“It’s like being robbed in a library, but you’re like, ‘Thief!’ You can’t shout that! Because there are ‘quiet, please’ signs everywhere.
Roger Hamilton, CEO of Genius Group Limited GNS,
He describes the powerlessness he feels because US securities regulations prevent him from discussing his company’s share price, even as it comes under attack from a group of naked short sellers.
A Singaporean education company announced Thursday that it has appointed a former FBI director to lead a task force investigating alleged illegal trading in stocks that it first addressed in early January.
For reference: Genius Group stock surged more than 200% after a former FBI director was appointed to investigate alleged naked short selling
The news sent the stock up a record 290% on Thursday, and it climbed another 59% on Friday. The volume of about 270 million shares traded in Thursday’s session crossed the daily average of about 634,000 — another indicator, Hamilton told MarketWatch in an interview Friday, of wrongdoing, given that the company’s float is just 10.9 million shares. “Obviously, it’s a lot more shares than we’ve created,” he said.
The Genius Group has evidence from Warsaw Burstein LLP and Christian Levine Law Group, tracking from Share Intel, that certain individuals and/or companies have sold but failed to provide a “significant” amount of its shares as part of a scheme to artificially discourage them. stock price.
The company is now seeking legal action and is planning an extraordinary general meeting in the coming weeks to seek shareholder approval for its planned actions. This includes paying special dividends as a way to weed out bad actors and working with regulators to share information.
Share Intel uses real-time tracking software to determine where there are anomalies in the market and where brokers are opening large positions, Hamilton said. The software can measure the number of shares that have been bare-shorted and has found many instances where significant amounts of fake shares were created, Hamilton said.
Bare short selling is illegal under Securities and Exchange Commission rules, but that hasn’t stopped the practice, which Hamilton said affects more companies than is commonly recognized.
In a regular short trade, an investor buys shares from someone else, then sells them and waits for the stock’s price to fall. When that happens, the shares are bought cheap and returned to the former owner, with the short seller pocketing the difference as a profit.
In bare short selling, investors don’t bother to borrow the stock first and simply sell the shares with the promise of delivery at a later date. When that promise is not fulfilled, it is known as failure to deliver.
By repeating that process over and over again, bad actors can make huge profits and drive down the stock price with the ultimate goal of driving the company into bankruptcy, where all equity is wiped out and the bare shirts are no longer needed. covered up
Hamilton said evidence gathered by the Genius group shows a large amount of illegal activity is taking place on US exchanges, but there is also activity taking place off-exchange and involves black pools.
“Because we want to stop this,” the company is fighting, Hamilton told MarketWatch. “They are taking value from our shareholders. They are hunters. They are doing something illegal, and we want to stop it, whether that means regulators enforcing existing rules or putting new ones in place. “
Public companies should form committees to monitor and report internal fraud to protect shareholders, he said. But there is no such team looking for external fraud and many retail investors see the stock as being manipulated, he said.
“Hopefully, the rules will change and regulators will see that there are just as many, if not more, threats from outside the company,” he said.
The Genius group is not alone, Hamilton said. He cited, among other examples, Torchlight, an oil- and gas-exploration company that used Metamaterial Inc. to thwart a naked-short-selling attack. decided to merge with
The stock rose from 30 cents to $11 in the six months after the deal was completed, and the company was able to raise about $183 million through a combination of convertible debt and equity. Hamilton’s interview with former Torchlight CEO John Brada can be found below.
Then there is Creatd Inc. Jeremy Frommer, CEO of CRTD,
The aim is to unlock creativity for creators, brands and consumers who are lagging behind CeoblocA website that aims to end the practice of naked short selling.
“Illegal bare short selling is the greatest risk to the health of the public markets today,” is how the site presents its mission.
On Friday, Helbiz Inc. Stock of HLBZ,
Genius joined the group in rocketing higher volumes, after the company said it was also taking bare-bones short sellers.
The New York-based maker of e-scooters and e-bicycles said it is following Genius Group’s example and that it believes “certain individuals and/or companies may be engaging in illegal short-selling practices that artificially depress stock prices.” The stock had fallen 64% in the three months to Thursday’s close of 12.31 cents.
Genius Group’s stock, which went public in April 2022 at $6 per share, is up more than 600% this week. S&P 500 SPX,
It has risen 1.1% over the same four trading sessions.