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Replies to post #41218 on SiNtx Technologies Inc (SINT)
These companies -- there were 13 of them, all pretty small -- raised money through what the SEC calls "confidentially marketed public offerings." A company would engage an investment bank, which would call up potential investors and ask if they wanted to buy shares in the company. The bank would do this before the company publicly announced the offering, and would "wall-cross" the potential investors, making them agree to keep the information about the offering secret until it was announced publicly.
So here's a predictable stock-market pattern and an easy way to exploit it: If a company calls you up to ask you to invest in its upcoming public offering, you should (1) say yes, (2) sell the company's stock short before the public announcement, and then (3) buy the stock back in the public offering, generally at a 10+ percent discount, a few days later.
This is of course not legal advice! It is a great trade, but it is also double super illegal, insofar as:
There is a specific SEC rule against short selling stock just before a public offering and then buying back the stock in the offering, 5 and
There is a general, and much more important, rule against trading on purloined material nonpublic information, and this is that.
trading in breach of that agreement, you are clearly violating not just the contract, but also insider trading laws, which make it illegal to trade "in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security."
But, you know, who will check?
Some of the funds would get wall-crossed, and then they'd tip each other and trade in the other funds to try to obscure what was going on:
When they were successful in obtaining such information, Fishoff shorted the issuer’s stock in advance of the offerings, directed trading by Chernin and Costantin in those instances when he did not place the trades on his own, and tipped Petrello, who then also shorted the stock through Brielle and Oceanview.
In many instances, the Fishoff-controlled entities for which Chernin and Costantin were fronting also participated in the offering, with the stock going to Featherwood’s account and often being used to cover the short sales.
By cheating on their wall-cross agreements and shorting the stock, these guys had the effect of driving down the stock price, which probably reduced the price in the offering. These companies probably got less money for their stock because their nonpublic information was (allegedly) used against them.
Though you could have a more cynical view of this sort of thing. A company needs to sell stock, but worries that announcing a public offering will drive down its stock price and not produce any takers. So it calls some investors up privately and tells them it's doing a deal. Those investors agree to invest in the deal, but before the deal is announced they lay off their risk by shorting the company's stock. Then the deal is announced and the investors buy shares from the company to (illegally) cover their shorts. The investors get their 10 percent, or whatever, discount to the market price as a commission; their real function is not to invest in the deal but to intermediate between the company (which can't sell stock without a publicly disclosed offering) and the unsuspecting public (which buys from the "investors" before the public disclosure). The wall-cross agreement creates deniability for the company. No one's stealing from the company; they're helping the company get a deal done that would otherwise be much harder to achieve. The victims are the public who buy from the insider traders at the inflated, pre-announcement price.
The 10000 can be wash traded back and forth freely between colluding computers. Tons of money is made so they can now walk the stock down even lower because risk has been reduced.
Things just go SOOOO much more interesting with this revelation. It shows there has in fact been a conspiracy of funds, shorting and distorting Sint & Sintx since 2015. My next post will give some insight into how this family of funds might operate. This includes shorting before offerings exactly as ive said was occurring but it looks like the other funds do the shorting and then cover with the shares the fund that bought the offering received. Also seems to include wash trading back n forth just like Xenalives has posted in the past.
Plaintiff further asserts that many of the potential investors that it contacted on behalf of Defendant operate as a family of hedge funds, all managed by the same investment advisor.
List named the following:
• Anson Funds Management LP and its affiliates
• Ayrton Capital, Altos Opportunity Fund and their
affiliates
• Crede Capital Group, Acquitas Capital and its affiliates
• CVI Investment, Heights Management, SIG and their
affiliates
• Connective Capital and its affiliates
• Empery Asset Management and its affiliates
• Intracoastal Capital LP and its affiliates
• Hudson Bay Capital Management and its affiliates
• Ionic Venture LLC and its affiliates
• Lind Partners and its affiliates
• Li Capital Global Opportunities Master Fund and their
affiliates
• Sabby Management LLC and its affiliates
This Schedule 13G (this “Schedule 13G”) is being filed on behalf of Frigate Ventures LP (d/b/a Anson Group), a Texas limited partnership (“Frigate”), Admiralty Advisors LLC, a Texas limited liability company (“Admiralty”), Mr. Bruce R. Winson, the principal of Frigate and Admiralty, M5V Advisors Inc. (d/b/a Anson Group Canada), an Ontario, Canada corporation (“M5V”), Mr. Adam Spears, a director of M5V, and Mr. Moez Kassam, a director of M5V, relating to Common Stock, $.01 par value (the “Common Stock”), of Amedica Corporation, a Delaware corporation (the “Issuer”).
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