Asensio Report On Chromatics Color Fuels Net Chatter By Johanna Bennett
The world is listening.......
NEW YORK (Dow Jones)--If you're amused by the volley of allegations in the
ongoing war between Chromatics Color Sciences International Inc. (CCSI) and
the short seller who sent the company's shares plunging, just read what
folks are saying on Internet chat rooms.
Investors - both longs and shorts - have battled it out on message boards
and chat rooms for the last few days, exchanging rancorous remarks and
insults as shares of the New York medical testing service plunged more than
45%.
And while on-line chatter about Chromatics Color Sciences's troubles and
Asensio & Co.'s controversial research report that apparently pulled the
plug on the stock died out overnight, both sides came out of their corners
slugging as shares continued to plummet Wednesday morning.
Chromatics Color Sciences stock, which closed Friday at 10 3/4, has lost
nearly half its value this week. The shares were recently trading at 5 7/8,
down 5/8, or 9.6%, on volume of 1.7 million, compared with a daily average
of 418,200.
"The only reason the stock fell was outright lies and CCSI will come out of
this joke as a sweet as it went," said one Yahoo Finance participant
nicknamed "Mr. Freeze."
"Curse! Swear! Scream! Yell! All the way down," responded another Yahoo
Finance member named "Stocksbuy." "...You sound exactly like all the
hypsters on these boards who sucked in investors. You are all hot air and
hype."
The minidrama erupted Monday when Asensio & Co. President Manuel Asensio, a
known short seller, published a research report on his firm's Web page
advising investors not only to sell shares of Chromatics Color but also to
short sell them.
The report accused Chromatics Color of fraud, alleging the company made
false claims about the capability and potential market for its device to
diagnose jaundice in newborns by measuring their skin color. Asensio's
criticism knocked the shares down in Nasdaq small-cap trading from Friday's
close of 10 3/4 to 6 1/2 Tuesday.
The report also took shots at Dreyfus Corp., a well-known mutual fund
company, and one of its fund managers, Michael Schonberg, for accumulating a
large share of Chromatics Color stock.
Asensio admits that his company is short 300,000 shares and describes his
position as a "terminal short" since he expects the shares to become
worthless.
The reaction among message board and chat room users is not surprising,
given that many individual investors and day traders use the forums. Tempers
often flare as stocks rise and fall, with long-term investors often pitting
themselves against shorts who make their money gambling that a stock price
will fall.
More than one jab was directed at Asensio.
"The so-called Asensio report is so unprofessional a hatchet job that it
does make me suspect that they feel immune to libel," wrote a participant on
the Silicon Investor's Chromatics Color message board.
Officials from Dreyfus Funds and Chromatics Color did not return telephone
calls. But in press releases issued Tuesday, both firms took issue with
Asensio's statements.
Dreyfus officials have said that while they have found no evidence of
wrongdoing, the company is reviewing trades in Chromatics Color stock.
Chromatics Color appears to be taking a harsher initial stand. Although the
company is still promising to make a more detailed response, officials said
they are considering legal action and have already contacted Nasdaq and the
Securities and Exchange Commission regarding short seller Asensio's
activities.
Meanwhile, message board participants continued posting missives, some
threatening to sell, others loudly trumpeting the stock and many simply
hurling insults.
"Who's the other lawyer on this thread? I wish I could take this one in
front of a jury," wrote on Yahoo Finance participant.
Regardless, Asensio appeared unconcerned with either company threats or the
on-line debate over his research report.
"We have never had a company say 'We are sorry we did this. Here take the
money back.' They always attack us. It is standard procedure," Asensio said |
