Rick, thanks for the kudos,
I can understand why you are pissed off. We should have known about the stock sales going into the Smith Barney Conference. I don't know if what Dr. Babish did was illegal or not, but the little investor certainly got screwed. After all, the conference was held on
February 13th and we first heard of the stock sales on February 20th:
techstocks.com
However, according to this post, Babish first filed his intent to sell with the SEC on February 4th. Ron Folk is a professional securities broker. He said in his affadavit that he was alerted by an SEC filing on Feb. 11th that Babish had sold some stock.
techstocks.com
I believe that by and large, the people invited to the Smith Barney conference were big dealers who probably had access, or should have had access, to this data. Perhaps Babish did not feel the need to tell them more because they had been put on notice through his SEC filings. I am not a lawyer, so I don't know if what Babish did at the conference was illegal pumping and dumping in light of his having filed an SEC form. Certainly, those at the conference had no idea of how extensive his dumping of stock would be. Whether or not he had a legal obligation to tell those at the conference what was going on, I think he had a moral obligation to let them know that something was amiss. It's just not right to talk up your stock while dumping it.
It certainly seems to me that he should have mentioned that he was selling stock because of difficulties negotiating a contract. It's just not fair to give people the impression that nothing is wrong while dumping your stock, even if the purpose behind dumping your stock is an admirable one.
Based on Babish's May 11th affadavit, he dumped the stock to gain the Board's attention so they would seriously negotiate a contract. Let's face it, if Babish were under contract, this would have been a stronger company. So it is possible to argue that dumping the stock was required, under adverse circumstances, as a necessary step to strengthen the company. Still, even if he viewed it as such, it would only be fair to disclose this information to potential stock buyers at the Smith Barney conference.
See the following post , starting at point 12.
techstocks.com
I have no reason, at this point, to believe that when Babish was dumping his stock that he knew he was going to resign. Still, even assuming he had no intention of resigning and assuming he followed proper notification proceedures for the SEC, not notifying those at the conference as to why he was dumping stock just wasn't fair.
Having said that, I would still say Babish's transgressions are minor compared to those of Rhodes and the Board. I hold Rhodes responsible for destroying the company and Babish's dreams. Babish reacted poorly in response to the nightmare Rhodes created. I really wish he had not sold his stock when he did, or at least he should not have gone to the conference to plug the company while he was selling his stock.
Rick, though the professionals knew before the conference began that Babish was selling stock, we were the last to know. It would have been nice if Babish had issued a press release stating just what was going on, but what do you bet that if he had issued such a release the company would now be suing him for damaging them by disclosing private information and portraying them in a bad light? Seems to me that he would have been damned if he issued a release and damned if he didn't.
The bottom line in all this is that the little investor who just read the press releases and didn't read the SEC filings every day got screwed. And that's a damned shame.
Robin
P.S. I hope some of my babbling makes sense. My noisy neighbor was keeping me up at 3:00 last night, so I don't know how coherent I am right now. |
