"With many new members joining this forum, one of the most "
pressing questions they may have is, "Why the Heck did I get Sued for owning this stock?"
Well, A very good question, and one probably most peoples friends wouldn't even believe. But seeing as it happened, a good explanation and discussion of such is needed, I think.
What follows is condensed from the company's filings and legal documents:
On December 12, 2006, the DTCC, NASDAQ, NASD, and other parties (together, the “Regulatory Parties”) hold a conference call with the principals of Energy Source, Inc. to discuss the unauthorized shares of Energy Source stock, and the possibility of Energy Source being allowed to trade again.
The Company’s representatives request assistance from the “Regulatory Parties” to resolve the matter without litigation; however, the company is directed that a lawsuit against the shareholders believed to be holding unauthorized shares of stock is necessary and required in order for Energy Source to determine its legitimate shareholder base.
The Energy Source representatives are told by the “Regulatory Parties” on the conference call that a court order determining which shares of company stock are valid will be required before the company can commence trading its stock again.
Based on the following known facts, the company files this lawsuit on April 11, 2007 with the belief that numerous defendants have obtained their fraudulently issued shares of stock from unauthorized third-party wrongdoers:
•Defendants are not one of the known 80 legitimate shareholders
•The Company’s transfer agent do not list the defendants as a verified shareholders
•Defendants purchase their stock in 2005 when the counterfeit shares are produced
•The Company does not receive any monies for the stock purchased by the defendants
The Company anticipates that any legitimate shareholders will be able to request stock certificates from their brokers and provide the Company with legitimate stock certificate numbers verifying their purchase of the Company’s stock.
The Company believes this lawsuit is the only means to determine the legitimate shareholder base for the Company’s stock, and to have the ability to commence trading again. It also believes that a court order determining that a shareholder holds unauthorized stock will provide a means for the defendants to seek recovery elsewhere.
The Company attempts to protect the numerous defendants in this case by seeking an order to seal the pleadings in order to protect the defendant’s confidential financial information.
Because the lawsuit turns into a case that was not what Energy Source originally thought it was pursuing (i.e. a lawsuit against wrongdoers), the Company dismisses this lawsuit after one month.
So it is clear from the company's official filings that the shareholder lawsuit was initiated at the behest of the regulatory representatives on the conference call, specifically representatives from the Depository Trust and Clearing Corporation.
To think that the company's interest was to actually litigate against all shareholders for $10K in damages is first of all patently ridiculous, almost all BCIT shareholders bought their shares through online brokerages and clearly had documentation to prove that, and secondly such an actual litigation would be so unheard of and cost prohibitive that it would end up being dropped, just like it was, when certain parties, and brokers included, started scaremongering across the internet as to what the suit's intentions were. Sadly these parties were successful and headed off their day of reckoning with the BCIT naked short position for two more years so far.
In reality, if the case had proceded as planned, all the shareholders who bought their shares legitimataely would have the power of a court order behind them to demand good shares from their brokers. But it was not to be at that juncture.
So to conclude, anyone complaining about "being sued" simply wasn't informed enough on what the strategy was. Now perhaps the blame lies with the company in that they didn't issue a press release describing the strategy, and demands of the regulators, but unfortunately due to legal counsel, they had to remain quiet.
SLUMDOG 
