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The exchange changed it to T2 because technically when a release is issued this is what happens. However did you consider that the company asked the exchange not to commence trading until they have adequately responded to the allegations which is what they said in their release anyway.
He did not do it on his own. How many people actually trade off his reports especially now? I say very few, certainly not enough to impact the share price. However I am certain he is connected to groups of shorts where he is probably compensated or if not knows the impact THEY will have and trades in sympathy. The stock moves always exactly when his reports come out. I say these groups are using Danny boy as a cover. We shorted because this "respect" patent attorney said the company was crap etc... I have kept a mental note of his articles and massive selling pressure it can not be a coincidence and it isn't mom and pop selling either.
I agree they can ask you to disclose it though as part of their terms. If you lie they have no way of knowing obviously. So it could come into play if the posters trades are being investigated.
I think it is a requirement of seeking Alpha to disclose your interest in the stock..
Semantics are not relevant right now. What they can demonstrate to the investing community to prove these errors is what matters.
It's pretty obvious what he's doing in my mind. He is working with short groups probably being paid by them and his flip flop allowed the groups and him to short from a higher level. Someone talked about credibility he has none and obviously if he fooled anyone with this stunt that's gone too. Desperate people do desperate things. This is the end game for the shorts they know their time is close to being over so they try an exotic stunt like this. The judges ruling will put the nail in their coffin and it could come sooner than most expect ...
So is this statement today consistent with these statements a week ago? If they decided months ago then why renew the agreement on December 28th. This really stinks in my mind. They were probably shorting LPH having knowledge of what Geo was doing all IMHO....
Longwei Petroleum Renews Agreement with RedChip
TAIYUAN CITY, China, Dec. 28, 2012 /PRNewswire-Asia/ -- Longwei Petroleum Investment Holding Ltd. (NYSE MKT: LPH) ("Longwei" or the "Company"), an energy company engaged in the storage and distribution of finished petroleum products in the People's Republic of China ("PRC"), has renewed its agreement with RedChip Companies, Inc. ("RedChip") for investor relations services.
"We've had the pleasure of working with RedChip for more than four years," said Cai Yongjun, Chairman and Chief Executive Officer of Longwei. "They have been with us since our initial entrance into the U.S. capital markets and have played a key role in our investor communication efforts. We are pleased to continue our relationship with RedChip as we enter yet another high-growth phase of our business."
"RedChip's platform has served us well over the past four years," stated Michael Toups, Chief Financial Officer of Longwei. "More recently, we've benefited from added exposure of our story through RedChip's new television program, 'The RedChip Money Report.' We plan to use multiple platforms to continue to disseminate the Company's story to both institutional and retail investors."
Dave Gentry, President and CEO of RedChip, stated, "With strong leadership at the helm, Longwei has grown from one facility to three since first engaging RedChip. Over the past three years, they have recorded annual sales growth of 45%, with net income rising 28% annually, earning the distinction of Forbes Asia's "Best Under A Billion" in July 2012. We believe Longwei will continue its track record of strong growth in the quarters ahead, capitalizing on the ramp-up of its Huajie facility and organic growth at the Company's two existing facilities.
"Moving forward, we will leverage the strong capital market foundation we've helped Longwei build over the past four years," continued Mr. Gentry. "We believe our comprehensive investor communication solutions can provide the ideal platform to produce improved valuation metrics for Longwei in the months and quarters ahead."
I am not sure what some of you are talking about . They said this
The Company believes that the Geo Investing report contains numerous errors of facts, misleading speculations and malicious interpretations of events.
The Company will release additional information concerning the allegations in due course. Longwei is committed to providing full and accurate disclosure to investors and to rebutting any false claims that attempt to undermine confidence in the Company.
Agreed. INteresting that they are basically saying we don't agree with the juries verdict. When was the last time we saw this much pre-market activity? Already 32,000 shares in 3 minutes. As far as shorts are concerned they have not even started to cover. Today will be big for that I say we do more than 10 million shares and exceed $4.00 at some point. I think the realization is that Google will settle and Ravicher understands this now also. This is actually in Googles and Vringo's best interest IMHO.
Here it is more b/s from Google. They are essentially retrying the case with their post-trial motions...
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA NORFOLK DIVISION
???I/P ENGINE, INC.
v. AOL, INC., et al.,
Plaintiff,
Defendants.
Civil Action No. 2:11-cv-512
??REPLY BRIEF IN SUPPORT OF DEFENDANTS' MOTION TO EXTEND BRIEFING AND DELAY RULING ON PLAINTIFF'S MOTION FOR POST-JUDGMENT ROY AL TIES
Plaintiff's Opposition fails to meaningfully address the points raised in Defendants' Opening Brief. For example, Plaintiff fails to rebut Defendants' argument that a postponed decision would not prejudice Plaintiff, but would instead provide several efficiencies for the Court and parties. Instead, Plaintiff mischaracterizes the effect of the parties' other pending post- trial motions, suggesting that they will not have an effect on any post-judgment royalty when in fact those motions are directly relevant to any such determination. Plaintiff also fails to substantively rebut that in seeking contested post-judgment damages it has presented an entirely new damages theory with a new royalty rate and hypothetical negotiation date, but instead makes arguments that flatly contradict its own prior statements to the Court.1 For the reasons below, and the reasons stated in Defendants' Opening Brief, Defendants respectfully request the Court to
1 Plaintiff's contention that Defendants do not dispute Plaintiff's claim for post-judgment damages, (D.N. 852, 1), is incorrect.
????1
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 2 of 12 PageID# 22031
delay briefing and consideration of Plaintiff's Motion for an Award of Post-Judgment Royalties until after the Court has ruled on the parties' pending post-trial motions.
ARGUMENT
I. Plaintiff Fails to Show How A Delay Would Cause Prejudice
Delaying a decision on Plaintiff's request for post-judgment royalties will not cause prejudice. Ignoring Defendants' explanations why it would suffer no prejudice from a delay, Plaintiff initially argues that if the Court delays ruling on post-judgment royalties, that would somehow delay Plaintiff's ability to license and enforce its patents and would negatively impact an appeal. (D.N. 852, 2.) But Plaintiff provides no explanation of how its ability to license and enforce its patents would be impacted by an extension to permit the Court to rule on the parties' post-trial motions. Nor can it, as there would be no such impact. Likewise, Plaintiff does not explain why it needs to appeal the post-trial damages issue immediately. Finally, although Plaintiff does not even make this argument, if it is concerned with the impact on an appeal of the various other post-trial motions, then, as discussed in Defendants' Opening Brief, the Court could sever the issue of post-judgment royalties from the remainder of the case as several courts have done. See, e.g., Fractus, S.A. v. Samsung Elecs,. Co. Ltd., No. 6:09-CV-203, 2012 WL 2505741, at *45 (E.D. Tex. June 28, 2012); Mondis Tech., Ltd. v. Chimei InnoLux Corp., 822 F. Supp. 2d 639, 642 (E.D. Tex. 2011).
Plaintiff fails to address why severing the issue of post-judgment royalties from the remainder of the case would not protect its interests or be improper, tacitly admitting that it is an appropriate course of action. See, e.g., Brand v. N.C. Dep't of Crime Control & Pub. Safety, 352 F. Supp. 2d 606, 618 (M.D.N.C. 2004) (citing cases and holding that failing to respond to an argument raised by the other party results in a concession that the other party's position is correct). Nor has Plaintiff explained how it would be prejudiced if required to appeal any post-
?2
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 3 of 12 PageID# 22032
judgment damages ruling at a later date, given that Defendants are financially solvent and Plaintiff agreed to postpone any recovery of pre-judgment damages until a later date.
Plaintiff purports to address the efficiencies from postponing briefing and ruling on ongoing royalties until after the Court has decided the parties' Rule 50, 52, and 59 motions by asserting that "none of the post-trial motions filed by the parties impacts the amount of ongoing royalties to be paid to I/P Engine for Defendants' ongoing infringement." (D.N. 852, 2.) This is simply untrue. Defendants' post-trial motions would go directly to the heart of the issue of what, if any, ongoing royalty should be paid.2 For example, Defendants assert that the proper form of the reasonable royalty would be a lump sum, not a running royalty. (D.N. 834, 23-25.) In the event that Defendants' motion for judgment as a matter of law is granted on this issue, then an ongoing royalty would be improper. Additionally, Defendants assert that the royalty rate calculated by Dr. Becker and asserted by Plaintiff was grossly overinflated. (Id., 25-29.) If the Court agrees, and grants Defendants' motion on this issue, then Plaintiff's demand for an even greater royalty rate for an ongoing royalty—based on Dr. Becker's continuation of his flawed methodology—would properly be questioned. Even more, Defendants assert that the royalty base that Dr. Becker calculated for post-judgment damages, which he also asserts is appropriate for an ongoing royalty, is fundamentally flawed. (See, e.g., id., 14-19.) This too should be resolved before determining what, if any, ongoing royalty is appropriate. The Court is by now well aware of the deficiency of Plaintiff's evidence related to both apportionment of a royalty base and the calculation of a running royalty rate, both of which must necessarily be resolved before any finding on post-judgment royalties can be made. (See D.N. 823, 3 (Plaintiff arguing
2 In addition to Defendants' motion regarding damages, the Court's analysis regarding post-judgment royalties would be significantly streamlined if the Court were to grant Defendants' motions regarding invalidity and infringement, which makes Plaintiff's assertion even more anomalous.
?3
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 4 of 12 PageID# 22033
that a determination of the royalty base and royalty rate are necessary prerequisites to calculating any post-judgment ongoing royalty).)
Even more, a ruling on Plaintiff's own Rule 59 Motion for a New Trial on Damages could impact the amount of future royalties to be paid to I/P Engine. (D.N. 825.) Plaintiff itself argues that the amount of damages awarded against Google by the jury is fundamentally flawed, and warrants a new trial on damages. (D.N. 826, 13-17.) This is not simply a "mathematical issue" that can be resolved by the jury's responses to the special interrogatories. Thus, Plaintiff's assertion that its Rule 59 motion relates solely "to the dollar amount of past damages" (D.N. 852, 3), is simply incorrect. As Plaintiff knows, the jury did not base its award on the 20.9% royalty base that Plaintiff sought for pre-judgment damages. Thus, there is no reason to simply assume this would be the appropriate royalty base to use in a new trial even if Plaintiff's motion is granted. Rather, this issue would be hotly contested, just as it was at trial.
Plaintiff's citation to Voda v. Cordis Corp., No. CIV-03-1512-L, 2006 WL 2570614, at *6 (W.D. Okla. Sept. 5, 2006), in support of this argument fails. (D.N. 852, 3.) In Voda, where plaintiff's request to sever the post-verdict damages determination was denied, the only determination to be made was the amount of damages to be paid each quarter, based on the defendants' sales of the infringing product. Id. Unlike here, neither party challenged the form or content of the jury's verdict or ongoing royalty. See id.
Plaintiff also argues there is no need to wait to rule on ongoing royalties because it has an "uncontroverted jury verdict of a running royalty and a reasonable royalty rate of 3.5%." (D.N. 852, 4.) This argument does not pass the straight face test. For the reasons outlined in their Renewed Motion for Judgment as a Matter of Law on Damages or New Trial, Defendants specifically contest a number of issues related to the jury's verdict—including that the proper
??4
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 5 of 12 PageID# 22034
form of the award should be a lump sum, rather than a running royalty, as supported by the evidence introduced by Defendants at trial. (D.N. 833, 834.) In any event, Plaintiff itself contests the jury verdict, arguing that it is entitled to a new trial to determine the appropriate amount of past damages to be awarded against the Defendants. (D.N. 826.) Given its own challenges to the jury's verdict on past damages, let alone Defendants' pending motion, Plaintiff cannot credibly assert that the pending post-trial motions will have no impact on a determination of future royalties.
While Plaintiff argues that deciding post-judgment royalties at this stage is routine (D.N. 852, 2 n.1, 4), Plaintiff does not cite to a single case where the court elected to make this determination where the plaintiff was also seeking a new trial on damages. Indeed, doing so would make no sense. As explained in Defendants' Opening Brief, the most efficient use of the Court's resources would be to definitively rule on the other post-trial motions before attempting to rule on post-judgment royalties, if any, especially because neither party believes the jury's verdict regarding damages should stand. To rule otherwise is to unnecessarily risk infecting any ruling on Plaintiff's request for post-judgment royalties with the uncertainties and flaws of the underlying ruling.
Plaintiff's failure to illustrate any true prejudice from Defendants' requested extension
demonstrates that its argument is without merit.
II. Plaintiff is Asserting an Entirely New Damages Theory, and the Court Should Extend Briefing to Allow Additional Time to Develop the Factual Record and for the Parties to Negotiate Post-Judgment Royalties
Plaintiff argues that its motion for ongoing royalties "does not raise a new damages theory." (D.N. 852, 4.) This is simply untrue. Plaintiff's motion, and the accompanying supplemental expert report of Dr. Becker, seek an ongoing royalty premised on a new royalty
rate that was not previously argued by Plaintiff or awarded by the jury at trial. (See D.N. 823.) 5
??
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 6 of 12 PageID# 22035
Indeed, Plaintiff admits that all of the relevant evidence related to its damages theory for an ongoing royalty was not presented to the jury. For example, Plaintiff attempts to introduce additional evidence through a declaration by Dr. Becker that sets out a new hypothetical negotiation date, one that is eight years after the date the jury considered, in order to justify the increased royalty rate that Plaintiff seeks for ongoing royalties. (D.N. 824, 2-3.) Dr. Becker's declaration, and Plaintiff's brief, cites numerous additional considerations not presented to the jury in support of Plaintiff's demand for a higher royalty rate than what the jury found. For example, Dr. Becker states that the parties to the hypothetical negotiation for an ongoing royalty would be I/P Engine and Google, rather than Lycos and Google. (Id., 3-4.) Dr. Becker also states that the following factors would be different in the hypothetical negotiation for the on- going royalty, rather than for past damages: expectation of positive impact of the invention, range of comparable license agreement rates under Georgia-Pacific Factor 12, and outcome of the hypothetical negotiation. (Id., 4-5.) All of this leads Dr. Becker to conclude that the royalty rate would be higher, 5% as opposed to his prior 3.5% opinion, for ongoing royalties than for past damages. (Id., 5.) Plaintiff then takes this royalty rate and asks for additional enhancement to a 7% running royalty rate. (D.N. 823, 9-12.) In light of all of the above, Plaintiff cannot credibly argue that its ongoing royalty motion does not raise a new damages theory, or that Defendants should not be entitled the appropriate time to respond to this theory.
Contrary to Plaintiff's unsupported assertion (D.N. 852, 4-5), courts have allowed expert discovery in situations such as this one, where the plaintiff introduced new evidence in the form of a supplemental expert report. See, e.g., Paice LLC v. Toyota Motor Corp., No. 2:04-cv- 00211-DF, D.N. 241 (E.D. Tex. Mar. 13, 2008) (setting a scheduling order over a three month time period that included supplemental expert reports and depositions in advance of an
6
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 7 of 12 PageID# 22036
evidentiary hearing). Further, it is common practice for courts to hold an evidentiary hearing in connection with a motion for post-judgment damages. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 & n.15 (Fed. Cir. 2007); id. at 1316-17 (Rader, J., concurring).
Plaintiff continues to misstate the issue by arguing that it is merely seeking a royalty that the jury already determined, and thus there is no need to engage in further discovery to allow Defendants a meaningful opportunity to rebut its arguments. (D.N. 852, 4-5.) But as noted above, the jury did not opine on the numerous new considerations that Plaintiff and Dr. Becker raise to support Plaintiff's demand for an ongoing royalty, including the November 2012 hypothetical negotiation date, the different parties to the negotiation, etc.
Plaintiff cites two cases in support of its contention that awarding post-judgment royalties is routine and requires no additional discovery, neither of which involved the introduction of new evidence post-trial as Plaintiff is attempting to do here. In Soverain, the plaintiff argued that the royalty rate the jury found should be adjusted upward based on changed circumstances, but the court rejected this argument because "the jury ha[d] already heard and considered the evidence of changed circumstances that Soverain now contends should be considered in a post-judgment royalty analysis." Soverain Software LLC v. J.C. Penney Corp., No 6:09-CV-274, 2012 WL 4903268, at *11 (E.D. Tex. Aug. 9, 2012). Likewise, in Affinity Labs, the court found that "there do not appear to be any significant economic or commercial circumstances that have changed since the original hypothetical negotiation date." Affinity Labs of Texas, LLC v. BMW N. Am., LLC, 783 F. Supp. 2d 891, 899 (E.D. Tex. 2011). Therefore, in both cases Plaintiff relied upon, the procedure for determining an ongoing royalty was more routine because neither party introduced evidence that was not already before the court.
7
Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 8 of 12 PageID# 22037
Plaintiff attempts to avoid the extensions that are commonly granted to pursue discovery and accommodate a hearing by painting Dr. Becker's new expert report as something other than a new damages theory, even though it involves a different party, a different hypothetical negotiation date, a different analysis of the allegedly comparable license agreements, and a different conclusion. Rather than allowing Defendants a meaningful opportunity to respond to this evidence by deposing Dr. Becker and giving Defendants adequate time to present their own rebuttal expert declaration in response, Plaintiff seeks to have the Court rubber stamp its new damages theory by arguing, without support, that the result is a foregone conclusion based on a straightforward application of legal precedent rather than an analysis that is driven by facts. Instead of attempting to make the important determination of post-judgment royalties on an inadequate and hastily constructed record, the Court should refrain from ruling on Plaintiff's Motion for an Award of Post-Judgment Royalties until the record is complete, after either additional discovery and/or an evidentiary hearing.3 See Paice, 504 F.3d at 1315 & n.15; id. at 1316-17 (Rader, J., concurring).
Granting additional time to develop the evidence and the record would also allow Defendants time to provide a meaningful analysis of the possibility of a design around and the ease by which a design around could be implemented. Contrary to Plaintiff's assertion, the
3 For this reason, Defendants request that the Court delay ruling on Plaintiff's motion until after it has ruled on all pending post-trial motions, or in the alternative extend the deadline for opposition to Plaintiff's Motion to February 28, 2013. This additional one month period should provide Defendants sufficient time to conduct any necessary additional discovery of Plaintiff and Dr. Becker, work with their damages expert to prepare a rebuttal declaration, as well as investigate a potential design around. Plaintiff has provided no explanation as to why this one month extension would cause it any undue prejudice, and indeed cannot do so for the reasons outlined above. Sorting through the complexities of the Plaintiff's new theory and expert opinion along with the thorny post-trial motions pending on both sides before resolving the post- judgment royalties issues will avoid compounding any error and mitigate the necessity of redoing and conforming any decision on post-judgment royalties to any changes in the calculus caused by such decisions.
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Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 9 of 12 PageID# 22038
potential of and difficulty in implementing a design around, in light of the jury's findings, is an important factor in the determination of an ongoing royalty. See, e.g., Paice LLC v. Toyota Motor Corp., 609 F. Supp. 2d 620, 627 (E.D. Tex. 2009) ("[T]he cost of switching to an alternative design is a factor that the parties would consider in arriving at an appropriate ongoing royalty rate.").
Plaintiff's criticism that Defendants do not intend to negotiate regarding post-judgment damages because they have not yet contacted Plaintiff overlooks the fact that negotiations are most effective when the parties are aware of the relevant facts. As previously stated, Defendants do not agree that Plaintiff is entitled to an ongoing royalty. However, to the extent an ongoing royalty is determined to be appropriate, Defendants prefer to come to the negotiating table armed with those facts and an accurate assessment of their bargaining position, rather than mere speculation and hyperbole. Defendants were only recently presented with Plaintiff's additional evidence regarding what it perceived to be an appropriate ongoing royalty. (See D.N. 824.) Defendants have yet to develop all of the relevant evidence that it can in response to this new evidence, including its own expert opinion and an assessment of the possibility of a design around. Defendants also do not yet know how the Court will rule on the parties' Rule 50 and 59 motions, which would be useful for purposes of negotiating any potential future royalty amount. The Court should follow the Federal Circuit's direction and allow the parties time to negotiate any potential future royalty, with the commonsense understanding that an agreement is more likely when the parties have the relevant evidence at their disposal. See Telecordia Tech, Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1378 (Fed. Cir. 2010).4
4 Plaintiff also relied solely on Soverain and Affinity Labs to show that courts routinely address the issue of post-judgment royalties with other post-trial motions. (D.N. 852, 1-2.) Yet Plaintiff failed to mention that the court in both of these cases ordered the parties to attempt to
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Case 2:11-cv-00512-RAJ-TEM Document 853 Filed 01/03/13 Page 10 of 12 PageID# 22039
Conclusion
For the foregoing reasons, Defendants respectfully request this Court grant their Motion to Extend Briefing and Delay Ruling on Plaintiff's Motion for Post-Judgment Royalties until the Court has ruled on all pending post-trial motions under Rules 50, 52, and 59. In the alternative, Defendants request that the Court extend the deadline for the opposition to Plaintiff's Motion to February 28, 2013.
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Read more: http://vringo.freeforums.net/index.cgi?board=general&action=display&thread=1063#ixzz2GyC1SNws
Another response from Dan Chen on S/A site...
I think that my intent of the comment was very clear. I had no intention to play denial and withstanding of the company's fair value if the company is indeed a fraud, or mostly a fraud. However, as a human being I think it is only fair that we hear what the company has to say about allegations that people throw on them before judging if these allegations hold grounds. As I have listed in my comment several things just doesn't make sense to me and many other investors I believe assuming all Geo's claims, especially the "no business running in facilities" are true. Don't you think as a judge you have to give the defendant at least a chance to respond before making a rule? As you said the company seemed to respond to two of your "concerns" - the business license and the capacities of their facilities (in a light way I have to say, maybe they'll also address that point more in their response to Geo's article). It is only fair that we at least hear what they say about Geo's allegations.
Secondly, honestly no I do not have time to read all your posts on message boards. I read quite some with my limited time and thus saw 4, 5 things you said. No disrespect but in my opinion Geo Investing's points are in magnitudes higher in importance in relative to shareholders' claims than the "flags" you raised assuming all are true. So, at this point I am much more interested to hear their responses to Geo especially in regards to their business activities and revenue.
I suggest that we see the company's response before making premature discussions here (if only for the sake of having more contents to discuss).
Last but not least, I am not in any way associated with the company. That I can tell you for 100% certain. I am only a public investor and analyst. I think the "official supporting documents" - the ones with the auditor and/or government/certified professional agencies' endorsements that the company published to prove its legitimacy were extremely strong and convincing. So, if the company indeed grossly mis-represented its financial status multiple official entities have had all contributed in putting out these false numbers and information in documents. That in itself is also unthinkable to me. Seriously, have you seen any past fraud Chinese companies that published so much signed documents from tax agencies, appraisal firms, and commerce department? I cannot recall any.
Also, if memory serves me right the CFO who lives in Florida said in a conference call that he was in company sites almost half of the time in 2012 and have seen everything. So, if the company is a total scam and has minimal revenue as Geo claims ... I almost cannot bear to imagine what will happen to him.
Again I am not trying to totally defend the company or my previous opinion, I am just saying very honestly that many pieces of information from both sides do not reconcile. My mind is in split mode right now ... seriously.
Best,
Kevin
:Yes and there was some really keen buyers stepping up before the close..after hours.. should gap up tomorrow could even test $3.80 -$4.00
I assume nothing no one knows the answer to that question.
Also when perpetuating a fraud generally you want to issue shares so that they can be dumped into the market for gain, no evidence of insider selling or issuance or shares., in fact 67% of the stock is owned by insiders why do that and then conduct no business as GEO is alleging? . Very strange IMHO. Lots of points don't add up as you say from both perspectives.
If this were a trial we just had the opening statement by the prosecution. Do you not have to hear the Defence to make an informed decision? That is what Dan is saying in his response that I posted from Seeking Alpha. NO idea if and when that will come but if it does that response should form the basis for an intelligent analysis. Dan makes some good points one of them Dan Chen or Geoinvesting is wrong.
Some questions for GEoinvesting from the S/A site no response from GEO BTW
Geo, needless to say I was shocked when I read your article this morning. As you said, this is probably the most shocking and unthinkable fraud case ever in Chinese small cap sector that fooled all investors including me. While I am indecisive on which side to believe until I hear the company’s response, I still cannot believe the conclusion you made that this company is a complete fraud because several things just don’t make any sense to me with that conclusion. Here are some key questions I have for you that I hope you can provide reasonable answers:
1. Even after reading your article, I am still not completely certain on assertion you made that Longwei could not have had Taiyuan Economic and Trading Company paid all its taxes. Regardless of which subsidiaries paid the tax, as long as the company paid that much tax (and the company provided photo-copies of the tax payment records, which their auditor claimed have fully verified with tax authority I believe), wouldn’t it prove that the company did generate that much revenue during fiscal year 2012? This simple point, if true, overthrows the conclusion that the company does not have any business running.
2. If the company is a complete fraud and just wants to steal shareholders’ money, why would they have spent so much time and money to do things such as completing the tax reconciliation, hiring two IR companies, paying Redchip to shoot an extensive onsite interview video and then subsequently a TV interview over the past one year or so to communicate to investors? Unlike some Chinese companies that were determined frauds, Longwei has not issued significant amount of new shares (except for the relative small amount that were issued for executive and IR compensation). What the CEO has to gain by spending so much time and effort to prove the legitimacy of the company?
3. According to what the company shows on its website, it does have oil wholesaling and distribution license (which you seem to agree from what I can see in its article). Evidences so far suggest that the company’s subsidiaries actually own the three facilities (which you also seem to agree from what I can see in its article). Now, even if they do not have that high level of business activities they claimed to have, shouldn’t they still be able to sell quite significant amount of oil with the licenses, facilities, and money they got when going public? Oil is a commodity that is really easy to sell. Do you really believe that they are that bad of business people that are not able to sell one truckload of oil per day?
4. The two biggest insider shareholders own about 66% of the company. So, every dollar they steal from the company 2/3 belongs to them anyways. In such a case, combining with point 1, 2 and 3, why wouldn’t they run a legitimate business but instead spending so much time, efforts, and money to keep their stock listed and at the same time doing the grand crime to steal money from investors? Even if they are not put into jail for committing such a crime, I don’t believe they can keep on running the three facilities and own the licenses. If I were a client or supplier I wouldn’t do any business with them anymore, and I would imagine that China government agency may withdraw their licenses. So, it looks to me that they would be giving up the business they’ve spent over 17 years to build. That reward/risk ratio for them to commit such a crime just doesn’t look good to me.
5. You said that your team spent about 50 days in Taiyuan and Gujiao facility video-taping the activities, but you only show 3 days of videos for each facility. Are you hand-picking the days that happened to have lower business activities?
I’d appreciate your feedbacks to these questions. Thanks.
Kevin
INteresting article on how Geoinvesting works....
Did Geoinvesting Commit Securities Fraud and Use Their Own Message Board Followers as Pawns? 9 comments
Oct 10, 2011 10:10 AM | about stocks: VALV, DEER, SCEI, SVM
Admittedly I have traded long and short in this market and have seen a lot of opportunity in both directions with good analysis by some and really poor analysis by others. With this being said I received an email that I thought was a bit off of color and something I was a bit frustrated to hear about. The screen shot I received was from a message boards that Geoinvesting runs on their website www.geoinvesting.com. This is the “research” firm that also charges individuals to buy advanced “research” reports prior to being released in the form of monthly subscription fees, which results in such individual front-running the stocks mentioned. Why I was appalled by this particular screen shot is that implies that Geoinvesting would employed a massive scheme to make a quick buck for themselves at even the expense of their own subscribers.
We will breakdown the implications in the screen shot below to be very clear on what is being alleged by what we believe is a paid subscriber to Geoinvesting.
It has been noted for some time that Geoinvesting has put together reports on companies in an attempt to drive down the prices of securities based on making an array of allegations that may or may not be true. The intent of these reports is to move the stock price, which one would argue is a clear-as-day 10b-5 violation according to securities laws. With that said, Geoinvesting takes this approach a bit further by using such reports to attract investors to their site so they can charge a monthly fee to access such reports and profit from receiving these stock tips before the reports are released. This has all been covered in the past and Geoinvesting has also been served with lawsuits by two issuers that believe they have had their securities manipulated by Geoinvesting and others. What has not been covered prior is that the subscribers themselves might just be the pawns that Geoinvesting uses to generate the most profit for themselves, and we are not referring to the monthly subscription fee they are required to pay.
From conversations we have had, and press releases from the Companies that have served Geoinvesting with lawsuits, some companies have alleged that Geoinvesting uses a tactic that if a company does not employ Geoinvesting for their due diligence services (we are unsure of the quality of such services), then Geoinvesting turns on the company and instead writes “a negative report” on such companies.
Nevertheless, what is below is even more shocking in our opinion than any other allegations made against Geoinvesting. Recently Geoinvesting has aggressively touted the stock of Shengkai Innovations, Inc. (VALV) and claimed they performed “extensive” on the ground due diligence and aggressively stated that the company is significantly undervalued in the market. The user below is stating that subscribers who pay the subscription fee to receive such early knowledge of reports did not know that immediately prior to issuing the VALV report, they claim that Geoinvesting and their colleagues might have taken a position in the stock and used such report to not only profit from the upward movement in the stock price as a result of such report but also to cover their position they took prior to releasing it to their members – which has been defined by as a classic “Pump and Dump”. We cannot confirm the accuracy of such statements ourselves, but from the tone of the paid subscriber and the stock price movement since such action it would be hard to argue.
Given the recent events that have transpired after the “glowing” report by Geoinvesting (Company issued a statement saying their business is deteriorating rapidly as well as dropped their very prominent auditor for a no name auditor) we ask ourselves:
- Did Geoinvesting rush to publish their “glowing” report, knowing that their on the ground due diligence actually uncovered these substantially negative developments within the company (and such negative developments subsequently came into light shortly after Geoinvesting’s bullish report) so that they could cover their long position at a substantial profit prior to the news being released?
- Or, was this just a classic pump and dump using message boards and “research reports” to manipulate a stock upward leaving their premium members paying subscription fees as the bag holders?
Themes: China Stocks: VALV, DEER, SCEI, SVM
Remember yesterday I posted this:
General Comment
The MM's will not let this run until there is sufficient volume to move the needle. Yes there are shorts and they probably add to positions on any run BUT the real reason there is no/down movement is that there is a buyers strike. There are buyers obviously every trade has one BUT they are passive and the amount they are looking for is too small. Until we see 5 million plus shares traded and ideally 10 million plus we are staying in this cycle. Obviously the tangible reason is that there is no real news to drive forward. When that comes then we will see a different trading pattern IMHO.
I agree not expecting a settlement in a few days but it seems to me they are on that road now.
Yes but why indicate this at all considering their previous position? I think they are finally seeing the light , that is their best option is to settle this with VRNG just like Microsoft realized with VHC
last short update was almost 13 million we will see the year-end numbers next week.. that is a lot of shorts to be amateurs IMHO
So far this is nothing shorts still are arrogant here. Wait till we get a positive ruling from JJ and according to Edvacourt that could come any day not after Jan 25 then you will see some real fireworks IMHO...
Remember...
by edvacourt . Jan 3, 2013 10:01 AM . Permalink
JJ can rule on the Interest and Supplemental Damages question right now. Everyone is talking about after January 25th and that is a mistake. All we are looking for is a ruling that will definitively show the market what the true value of this litigation has been for Vringo. If you assume that JJ uses the only math presented during the trial then his ruling on I & S will open the floodgates. Keep your eye on the ball. This is the next one to cross the plate. One other thing. The caliber of the people that Vringo keeps adding should tell everyone something about what they have now but more importantly where they are headed. We can hear from the court in Mannheim on ZTE anytime after mid-January. This will be a blockbuster year for Vringo.
Hi Guys .. saw thew news on Longwei this morning and was impressed. I looked at the research on here it seems that LPH should be trading higher. What are the short/long-term catalysts here.
Thanks in advance...
General Comment
The MM's will not let this run until there is sufficient volume to move the needle. Yes there are shorts and they probably add to positions on any run BUT the real reason there is no/down movement is that there is a buyers strike. There are buyers obviously every trade has one BUT they are passive and the amount they are looking for is too small. Until we see 5 million plus shares traded and ideally 10 million plus we are staying in this cycle. Obviously the tangible reason is that there is no real news to drive forward. When that comes then we will see a different trading pattern IMHO.
I am honored to join the Vringo board of directors. Thanks to the execution of the company's exceptional management team, Vringo is an emerging leader in innovating, licensing and protecting intellectual property and technology. The company is poised for growth in 2013, and I am excited to play a part in Vringo's continued success," said Mr. Keller.
This is the difference between an institutional investor and retail. These words are very powerful in my mind. They do not rely on S/A articles and are not swayed by what appear to be short-term set-backs. The company is poised for growth in 2013. He is a very knowledgable person with respect to legal matters and appears to be an expert in appellate matters. These are the type of signals that most retail investors will miss and they will look back after the move and point to it as one reason why they should/could of been proactive.
Nice article on S/A over the week-end. It is from a group of analysts:
http://seekingalpha.com/article/1087251-does-a-scalable-business-plan-work-for-vringo?source=yahoo
I agree with their conclusion
In Conclusion
With regards to Vringo, the actual software development corporation goes, there's a little investment here. For the Q3 of 2012, the company documented an operating loss of $10 million on revenues of $266,000. In fiscal 2011, Vringo documented zero revenue.
In terms of the firm's intellectual assets, I believe the success they are about to achieve against Google sends a chill through the industry and obviates the need for Vringo to litigate going forward. Several companies will accept to pay the licensing fees Vringo is challenging, and that should enhance Vringo's cash flows.
I also expect the corporation to be very active in chasing such fees with a backlash of their Google victory. Vringo stock clipped on news of victory in court, and subsequently, gave it all back. It's challenging to believe we'll see a continual rise in stock if or till the actual product the corporation sells catches on.
Disclaimer: EfsInvestment is a team of analysts. This article was written by Siraj Sarwar, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.
You are correct the Active Video case was appealed to the Federal court all in just over a year.
thank you ....for proving my point you have ZERO intelligence
Then you need glasses ... there is a motion to correct their error you do not know that this will not be corrected. Also Vringo has asked for 7% rr this can also go against Google my friend.
AS a point of reference in another case decided by Justice Jacskon. Look at the folly of Verizon's arrogance; like Google they turned a $115 million dollar jury decision into $260 million plus unspecified damages in a settlement.
The numbers here are far greater and the jury has already decided infringement so Google's folly is going to cost them a lot more money. This is not speculation but fact. Judges do not invalidate a jury decision without compelling evidence. The trial was run and Google's lawyers lost just like they have lost the last four cases they were involved in. I expect Google to settle at some point.
My thesis is based off the $15-$20M that JJ is likely going to award VRNG per year for the remainder of the patent lives, which Google will eventually settle for under $70M at a slight discount for paying the money upfront
I don't agree . This stock is in an information vacuum. Uncertainty abounds no one knows when a ruling will be available, there are many who bought this expecting a big pop they are gone or disillusioned. Institutions are increasing their position here check the numbers from August till now. This is a more logical explanation than they have information that no on else has IMHO
I have seen many stocks behave like this and then move dramatically higher so your assessment is not necessarily correct.
Really so share with us your research. It had better be more substantial than your assertion VRingo would settle for $70 because that is absolutely ridiculous. Go ahead
totally irrelevant,.. what is mesh press anyway?
Oh yes lets not get into that and why the sec allows offshore accounts and naked shorting it makes no sense to allow crooks to do this. There is no legitimate reason to engage in naked shorting period.
Sure. Sorry for getting back late. Well short sale days means how many days will it take to cover the short position given the average daily volume. We now have the highest short position I believe and it is probably even higher now because those stats are from 2 weeks ago. The average daily volume has been going down for a few months now which means if there is a positive event the combination of new buyers and all these short is the ignition for blast-off. I have seen these type of stocks before , shorts keep piling on and then they get greedy thinking there luck will never end, then something happens they are trapped and the squeeze forced buybacks etc moves the stock several 100% higher. If the news is really good it just keeps going. what's your take?
Someone said that their firm has a 90% win rate well not anymore...Also with the large short position ...almost six days to cover and most definitely an even higher number now any good news will skyrocket this stock.
I was just making a general comment on insiders selling. THey can sell because they expect bad news, but it could also be because they want a new, car, buying property, jewelry, etc. Purchases are more significant because the only reason an insider buys is if he/she expects a higher stock price in the future.
I was responding to someone's post about Google which is very clear. Take a look at your one line posts like timmmbbbbeerr..that's really intelligent keep it up . Let's hear some of your wisdom go ahead I dare you....
Not sure I agree . Insiders sell for many reasons not just because they are down on the company. Insider purchases are more significant however.