Sep. 24, 2018
Sirs, I am writing this letter in response to public comment involving retail fraud. I feel it extremely fraudulent for groups of “professional investors/hedge funds” to run Short and Distort campaigns against small cap companies. I agree shorting as a strategy is perfectly fine in a normal market, however when groups of people are able to spread lies and falsehoods through social media or friendly press contacts for the purpose of a stock to go down is fraudulent. Add to that naked shorting and stock manipulation. I have been an investor in MImedx, a company that is battling such a short and distort campaign. With the associated group of hedge funds and accredited investors making claims via social media of the company being insolvent and bankrupt. Attacking health care professionals that use/administer the product, shaming/threatening these people and their families through social media. Causing loss of business reputation, and shareholder value. They can claim/ say anything they want even issue death threats to executives with zero recourse. All the while leaving a company helpless to respond. Damn if you do, damned if you don’t. These attacks follow a similar pattern. Attempt to have a whistlebower lawsuit. Use the lawsuit as information they are able to distort for their own gain. Spread false info and lies about the company all for the purpose of financial gain using court documents obtained from friendly attorneys. Have friendly press run hit pieces on or about option expiration dates. Attacking analyst and other posters on various social media such as Twitter and Stock Twits Seeking Alpha and Facebook. Some companies deserve the negative attention they receive however those that don’t have are fighting an uphill battle and I would argue illegal battle against people that can say whatever they want, illegally Short phantom shares, and intimidate whomever they want through social media. These actions destroy retail investors monies, companies and innovation. Some solutions could include bring back the Up Tick rule, stopping continuous shorting to allow a small amount of shares to dramatically bring down a stocks price. Make Short shares be disclosed as long positions are. Find a way to stop naked shorting, making sure there are shares to short. Holding hedge funds to similar rules that registered individuals have to abide by to reduce fraudulent information. Rework the whistleblower rules as these people are taking advantage of them which is NOT the intent. Thank you for reading this Retail Investor’s letter