This was just a simple stock exchange agreement between two private investors... Apparently, this russian kid breeched a stock restriction clause in this stock exhcange agreement between these two investors
This story makes absolutely no sense. First of all, I'm not sure I understand what a "stock exchange agreement" is. I can see trading restricted stock for common, but what kind of stock could Makhmoudov have traded to get back restricted?!
Let's just assume he somehow got restricted stock. To "breach" a stock restriction clause you have to get the legends on the certs removed. This requires an opinion letter from a securities attorney. Then the transfer agent has to be told the stock is now free trading so they will be sure to honor it. Lastly, it's usually standard operating procedure for the transfer agent to double check with the company to make sure everything is OK with them. So, IMO, this most likely didn't happen.
About the only scenario I can imagine is that Makhmoudov got restricted stock and immediately shorted against it to "lock in" his profit. As you have found 1.3M in "stops and cancels", it is conceivable he shorted against all of that and that's what killed the stock price. Whether this was all his stock or stock he was essentially loaned, it doesn't matter. As a matter of fact, there's no reason to believe what he did or may have done was in any way illegal. And, lastly, as I don't see any assets of any value for ORXX, who is to say the price was not shorted back to fair market value?
I think ORXX needs to be more specific about what they are accusing Makhmoudov of doing that is illegal, as opposed to simply unethical.
- Jeff |
