Any stock lawyers or SEC rules freaks here that know exactly which laws make short distortion illegal? It would be a great service listing them to this board because if there is nothing illegal about what is going on, we sure are wasting a lot of energy in our ignorance. End ignorance legal eagle, post rules on Short Distort.
I am a litigator, but I am not seasoned on the SEC rules or the Securities Act, nor criminal law so I cannot comment about whether those are avenues for legal action in relation to the Gotham article. However, I am very familar with fraud, defamation and false light claims -- all of which I believe can be brought with respect to the Gotham article. There are many misrepresentations in the article which are clearly false statements of fact and/or opinions which have no reasonable basis and which are made with the intent that the reader rely upon them as fact and not opinion. I also think the article is very clear that the author(s) made these misrepresentations with the intent to drive the stock price down and profit from this misinformaiton. Definitely a civil lawsuit could be brought in relation to the Gotham article. The problem is collectability of any judgment obtained. I highly doubt that the author or Seeking Alpha is solvent enough to satisfy any meanigful judgment entered against them which even remotely approaches the losses sustained. Now, if it could be demonstated that a hedge fund or very wealthy people here were co-conspirators, then maybe a civil case could have some viability.
There's more involved than Gotham City. This was a far bigger operation than one person. Naked shorting looks likely too since it would be hard to obtain sufficient borrowed stock. Brokerage houses had to allow it. It appears to me that the stock was naked shorted down and then the shorter bought to cover and added more so that it could be sold to drive the price down further. Just look at the people who criticized David Collins; that's a start. Short and distort people try to discredit people like David Collins. Also "news" sources for the "SEC investigation"; they like to say that the SEC is watching and will or should halt the stock.
Sentiment: Strong Buy
The Gotham article is legal. What is illegal is to manipulate the price down selling it short at the same time. It is the same as pump-and-dump. It is stock manipulation. They will claim that the article and Daniel Yu have no contact and are not associated with the hedge fund shorting the stock.
Amazing how the manipulators can control this equity so easily. Hovering around break-even 1 cent in the red, 1 cent in the black back and forth like a yo-yo! This pattern has been prevalent for almost 3 years now.. Have the shorts made any money? It was trading about 27 and change 3 years ago!
It is amazing, but a lot of the volume is faked by HFT computers. How much does it actually cost to take the stock down from $19 to $13? It depends on how many shareholders you can scare out of the stock. Still I guess it costs more than $5m in shorting if not in the low $10ms. At the moment though they are paying over 20% to borrow the stock on the AQS system. This short position is not sustainable if earnings increase. They are getting just slightly desperate.