"As previously disclosed ... Insmed ... completed a registered direct financing with three investors ... pursuant to which the Company issued 6,304,102 shares of common stock.
The price ... was $4.07 per share ...
On October 5, 2012, the Company received telephonic notice from its outside counsel on the transaction that the Staff (the "Staff") of The NASDAQ Stock Market LLC ("Nasdaq") had informed such counsel of the Staff's belief that the sale of the shares did not comply with Nasdaq Listing Rule 5365(d).
The Staff's concern was based on the fact that the shares were sold at a price that was below the book value ...
As a result, it was the Staff's belief that, pursuant to the Nasdaq Listing Rules, the Company was not permitted to issue 20% or more of the Company's outstanding common shares ...
Following communications by the Company with the Staff, on October 12, 2012, the Company received a Letter of Reprimand from the Staff ..."
I observed at the time that we were entitled to expect Management to have a basic awareness of the underlying principle. They should seek our approval for transactions likely to dilute our ownership by 20% or greater.
Hence the Nasdaq Reprimand?
But such is their arrogance that the response has been a compound dilution of 44% at an average price of $7.05 - via two transactions in nine months, engineered so that they wouldn't have to seek our approval for either.
Any guesses as to what might have happened to the share price if those investors instead had bought even half of the 13 million shares on the open market, during the same nine months in which an additional 5 million shares were bought by the Russell 3000 tracker funds?
Who here would have voted in favour of even ONE premature dilution - after the Company assured us in July last year that the $20 million raised in the Hercules dilution would "extend our cash runway well into 2014"?
Every e-mail sent increases the possibility of a SEC investigation.
Maybe this tidbit evades your simple intellect, but NASDAQ is a private company and can make rules all day long that have nothing at all to do with regulations contained in the CFR. I suspect this is one of those rules.
I'll give you an example that you may be able to understand. My company has a rule related to maximum expenditures for entertainment. If I exceed those limits - shame on me with my company. But, the FBI won't come knocking.
There's no easy way for me to break this to you, but you're way out of your depth here.
The investors who use this forum take it for granted that the Nasdaq deals with violations of Nasdaq regulations - and understand I was suggesting that the previous instances of the leadership team's lack of respect for existing shareholders might have have resulted in the Nasdaq interpreting the price movement leading up to the recent offering as possible securities fraud.
I assume that either -
a) you can offer us an innocent explanation for the sale of several million shares which took the share price from $14.30 to well below $10 despite the five analyst valuations which suggested the stock was substantially undervalued at $14.30
b) you've already e-mailed the SEC in the hope that an investigation will establish if anybody at Insmed assisted in securities fraud.