Category: Publications

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Article: Financial fraud involving illegal withdrawal of over RUB 1 bn abroad was solved by Russian MIA General Administration for Economic Security and Combating Corruption

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Financial fraud involving illegal withdrawal of over RUB 1 bn abroad was solved by Russian MIA General Administration for Economic Security and Combating Corruption

THE MINISTRY OF INTERNAL AFFAIRS OF THE RUSSIAN FEDERATION, 16 November 2016

“Employees of the General Administration for Economic Security and Combating the Corruption of the Russian MIA detected an illegal scheme for withdrawal of money in foreign currency abroad through many-fold overstatement of the cost of imported goods,” said Russian MIA official representative Irina Volk.

According to the available information confirmed by documents, the malefactors had used banking details of dummy entities registered in the Kaliningrad Region to transfer funds to the bank accounts of the controlled non-resident under the guise of fulfillment of foreign trade contracts for supply of computer hardware and components. For that purpose, they had provided financial institutions acting as currency control agents with documents that contained false information about grounds, purposes and nature of transfers, namely about the cost of goods that had been artificially overstated hundreds of times subject to forged shipping documents – invoices. Continue reading “Article: Financial fraud involving illegal withdrawal of over RUB 1 bn abroad was solved by Russian MIA General Administration for Economic Security and Combating Corruption”

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Article: Overstock’s Blockchain and the War Against Naked Shorting

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Overstock’s Blockchain and the War Against Naked Shorting

Jacob Dienelt

coindesk, 14 November 2016

Sometimes called the “Pariah of Wall Street”, Overstock CEO Patrick Byrne has spent decades fighting against a suspect practice known as “naked short selling”.

Naked short selling, or a naked short, occurs when a trader sells a share of stock without first procuring a “borrow” – an assurance that the shares are available to be delivered. This can lead to more shares being shorted than can actually be delivered to the buyers.

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Article: Osiris Therapeutics: Regenerative Technologies And Restated Financials

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Osiris Therapeutics: Regenerative Technologies And Restated Financials

Cannell Capital LLC, 10 November 2016

Investing in oil exploration, gold prospecting and biotechnology is high-risk/high-return speculation. Such plays are about getting rich quick, and high hopes and dreams often attract scallywags – a desirable ingredient in short-selling candidates. We think Osiris Therapeutics, Inc. (“OSIR” – $5.18), a Columbia, Maryland-based trafficker in used human tissue, is flailing and infested with vermin.

December 14, 2015 – OSIR’s auditor, BDO USA, resigns in the wake of questions about OSIR’s accounting and business practices.[1] As of November 8, 2016, Osiris had yet to file its financial results for the year 2015 or for any quarter in 2016.

March 15, 2016 – Unable to file its Form 10-K, OSIR files the esoteric mea culpa Form 10-NT instead.[2] In its last timely filed Form 10-Q [3] (August 10, 2015), the company reported 47% year-over-year sales growth that yielded a 121 days sales outstanding and 232 days in inventory! Amongst the reasons for the inflated receivables was a one-year extension of payment terms which were expected to come due in the end of 2015. It remains unclear whether these payments were ever collected.
Continue reading “Article: Osiris Therapeutics: Regenerative Technologies And Restated Financials”

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Article: Cohodes vs Home Capital: Testing the short seller’s claims

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Cohodes vs Home Capital: Testing the short seller’s claims

Amber Kanwar, 27 October 2016

San Francisco-based short seller Marc Cohodes has been shorting Home Capital Group since 2014. He made a number of claims, and raised questions, about Home Capital in an interview with BNN this week. We gave the mortgage lender an opportunity to respond. Below, you’ll find Home Capital’s comments.

Cohodes says Operation Trillium was Home Capital’s response to discovering mortgages that had poor underwriting standards. He believes it was initiated a year before the suspended brokers were announced. “[Operation Trillium] is somewhere between a cover up and a remediation effort,” said Cohodes in an interview with BNN. He believes it was initiated a year before Home Capital disclosed the suspended brokers.

Home Capital did not confirm the existence of Operation Trillium and instead provided this comment: “We refer investors who are interested in the facts to our quarterly disclosure, which includes information on the performance of the mortgages originated by the suspended brokers, the value of loans outstanding that were originated by those brokers, and the progress of our review of those mortgages.”
Continue reading “Article: Cohodes vs Home Capital: Testing the short seller’s claims”

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Article: Investigators track millions of dollars from Russian tax fraud coming to Canada

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Investigators track millions of dollars from Russian tax fraud coming to Canada

DANIEL LEBLANC, 27 October 2016

Investigators have tracked millions of dollars associated with an elaborate tax fraud in Russia to bank accounts in Canada, bolstering their call for Ottawa to adopt legislation to freeze the assets of corrupt foreign officials.

Anglo-American financier Bill Browder and a team of investigators and lawyers compiled the data on the transfers of the funds, which indicate a clear Canadian connection to a $230-million (U.S.) swindle in 2007 by Russian officials who used his Russian-based hedge fund, Hermitage Capital Management. Continue reading “Article: Investigators track millions of dollars from Russian tax fraud coming to Canada”

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Article: Inside Billionaire Steve Cohen’s Comeback

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Inside Billionaire Steve Cohen’s Comeback

In 2013, an insider-trading scandal brought down his hugely successful hedge fund. In his first interview about the firm since then, Cohen tells Fortune how he’s rebuilding for redemption.

On the night of Jan. 8, 2016, Steven A. Cohen walked into a steak house just east of Times Square. It was Friday, and the stock market had just closed out a brutally bloody first week of the year. But no matter: This was Exoneration Day, according to Cohen’s friend and former investor Anthony Scaramucci, and they were celebrating.

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Article: FINRA Merrill’s system failures produced millions of inaccurate trading records

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FINRA: Merrill’s system failures produced millions of inaccurate trading records

Kenneth Corbin

OnWallStreet, 19 October 2016

Staffers at FINRA’s Department of Market Regulation identified a number of reporting errors in the data Merrill submitted to FINRA’s Order Audit Trail System, or OATS, and cited the firm for failures relating to its supervision practices and its maintenance of books and records.

In a statement announcing the settlement, Thomas Gira, executive vice president and head of market regulation at FINRA, notes the importance of maintaining accurate data through the OATS market-surveillance program to detect signs of market manipulation and other irregularities.

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Article: FINRA fines Merrill Lynch $2.8 million for reporting violations

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FINRA fines Merrill Lynch $2.8 million for reporting violations

Elizabeth Dilts

Reuters, 18 October 2016

The Financial Industry Regulatory Authority fined Bank of America’s Merrill Lynch $2.8 million on Tuesday for what it called systemic violations in record-keeping and how the firm reported trades and order audit trail system data.

The allegations involve trade and order audit data that brokerages submit to FINRA, and which the regulator uses to detect, among other things, possible market manipulation.

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Article: High-profile short-seller takes aim at five Canadian companies

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High-profile short-seller takes aim at five Canadian companies
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LUKE KAWA, 05 October 2016

Twenty five minutes into a profanity-ridden presentation at Jim Grant’s Fall 2016 Investing Conference in New York City, Marc Cohodes paused his speech to don a red jacket emblazoned with a maple leaf on the right breast.

So attired, the short seller proceeded to launch into his bearish theses for the collection of Canadian companies he’s betting against.

Mr. Cohodes, the former managing general partner at Copper River Management and current chicken farmer at Alder Lane Farm in California, revisited the cases for why he’s short Valeant Pharmaceuticals Inc., The Intertain Group Ltd., Concordia International Corp., and Home Capital Group Inc.

At the conference on Tuesday, he unveiled a short position in Equitable Group Inc., a Toronto-based provider of mortgage financing. The company disputes Mr. Cohodes’s claims about its vulnerabilities.
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Article: Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts | Zero Hedge

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Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts | Zero Hedge

Tyler Durden, 01 October 2016

For Deutsche Bank, when it rains, it pours, even when everyone tries to come to its rescue.

One day after its stock soared from all time lows, following what so far appears to have been a fabricated report sourced by AFP which relied on Twitter as a source that the DOJ would reduce its RMBS settlement amount with Deutsche Bank from $14 billion to below $6 billion (and which neither the DOJ nor Deutsche Bank have confirmed for obvious reasons), moments ago Bloomberg reported that six current and former managers of Deutsche Bank, including Michele Faissola, Michele Foresti and Ivor Dunbar, were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank, Monte Paschi (which itself is so insolvent it is currently scrambling to finalize a private sector bailout) and manipulate the market. Two former executives at Nomura Holdings Inc. and five at Banca Monte dei Paschi di Siena were also charged. Continue reading “Article: Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts | Zero Hedge”

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Article: A Family Affair At Home Capital Group: Did Re-Charge Just Open Pandora’s Box?

Article - Media, Publications

A Family Affair At Home Capital Group: Did Re-Charge Just Open Pandora’s Box?

The Friendly Bear, 29 September 2016

We published a report on August 23rd exposing a peculiar relationship between Home Capital Group (OTCPK:HMCBF) (HCG.TO) and a previously undisclosed mortgage company called Re-Charge. In response to our report, Home Capital Group put out a press release making a series of claims that downplayed the significance of Re-Charge. Some of the main claims in the press release were as follows:

That “in the normal course of its business, HCG from time to time sells loans to third parties, when loans require work-outs or restructuring.” That “loans sold to all third parties since 2013 totaled less than $125 million” in the context of a “current on-balance sheet total loans portfolio of $18.1 billion.” That “Home Trust has not sold any loans requiring work-out or restructuring to any third party, including Re-Charge Corporation, since September 2015.”
Continue reading “Article: A Family Affair At Home Capital Group: Did Re-Charge Just Open Pandora’s Box?”

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Article: David Dayen Series on Naked Short Selling

Article - Media

David Dayen, a persistent chronicler of how oligarchs exploit the financial system to enrich themselves at the expense of others, writes about Chris DiIorio, a stock analyst who for 10 years has obsessively investigated how exactly he came to lose $1 million on one penny stock. A remarkable story ensues.  All article in The Intercept.

The Money is Gone (22 September 2016)

Big Players, Little Stocks, and Naked Shorts (23 September 2016)

Naked Shorts Can’t Stay Naked Forever (24 September 2016)

Calling the SEC (25 September 2016)

Turning Up Like A Bad Penny (26 September 2016)

Were Paper Losses the Goal All Along (27 September 2016)

The Half Billion Glitch (28 September 2016)

 

 

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Article: GOLDMAN SACHS NZ TRADING UNDER SCRUTINY IN MARKET MANIPULATION TRIAL

Article - Media, Publications

GOLDMAN SACHS NZ TRADING UNDER SCRUTINY IN MARKET MANIPULATION TRIAL

BusinessDesk, 26 September 2016

Trading by Goldman Sachs has come under the scrutiny of lawyers representing Milford Asset Management portfolio fund manager Mark Warminger in a High Court trial on market manipulation.

Duncan Rutherford, who headed Goldman’s securities team in New Zealand until it was restructured earlier this year, was giving evidence today as part of the first week of the Auckland trial brought by the market regulator, the Financial Markets Authority.

Warminger is accused of making trades on 10 occasions that breached securities law prohibiting trading that is not for a genuine commercial purpose and creates an artificial appearance in the market.

The first cause of action brought by the FMA relates to trading in Fisher & Paykel Healthcare shares on May 27, 2014, where Warminger is said to have bought shares to push up the price of the stock from its opening price of $4.32 to $4.35 through five small buy trades and then later selling 500,000 shares at an allegedly manipulated higher price off-market.

Warminger’s counsel Marc Corlett QC questioned why Goldman Sachs also sold shares in F&P Healthcare in the market’s opening auction that day – 15,000 shares at $4.32 and then 10,000 at $4.33 even though it was “short” in its own facilitation account of 463,000 shares. The firm made a loss on the trades. The stock price had been volatile closing at $4.35 the previous day and in the “4.20s” the day before that.

Rutherford said it wasn’t unusual for the firm to do that given the “bigger picture” of its trading strategy for that day and the commissions it received on trading activity. It also did so in the belief Warminger would be a potential seller that day, he said.

The idea of the facilitation account is not simply to make profits on the shares it trades, he said, but it was part of a suite of services it offered clients and acted like a “bucket” that facilitated trades between clients and increased liquidity on the often volatile New Zealand market.

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Article: BIG PLAYERS, LITTLE STOCKS, AND NAKED SHORTS

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BIG PLAYERS, LITTLE STOCKS, AND NAKED SHORTS

David Dayen, 23 September 2016

CHRIS DIIORIO HAD lost a million dollars when the penny stock he was betting on shed 98 percent of its value in a matter of weeks. But when he looked deeper, he found this wasn’t a typical penny stock pump-and-dump scheme. He was determined to get to the bottom of it.

For one thing, there were two huge companies involved. Continue reading “Article: BIG PLAYERS, LITTLE STOCKS, AND NAKED SHORTS”

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