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Molycorp, Inc. Message Board

  • esoxlucios esoxlucios Feb 1, 2013 4:59 PM Flag

    SEC enforcement action announced afterhours

    Got your attention.

    cn_cb480 wrote, "If you believe SEC would sit on this stock for 5 months while any wrong doing is going on you're mistaken ... if you review the Nov MCP call you would have learned they totally changed their bookkeeping ....then they submitted SEC disclosures supporting the changes ... this was the SEC's doing ...then CEO Smith is gone .... another SEC decision ... no Wells order has been issued therefore no wrong doing on MCP .... numerous new disclosures have been issued as well none of which would be issued without SEC review.... I agree SEC will leave without any fanfare and stock might pop up 30% or more."

    Wrong. They probably have simply failed to disclose the issuance of the Wells Notice (See "Is there a Duty to Disclose a Wells Notice?" (Sidley Austin, LLP | Fall, 2012). Why would I suspect Molycorp of not disclosing such a fact? Like they said over at Motley Fool, "The bigger problem [is] an SEC investigation into the company's public disclosures. Apparently, the SEC began investigating the company in August, and the company didn't feel the need to tell investors until it slipped the nugget into the 10-Q filing. No mention in the earnings press release, the conference call, or any release before that . . . When the SEC comes knocking, the best move is to run."


    Sentiment: Strong Sell

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    • Do you really think insiders would be buying massively if they were worried about an sec investigation... You mook!

      Sentiment: Strong Buy

      • 1 Reply to atstub99
      • Define "mook."

        Well, anyway, you may have a valid point there. One would assume these particular insiders are close to the investigation and would know the outcome or probable outcome.

        OTOH, insider buying is not sina qua non to a prosperous, bright future: Smith bought in at ten bucks in October (also after the SEC investigation commencement), and the shares rallied on news of it at that time, yet he cannot sell until six months, and look how much those shares are worth today.

    • Just some random Google info:

      What is a Wells Notice?

      It's a letter, usually from the SEC, that says a publicly traded company and/or person from the same firm—has been investigated and that there is probable legal action planned for violating federal security laws.

      ... a Wells Notice - a notification from a regulator that it intends to recommend that enforcement proceedings be commenced against the prospective respondent. The notice references, in broad-strokes, the violation that the Staff believes has occurred.

      Before the Wells notice is sent, the SEC has conducted an investigation by subpoenaing witness and documents. By doing so, the company or person is made aware that an investigation is ongoing and that a Wells notice could be coming.

      The time between the SEC investigation and the sending of the Wells notice can be from 5 months to a year, according to analysts.

      And some random thoughts:

      I don't know what the SEC is investigating other than the SEC investigation is into public disclosures. I tend to read them so I have a sense that MCP manages to fulfill the legal obligations. That doesn't mean I approve of every information handling they have done, just that what I've disapproved of has generally been legal. A publicly traded company has to obey the laws and the SEC has to investigate when they see a company tread near the lines.

      I don't know what the SEC has found or what they think. MCP tells us of an investigation that they became aware of in August, 6 months ago. This corresponds to the "subpoenaing documents" mentioned in the document request blurb (a subpoena is an order, but since it is resistible, I suppose it counts as a request).

      There are many possible outcomes. In order of severity:

      The SEC may determine the disclosure processes of MCP fulfill all the legal requirements and end the investigation.

      The SEC may determine the disclosure processes of MCP fail to meet some requirements and warn the company, with no fine.

      The SEC may determine the disclosure processes of MCP fail to meet some requirements and fine the company a small amount.

      The SEC may determine the disclosure processes of MCP fail to meet some requirements and fine the company a large amount.

      The SEC may determine the disclosure processes of MCP fail to meet some requirements and fine the company a large amount and civil lawsuits are necessarily substantiated.

      At the moment we just don't know. There is exposure to almost limitless damages at the extreme end of the spectrum. As I said, I found some of the disclosure techniques of MCP a bit reprehensible, but still legal. They have definitely had a bias to manipulate information so that it reflects positively and to neglect negative information. That doesn't have to be illegal, and I support the more honest/open style of the new CEO as an improvement. Even if they were legal in not presenting negative info (remember the drilling results PR ... neither do I, as they did not issue one). Or remember the PR that revealed they had learned of an SEC investigation ... again, they released the negative info, but only in the minimally informative way ... possibly still a legal disclosure, but not one I approve of.

    • What an idiotic analogy. Desperate short. Squeezzeeeeeee coming to your account soon.

      Sentiment: Buy

      • 1 Reply to atstub99
      • I didn't draw an "analogy," fool. And I don't have a short position, either. I covered 4,400 shares two days ago at $7.36, and bought 2,135 of XIV this morning in premarket (it went up over 5%). Now, I've turned around and shorted XIV for holding over the weekend.

        Volatility is guaranteed to return (hence XIV-short is a position I can sleep well with overnight). Holding MCP-short overnight is risky because of news and manipulation beyond our control. And holding long for any period to time (during the last 2.5 years) for anything other than daytrades does nothing but wipe out one's account (I know, I lost $125K on MCP (excluding 2011 MCP gains) in 2011-2012, so please don't waste your time trying to persuade me or anyone to go long on MCP). The only money I've made off MCP in the last two years has been short positions.

0.90-0.02(-2.47%)May 1 4:02 PMEDT