Larry: Keep in mind that the SEC never, never, never confirms or denies the existence of an investigation in its early stages. This gives crooked managements the ability to lie about what the SEC is doing, knowing full well that the SEC won't contradict those statements.
Several years ago I was involved in a situation in which exactly that happened. I had alerted the SEC to an A.S.E. listed stock that was clearly cooking its books. I spent many hours going over the numbers and my research with investigators from the SEC and the exchange. The SEC started an official investigation of the company, and came back to me with more questions. Never once did the SEC ask me a single question about my own position, because the object of its investigation was the company and its crooked accounting - it didn't care whether I was long, short or neither.
Nevertheless, when rumors spread that the company was being investigated, management put out a press release, and even had the audacity to include in a 10-Q filing, that it had talked with the SEC, and it was delighted to cooperate with the SEC's investigation of the manipulative practices of certain short sellers. This was a total lie, yet the company knew that the SEC's practice of not commenting would allow the lie to stand uncorrected for quite some time.
The stock in question had been heavily touted on the Prodigy "Money Talk" board, and all the bulls bought the company's line that it was really some evil short sellers that were being investigated, that the company had been unfairly attacked, etc.; i.e., the same nonsense one reads on this thread. This kept the suckers in the stock, allowing management to unload millions of dollars worth of stock before the truth finally came out and the scam collapsed.
I am not making any predictions about how this one will turn out, but the resemblances are uncanny. |
