should come a couple weeks after the plan is approved. On the effective date the bankruptcy is closed, old shares are wiped out, and new equity is distributed to creditors.

It is important to note that there are other (less common) ways that a bankruptcy can end: the old equity can remain after essentially all the assets have been sold with the proceeds going to the creditors (this is what happened recently with Saratoga Resources (SARA), and in this case the equity essentially owns a shell company).

Shareholders of a bankrupt company can keep the stock price at an unrealistic level even when they are likely to get wiped out. However, the events mentioned above tend to be catalysts for sending the stock price towards its fair value.

Here is a chart of Cosi (COSIQ); the big down day is when the company declared bankruptcy.

cosiq

Next is the chart of C&J Energy (CJESQ) — November 4th in premarket the bankruptcy plan was revised to give shareholders 2/3 fewer warrants in the new equity.

The evening of November 4th the judge denied the request for formation of an official equity committee.

cjesq

 

Here is the chart of Republic Airways (RJETQ): the bankruptcy plan was filed after-hours on 11/16/2016. The plan calls for shareholders to be completely wiped out and get nothing.

rjetq

Next is the chart of Hercules Offshore (HEROQ) with the big drop on November 1st coming after the judge approved the bankruptcy plan:

The final even in bankruptcy is the effective date. As I stated above this is not known far in advance — it depends on if there are any objects or delays after the plan is confirmed. Below is the chart of Arch Coal (ACIIQ; the post-bankruptcy stock trades as ARCH). On September 30th the company filed an 8-K stating that the effectiveness date was anticipated as being October 5th. The stock promptly dropped bigly.

aciiq

Republic Airways (RJETQ) and understanding a bankruptcy plan

An official equity committee was never approved by the judge because unsecured creditors were set to lose over 50% so the likelihood of equity holders getting any recovery was very low. The evening of November 16th a bankruptcy plan was finally filed. You can see the bankruptcy court docket for free. To find free bankruptcy court dockets, just Google “[company name] bankruptcy docket”. The various corporate bankruptcy trustees all make these available. In the case of Republic Airways, docket 1089 is the bankruptcy plan and docket 1090 is the plan disclosure statement.

The most important part of the bankruptcy plan is the listing of claimant classes and what they will receive at the confirmation of the plan. Here is that list for Republic:

creditor_list

Interests in RAH include the stock of Republic; but don’t take my word for that: the first part of the plan has definitions of all the relevant terms.

From page 9:

“Interest” means any equity security within the meaning of section 101(16) of the Bankruptcy Code including, without limitation, all issued, unissued, authorized or outstanding shares of stock or other equity interests (including common and preferred), together with any warrants, options, convertible securities, liquidating preferred securities or contractual rights to 16-10429-shl Doc 1189 Filed 11/16/16 Entered 11/16/16 18:56:36 Main Document Pg 14 of 68 10 purchase or acquire any such equity interests at any time and all rights arising with respect thereto.

From page 13:

“RAH” means Republic Airways Holdings Inc., a Debtor in these Chapter 11 Cases.

Page 25 has the details of how interests in RAH will be treated (emphasis mine):

i. Interests in RAH (Class 5) i. Impairment and Voting. Class 5 is impaired under the Plan. Holders of Interests in RAH are deemed to reject the Plan under section 1126(g) of the Bankruptcy Code and are not entitled to vote on the Plan.

ii. Treatment. Upon the Effective Date, all existing Interests in RAH shall be deemed cancelled and extinguished and the holders of such Interests shall not receive or retain any property on account of such Interests under the Plan.

If that isn’t clear enough, look at page 92 of the disclosure statement (emphasis mine):

2. Consequences to Holders of Existing Interests in RAH Holders of interests in RAH, which are being cancelled under the Plan, will be entitled to claim a worthless stock deduction (assuming that the taxable year that includes the Effective Date of the Plan is the same taxable year in which such stock first became worthless and only if such holder had not previously claimed a worthless stock deduction with respect to any Interest  in RAH) in an amount equal to the holder’s adjusted basis in the Interest. If the holder held its Interest in RAH as a capital asset, the loss will be treated as a capital loss.

Republic stock gapped down after that bankruptcy plan was filed but thankfully bounced enough for me to short over $0.50. Considering that the company stated in a press release then that it expects to emerge from bankruptcy in the first quarter of 2017 and that the borrow rate on RJETQ at Interactive Brokers is under 4% APR (effectively 12% because that is calculated on short collateral), I continue to believe that RJETQ is a good short. I expect the stock to slowly fade over the coming two months and drop under $0.10 once the plan is confirmed.

Disclaimer. I am short RJETQ and may add to or cover my short at any time. I have traded all the other stocks mentioned but currently have no positions in them. 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.