Interesting...
My father-in-law lived in an affluent neighborhood. Once or twice a year he would go to church and find out that a member of the congregation was in white-collar jail for fraud. The fraud usually started out as a legitimate attempt at business, but when finances started to go south...the person justified himself (usually male) to stretch or obscure the truth to raise more funds, so that he could buy time to overcome the crisis. Sometimes it worked, but usually one thing lead to another and he found himself at the center of a major financial crisis/fraud.
I tend to believe that is what happened to Madoff. I'd bet it didn't start out to be a fraud.
So how does this apply to NNVC?
Let's suppose life was pretty good for Diwan and Seymour, being the management team of a NYSE-Mkt listed public company doing research-stage drug development...with a generous salary, options, bonuses, IP licensing fees, and 30% markups on R&D and manufacturing services. What happens if NNVC encounters an intractable problem (say for instance, they cannot produce drug materials at commercial scales, or at a reasonable cost, or you simply find you're not very good at managing the business)?
You have voting control, so the board of directors can't really throw you out of the business or send the working capital back to the shareholders. Only you can do that to yourself. Just another conflict of interest.
At what point do you cut yourself off of the gravy train and tell your wife you fired yourself (and her too, BTW)?
Do you raise more working capital? At what point does lack of disclosure become fraud?
Could it happen at NNVC? I don't know...
This is one reason the lack of disclosure of plans, schedules and other business issues is so annoying. From Seymour we got platitudes like, "It just has to be done perfectly for the FDA." "We can't hurry it without risking everything." "We are incapable of providing a schedule because we cannot control third parties." "Soon...soon meaning VERY soon." I can't tell you how many times I was denied an answer to a perfectly reasonable question. The subject would be changed, or various other ploys to keep from setting an expectation with regard to a schedule. From weather to the FDA, there was always another cause besides poor management.
Now with Diwan we hear little to nothing.
At some point I start to lose my patience for all of the excuses, delays and now silence in such a time of relative financial instability for the company. I would like them to communicate openly with us shareholders.
I'm not holding my breath... |
