And I'm supposed to IGNORE the facts in this article? Pleeaaase!!!!!!!! The part in BOLD smacks of extortion - plain and simple! And you think this is not evidence???
FOLLOW-UP: Research Frontiers Goes Commercial
Exactly one year ago in our May/June 2001 cover story “Moment of Truth,” EQUITIES Magazine stuck its neck way out by selecting for our cover dedicated entrepreneur Robert Saxe and his pioneering SPD light valve start-up concept. Under vicious attack by an abusive shark pack of hedge funds, Saxe had become suddenly controversial, but not to us. Saxe was no stranger He attended Harvard College one year behind and Harvard Business School one year ahead of EQUITIES Editor Robert Flaherty. In December 1987 when his shares sold for a “smidgen,” Saxe presented his Research Frontiers (Nasdaq:REFR-12.20) at an EQUITIES conference. New investors liked what they heard and his stock instantly tripled. Then conference attendee newsletter Editor Robert Acker adopted REFR and 14 years later in his most recent The Acker Report he werites REFR is still “our strongest emerging technology, special situation buy recommendation.”
Our defense enraged another Harvard man, fiery Cuban MBA Manuel Asensio, known fearfully in Nasdaq trading rooms as “The Assman.” Here are the words on our cover, which upset him: “Harvardian Bob Saxe has spent 36 years on a dream of turning day into night. Now his Research Frontiers is close to reality.”
Today REFR is making the crucial transformation from a concept company into a real one. Product is being manufactured at a subsidiary of Korea’s largest glass company and marketing is going on. In the U.S. REFR licensee ThermoView is seeking orders for SPD Smart Windows, which can regulate the amount of light entering your home and does away with the need for Venetian blinds. REFR’s challenge will be expanding marketing and learning if the long struggle has produced a limited success, a global blockbuster4 or something in between.
In spite of the possibility of initial profits in 2003, REFR stock recently sold 68% under its all-time pre-Asensio high of $40 in February 2000. A battered Chairman Saxe cheers that a deluge of shorting aimed to know REFR out of the Russell 2000 by the cutoff date of May 31 failed. Index funds and their imitators did not automatically have to dump REFR stock. Chairman Saxe adds, “There has definitely been unreported naked (not borrowing existing shares as required) shorting coming out of Canada.”
The short position now equals 1.8 million shares, which currently would take a frightening 42 days of daily trading to cover. Of 12 million total shares outstanding only 10 million are in the public float. Most is held by long-term retail investors who still believe in the company and will not sell at recent depressed prices. Institutional ownership, for years only about 3%, has short up to 11%. REFR continues to buy in shares itself. “If Asensio is going to five us a gift, we will take it,” snaps Saxe.
REFR President Joseph Harary claims that Asensio first appeared in March 2001 representing an anonymous hedge fund with a big short position. His client wanted to buy some cheap shares directly from REFR to cover its borrowing. If that happened, Asensio indicated that he would go away. Otherwise, he would stick around and be as hard to fet rid of as the flu.
After REFR refused, Asensio broadcast over the Internet and put on his website 14 consecutive negative press releases. He dismissed their Suspended Particle Device technology with now 365 issued or pending patents as a hype. He charges REFR was a terminal short—a stock promotion where the lack of a viable commercial product would ultimately produce a worthless bankruptcy. He vilified its now 15 licensees, who range from world class General Electric to up-and-comer ThermoView. On July 12, 2001 he unfairly and falsely claimed it evolved from a shell whose prior controlling shareholder David Yeanam was “convictred of securities fraud, wire fraud and conspiracy.” On July 16 ThermoView replied that because of an old uncorrected SEC clerical error Asensio had mistaken its own clean shell with a similar name, which had owners like General Electric and nothing to do with Yeaman, for the dirty shell. To this date Asensio still has not admitted he was wrong. He also tried to smear anyone close to REFR like its financial backers, its customer and its regulators.
Recently, Asensio reiterated his sell recommendations. He stuck by his original charges. His new thrust so far has primarly stuck on his website. “I shut him down,” claims Harary. It is no accident that Business Wire, PR Newswire and now PrimeZone will no longer carry Asensio’s attacks. REFR sent each a strong letter that past Asensio press releases carried by them contained untruths. Now they know that they would be held responsible in the future. The fact Asensio was fined, sanctioned and censored by the NASD for his improper Internet postings and also misstating his investment performance came in handy.
REFR’s Saxe claims Asensio faces serious problems. Asensio attacked Polymedica (Nasdaq:PLMD-25.28), featuring an SEC investigation which short sellers may possibly have triggered. Bad news bears do that. On the day the SEC suddenly called it off, the stock exploded upwards.
An American has the right to short over-priced stocks. This is a value judgment any citizen should be able to make. But Asensio dramatically increases his vulnerability. He proclaims that he person only shorts frauds. Naturally, CEOs who do not believe they are running a fraud sue him for libel and anything else they can. So Asensio always has costly legal bills.
In Philadelphia, his court battle with Hemispherix Biopharma (Amex:HEB-247) has become the proverbial can of worms. After a jury found for Asensio because the company did not prove damages, a motion to retry was filed partly because of Asensio’s unruly behavior. Meanwhile the same law firm representing Hemispherix is in another state suing Asensio for another victim Chromatics Color Sciences, which had its financings fall through and went under after Asensio labeled it a fraud. EQUITIES personally believes that the lovely lady CEO was only trying to help sick babies be born healthier.
The Hemispherix lawsuit is taking on a life of its own. REFR discovered that many of the hedge funds that attacked Hemispheriix are also the same hedge funds that have been striking REFR. In fact REFR learned that one if its longs being briefed as a loyal management supporter was really a short-selling Judas in disguise.
A report filed in the case by a forensic accountant, Robert Lowry, who once worked for the SEC, is disturbing. Examining past trading, it uncovered that many of the hedge funds with huge short positions also had long positions.
“Why do they do that?” asks Harary. “When a target company comes out with an important press release or positive earnings, right after the release of good news the hedge funds dump the shares into the market from their long account to make the stock weak. This keeps a lid on the price of the stock. They did that around our annual meeting to make it appear that it was not a success.”
Charging Asensio had a long position in REFR while advising others to short, REFR has already passed this conflict along to regulators.
If true, the Lowry report has sweeping importance far beyond Asensio. Since the Roaring 20s CEOs under attack from shorts like Joe Kennedy, later the first SEC chairman, have wondered where the mysterious deluge of selling comes frm which drops their stock whenever good news is released.
While regulators sleep, are many short selling hedge funds using their long positions to cap the market price and panic ordinary investors?
It is amazing how unregulated short-selling hedge funds are. Why do short-selling hedge funds in addition to their huge short positions need to have big long accounts? Do these long positions also enable them to participate or help initiate the flurry of lawsuits, which inundate so many companies under short attack? Many seem to serve the interest of the shorts not the average shareholder.
While reviewers liked his book, Sold Short, EQUITIES gave it thumbs down, no stars. Asensio called on everyone else to come clean but didn’t himself, not mentioning his stints with bucket shops which have financially raped the public. Other reviewers didn’t check. While we are at it, why can’t all short sellers come clean too? Why just pick on Manuel? Why should any short seller be preceded by the word “secret?”
In this time of national crisis and need for greater disclosure and trading transparency why do abusive short sellers have invisibility? Now CEOs think big shorts are actually long term supporters because the law requires the hedge funds to report their long positions, but not their short positions which may be 10 times as much. Does this make sense? Why let naked shorting go on? Who is selling offshore at crucial moments?? After all gays have come out of the closet. Why can’t the shorts?
What are you guys doing in there? Let the sunshine in.…….
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