David Dayen, a persistent chronicler of how oligarchs exploit the financial system to enrich themselves at the expense of others, writes about Chris DiIorio, a stock analyst who for 10 years has obsessively investigated how exactly he came to lose $1 million on one penny stock. A remarkable story ensues.
Chris DiIorio had just lost a million dollars.
This was back in 2006. DiIorio, who was 39 at the time, had recently moved with his new wife from Boston to Castle Pines, Colorado, a leafy suburb of Denver, and was toiling in finance as a market researcher, analyzing the financial statements of public companies and giving recommendations to portfolio managers.
He had previously worked on Wall Street as an institutional equity trader and research analyst for a subsidiary of the now-defunct investment bank Donaldson, Lufkin, and Jenrette. He had 13 years experience executing massive trades for large mutual fund clients like Fidelity and Putnam.
Chris DiIorio
Photo: Matt Slaby for The Intercept
But in his new life, DiIorio happened upon a technology company called E Mobile (symbol: EMTK), a small computer chipmaker that claimed to hold patents on an antenna-type Wi-Fi router and other products. He reviewed company press releases, as well as investor chatter online claiming that E Mobile’s chips were provoking interest from Chinese content companies.
E Mobile didn’t trade on the New York Stock Exchange or Nasdaq, however. It was an over-the-counter stock, traded on an electronic exchange called the Pink Sheets that is home to what are commonly called “penny stocks.”
A penny stock is actually any equity that trades for $5 a share or less. But many shares can be had for a literal penny, or even a fraction of one. They are purchased on the Pink Sheets and the over-the-counter Bulletin Board market, through your regular brokerage account.
Not every penny stock is suspect; some are simply startup companies working their way to larger exchanges. But they do lurk on the dark edges of the financial markets, with sudden volumes and massive volatility. Regulation and reporting vary from light to nonexistent.
“They don’t have the same standards,” said Joseph Borg, director of the Alabama Securities Commission, who achieved fame by investigating Jordan “The Wolf of Wall Street” Belfort’s company Stratton Oakmont for penny stock fraud in the 1990s. “Willie Sutton said he robbed banks because that’s where the money is. This is the easiest place to manipulate something.”
The Pink Sheets’ own website warns that it “offers trading in a wide spectrum of securities” and that “With no minimum financial standards, this market includes foreign companies that limit their disclosure, penny stocks and shells, as well as distressed, delinquent, and dark companies not willing or able to provide adequate information to investors. As Pink requires the least in terms of company disclosure, investors are strongly advised to proceed with caution and thoroughly research companies before making any investment decisions.”
But DiIorio didn’t know that at the time.
On Wall Street, he had executed multimillion share trades, usually of blue chip companies that make up the Dow Jones Industrial Average, like IBM or General Electric.
“I had never invested in a penny stock before,” DiIorio said. “I was not super sophisticated in this world.” But he decided to take a flyer on E Mobile, based on its promising news. “I bought this company on hype.”
Between February and May 2005, DiIorio bought over 3.7 million shares of E Mobile, mostly through his rollover IRA account with TD Ameritrade. The total cost: $100,000, or a little over 3 cents a share. It was a big position, but this was retirement money he was trying to grow, and if it paid off, the payday would be tremendous.
E Mobile bounced around for a year, not doing much. The CEO, Nan Hu, personally called DiIorio, asking him to invest more through a “private placement”: an off-market offering of stock to select investors.
DiIorio declined. “I was already up to my eyeballs. I said, ‘I’m good with my position.’” Attempts to reach Hu for comment were unsuccessful.
Then, in March 2006, E Mobile announced a “reverse merger” with Best Rate Travel, a private company specializing in online vacation booking. Adrian Stone replaced Hu as CEO. To DiIorio, it was a puzzling maneuver for a chipmaker. “They announced a merger with a travel company?” he said. “What the fuck?”
As part of the merger, E Mobile changed its name to Best Rate Travel, altered its stock ticker symbol to BTVL, and did a 1-1,000 “reverse stock split.”
You’ve probably heard of a stock split; it can happen when a company’s share price gets unmanageably high. So when a stock hits, say, $200, investors who owned one share receive two, each priced at $100.
Well, the opposite can happen, too. Best Rate Travel’s reverse split gave existing investors like DiIorio way fewer shares — at a way higher price.
As a major shareholder, DiIorio was offered a slightly better deal: a conversion to preferred shares of E Mobile at a lower reverse split rate of 1-to-30, and then a conversion at 3-to-1 to Best Rate Travel. After all that, he was left with 373,599 BTVL shares.
The merger hype, repeated in a feedback loop of positive press releases, moved the stock. DiIorio recalls it peaking at $3.50 by September 2006, giving his holdings a value of around $1.3 million.
“I thought this was the exception to everything I knew about the markets,” DiIorio said. “Cheap stocks are cheap for a reason.” But the success fed DiIorio’s ego. He felt like he beat the odds, vindicating his stock-picking acumen.
There was a problem, however. Best Rate Travel structured the conversion with a “lock-up” agreement, restricting shareholders like DiIorio from selling the stock for a year. This is common for newly public companies.
But it left DiIorio helpless when the stock plummeted from $3.50 to $0.06 a share within two months.
DiIorio initially saw it as a classic “pump-and-dump” scheme, where major investors in a company lure in other investors with overhyped claims, raising the stock price, and then sell their shares, leading to a drop. Pump-and-dumps have proliferated with the rise of internet message boards. “It’s not just promoters calling you on the phone anymore,” said Laura Posner, bureau chief of the New Jersey Bureau of Securities. “People pretend to be other people, pretend to have inside information.”
But to DiIorio, BTVL’s drop didn’t make sense, because prior shareholders were prohibited from trading the stock. “I called the CEO regularly and said: ‘Who’s selling the stock? How is this happening? The stock is not for sale.’ He told me that he was locked up too.” Phone numbers and email addresses listed for CEO Adrian Stone no longer function, so he could not be reached for comment.
By the end, DiIorio took a loss from the peak stock value of well over $1 million. “I never saw such devastation in a stock before,” he said.
In a pump-and-dump scheme, investors buy a stock, hype it to pump up its value, then dump it before it crashes back down.
Graphic: The Intercept
A Real Head-Scratcher
DiIorio prided himself on being a savvy trader.
And the implosion of Best Rate Travel, given the lock-up period, shouldn’t have occurred. DiIorio wanted to understand what really happened to crush his investment so completely. And he had the background in financial market analysis to see it through.
So DiIorio started learning what firms traded Best Rate Travel. The biggest two by far were the giant Swiss bank UBS and a massive New Jersey-based company named Knight Capital.
He thought these were very big names to be involved in such an obscure penny stock.
Something fishy was going on, but DiIorio had no idea what. “I just thought, what the hell, I’m going to figure this out.”
Contact the author:
David Dayen, a persistent chronicler of how oligarchs exploit the financial system to enrich themselves at the expense of others, writes about Chris DiIorio, a stock analyst who for 10 years has obsessively investigated how exactly he came to lose $1 million on one penny stock. A remarkable story ensues.
“The Scorpion and the Frog”
Can’t believe the principle in this piece is an astute trader……not possible.
On to part 2. In the meantime one notes (fortunately) he only at most loses his initial $100k investment NOT $1m. The share price of the ‘stock’ lost that relative value. Quite a drubbing but not per the misleading title. And 15 years in the business -and ‘didn’t know what penny stocks were’..
@Anonymous –
Thank you for chiming in. I couldn’t respond directly, the reply link wouldn’t work. Sorry you’re still having problems, too. Just now, the Mackey piece on the video of Mr. Scott seemed to go fine. But againk twice to get here, reply link didn’t work, and yes, the menu still won’t load.
Yes —- thank you for agreeing, one HAS to wonder if TI is paying attention. Yes, the stories are good, but reader friendliness is very important as well.
I could be guessing wrong here, but it seems like you David Dayen(author of the outstanding book, Chain of Title), are going to be discussing the SBP, or Stock Borrw Program of the DTCC, which allows big traders to do a borrow on stock which isn’t or can’t be in play (owned by other parties), also known as “virtual stock” and used to destroy the common stock of smaller companies by shorting, etc.
Interesting to note that the last time I checked, DTCC was owned by Goldman Sachs, Morgan Stanley, Chase and the NYSE — the NYSE in turn is majority owned by ICE, or the InterContinental Exchange, which the last time I checked was owned by Golman Sachs, Morgan Stanley, Deutsche Bank, Total and BP – – – seems kind of circular ownership here?
In the previous installment, Mr. DiIorio pretended to be a poor naïve Wall St. trader. In the current installment, Mr. Dayen pretends to be economically illiterate.
Stocks tank because eventually the hype wears off, and investors realize the stock has no fundamental value. Hint: if the company you invest in is a chip maker, and overnight it becomes a vacation booking company, then it probably doesn’t have a good fundamental value. For example, if one week someone is introduced to you as an opera singer, and the next week they are introduced to you as an NFL quarterback, you would do well to be a little suspicious.
From Episode I:
This isn’t a slightly better deal. Either it is a typo, and the split rate should be 1-to-300, or Mr. DiIorio obtained 1 BTVL share for every 90 of his E Mobile shares as compared to 1 for every 1,000 to other shareholders.
The catch, of course, is that to get this deal, he had to agree not to sell his shares for a year. This made it easier to pump up the share price. Normally, many shareholders, when they see the price going up, decide to sell out, putting a brake on the price increase. However, if the major shareholders can’t sell, due to the lockup agreement, this won’t happen. The price manipulators can pump up the stock and get out, all before the year is up.
So the culprit is obviously whoever put together the share price deal with the lockup agreement. In other words, the company management. Knight Capital is just a scapegoat. The naked selling occurred because people saw the stock price going up, and wanted to get in, but the major shareholders were locked into a no-sell agreement, and so the shares weren’t available on the market. Without Knight Capital, the stock would have peaked even higher (since the investors would have bid up the price even higher due to artificial scarcity of shares on the market), and therefore fallen even further.
However, any grifter will take the opportunity to blame the collapse of the stock value on the naked sellers. A little misdirection is useful.
He lost money gambling – errrr, “investing” – in penny stocks!
I’m shocked, shocked I tell you. I can’t believe it!
Pump n Dump should be the name of a porno: “Pump n Dump — The Wolf of Wall Street Takes You From Behind (no reach arounds)”
Las Vegas is a funny place; everyone goes there dreaming of big returns on small investments, but there’s a show going on to, a sense of being at the party, involved, a player – but notice how the people who own and run the casino are the only ones reliably making money off this system? The same is true on Wall Street.
Most of the firms who make money as investors are making money off dividends, as with Big Oil, Big Pharma, Big Money-Laundering, Big Telecom, etc. Big Media is the PR system that promotes all these operations, and which often operates at a loss – but PR is important. It’s a wealth-generating system for the 1%, with some trickle-down to pension funds and retirement accounts.
Any rational person would pull their money out of Wall Street entirely, and put it in a local credit union; if there’s some specific industry you like, (renewable energy, say), then invest directly in people like Tesla and Sunpower.
If you’re just some greedy shit trying to make a quick buck, why not just rob banks and sell cartel cocaine? Of, course, the easiest way to rob a bank is to own one, as the likes of Wells Fargo and Goldman Sachs have demonstrated, and the safest way to profit off cocaine is to launder drug cartel money, which is part of the HSBC and Bank of America business model.
“I bought this company on hype.”
This is a savvy Wall Street trader? This is the guy you want to advise you on your retirement investments? Why waste the money on him? Any jackass with a few dollars can blow it on a stock he doesn’t research.
I can only hope that Part 2 reveals this guy is not as dumb as he seems.
Honestly this is a terrible article. It doesn’t even begin or attempt to answer the question it poses itself; how and why did this company collapse? Not to mention, it sounds like our subject actually made money on his investment, just not as much as he could have.
Come on. Part 2 coming soon? Half a story isn’t a story.
He didn’t lose a million dollars. He lost a tenth of that, his initial cash investment.
It’s hype and distortion to assert that the book value of a scam stock is worth what it says it is. These scams work because people confuse these two. When a journalist equates them, they are feeding the scam beast, reinforcing a delusion that whenever you see a number that the number is true. Please don’t do that.
Penny stocks are well known as potential scams. So odd he didn’t know. But there is a story here about market manipulation and I’m sure those big investors were somehow behind it. Can’t wait for Part II.
What is Journajism?
I think this story is the perfect example of what can only be described as…
Part Two of my post is coming soon.
—-
thelastnamechosen is a persistently fucking awesome and the author of “Marketing: If it Doesn’t Work, Then You are an Idiot for Buying This Book! Part 1″ and “Marketing: If it Doesn’t Work, Then You are an Idiot for Buying This Book! Part 2″ and “Marketing: If it Doesn’t Work, Then You are an Idiot for Buying This Book! Part 3″
Mr. chosen is a world renowned Pick Up Artist, and his “one little trick that guarantees you won’t go home alone” will be revealed for the first time–right here, right now!
Part Two of this Bio is coming…
Part Two of this Teaser is…
Also I have logos for all this crap. The post. The bio. Even the logos have logos. But my graphic designer is seriously fucking with me. Bastard.
—
Perhaps I should be an investment advisor. My qualifications are that I used to watch Wall Street Week with Louis Rukeyser. May the blessings of the Profit be upon him.
https://www.youtube.com/watch?v=qzUBmHxpnLA
Part II teaser …
The money is long gone. .. and it’s not coming back.
This is the incredulous line:
“But DiIorio didn’t know that at the time.”
There is no way this is true. And if he actually said it, he’s running his own pump and dump with telling his story.
David, there is nothing about oligarchs exploiting the poor here. The former analyst is beyond reckless for pissing away 100k on a company and a business he didn’t know about. It’s pretty incredible that he only started figuring shit out once his stock went to zero.
Am I the only one having problems using the site? It took TWO times to get to this article, the link to go to comments isn’t working. Menu still won’t load.
Is ANYONE at TI even paying attention?
“Is ANYONE at TI even paying attention?”
One has to wonder.
(I’m still having problems, as well.)
Welcome to Bartertown.
“… seeing this poor analyst loose all his hard earned money,”
Yes this would be sad for anyone, even if he should have known better than to gamble. But the way this story is written we can’t actually tell whether he lost anything at all. All that reporter Dayen tells us is, “By the end, DiIorio took a loss from the peak stock value of well over $1 million.” Which of course is interesting, but it’s not the question most people have in their minds.
The fact that Dayen doesn’t tell us how much Dilorio ultimately lost (or made) on his $100,000 makes me think it doesn’t make for a dramatic story.
My read is, if he bought for 100,000, the stock reached 1.3mn, then dropped by 1mn from its peak, he’s left with 300,000, or a 200k profit? So saying he “lost 1mn” seems a stretch worthy of a bad 50s comic book hero
Cry me a river…
Wall Street traders only tell their clients about a dozen times a day that they merit their high trading fees because the NY Stock Exchange is stringently regulated and their listed companies are regularly audited. How could he have possibly known that the sheet his bosses gave him to read over the phone to clients was actually true? I googled pink sheet and on the first page of results, read “Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC.” To many people, this would have raised a red flag but not, apparently, to a Wall St. trader.
Clearly, there should be a law to protect Wall St. traders from unscrupulous stock promoters. Their brains aren’t equipped to understand the concept of fraud – which makes them uniquely vulnerable. I am pleased that Mr. Dayen is taking up their cause.
Companies that are small are exempted from filing with the SEC because it’s a real, legitimate financial burden to them to comply with SEC filing requirements.
There are lots of great small companies doing good work trying to bring products to realization.
Filing requirements are based on market cap. But lack of audited statements shouldn’t be a disqualifier. But it is certainly a higher risk and he should have known better.
I find it completely unbelievable that an institutional investor did not know about the pinks. I know it is the wild wild west exchange and I am a TINY! investor.
I did ride out the Globe Tel year, GTEL, GTL, GT??? there were a few different symbols over a few years. Talk about a wild ride. From Stratellites to the Russians signing a $600,000,000 wireless network contract, that company bounced from sub-penny to dollars many times. Of course it was all hype.
https://en.wikipedia.org/wiki/Stratellite
I am creating the mother of all pump-and-dump schemes by printing money and holding interest rates at zero percent for eight years while the US government goes on a spending spree, thereby, doubling its debt to $20 trillion.
Good luck in getting repaid with dollars that are worth anything.
David,
I’m close to weeping seeing this poor analyst loose all his hard earned money, which he planned to gamble according to the rules he knows, stolen by some unscrupulous figures tied to big banks who deceived him.
I mean, how could he as a stock analyst imagine such foul play?
Your talking about our daily grind David, we didn’t feel for the people who fell for Murdoch, you know.
Maybe if you dropped all that cheesy wrapping the second part would be interesting.
“He took a flyer with his retirement”? What don’t I understand here? A Parasite gets screwed by smarter Parasites. What ever happened to honest productive work? What ever happened to the banksters supporting the Real Economy? Tens of thousands of financial parasites need to be jailed as we let the kids jailed for drugs out. Start with Blankfein and Diamon. Put them in with Rubin, Summers, Goldgarbage and of course; Clinton, Bush and Obama; that would be a good start.
Maybe they won’t follow the arresting officers orders.
Love it . Sounds like Liars Poker, the Money Ball and the Big Short. Great story
I can’t see him being a savvy trader if he didn’t properly analyze the chart, and then risk his total capital on a single questionable pennystock. Atleast wait for their SEC filing…
Not even a veteran WallStreet analyst if he signed the contract without reading the clause terms and not having the clarity to understand that pennystocks are hugely risky for long term games.
That is like #1 thing they teach when you google “how to trade pennystocks”
I’m a prepper and I’m proud
I use to feel alone in a crowd
but now you look around these days
and it seems there is a prepper CRAZE
I’m a prepper he’s a prepper she’s a prepper we’re a prepper
wouldn’t you like to be a prepper too?
I’m a prepper he’s a prepper she’s a prepper
us preppers are an interesting breed
an honest chance is what we need
ask any prepper and they’ll say “Stay down in the bunker until we are freed”
i’m a prepper he’s a prepper she’s a prepper we’re a prepper wouldn’t you like to be a prepper too?
i’m a prepper he’s a prepper she’s a prepper we’re a prepper wouldn’t you like to be a prepper too?
add notes and let that stuff catch a wind.
Would quantum radar have clued him in?
You gotta love the cliffhanger.
I use to pay a penny as a kid to get into matinees that featured old movies which were always prefaced with serial cliffhangers – the purpose of which was to repeatedly bait audience members into coming back for other “B” rated movies. I cannot currently remember the name of any one of those “B” rated movies (although I am fairly certain that Ronald Reagan and a monkey was in one or two of them), but I can remember the plot lines of those dumb serials that drew me in week after week (the popcorn topped with real hot butter might have contributed to some of my consumer loyalty). I only bothered to recount this tale because, upon finishing the article, I was noticeably left with an unsatisfied urge for hot-buttered corn. I hope that I am not going to be forced to return Dayen and Dayout to hear the “rest of the story” (after commercial breaks of course).
Don’t forget to Eat Your Ovaltine.
Hello again –
Although there is some progress, often the links to go to the comments aren’t working and I still can’t get the menu to work.
It would make reading a lot better if such things would be fixed, PLEASE!
And still no coverage of Amy Goodman and warrant?
Will be back later to try to catch up on reading this…
For those of you who have not seen it, The Wolf of Wall Street is the movie about Jordan Belfort, who made millions in penny stocks. di Caprio does a wonderful job of portraying him, and Margot Robbie is truly unforgettable. But leave the kiddies at home.
Dude srsly I can’t wait.
Can’t wait for Part II, David. Ignore the trolls that were born from their mothers’ shit-holes. lulz
For someone claiming to be savvy, this guy is a real idiot. Anyone in the industry knows this is exactly what happens on the pinks.
Yep. The theory is that because they are so cheap, you cannot lose much on them, it’s all upside. Like if you bought 1000 shares at one cent each – a $10 investment. But the penny stock market psychology is what I call the M&M theory. Put out a barrel of M&Ms and nobody is going to stop after eating just a handful. So you buy a million shares and get to lose ten grand.
They’ll stop if you poison three of them — or so I hear.
“Anyone in the industry knows this is exactly what happens on the pinks.”
This pretty much sums up the whole industry–anyone outside of the industry is a sucker waiting to be had. That’s what the industry counts on.
Really?! A professional money shuffler gets caught up in a pump and dump and loses a million bucks?! Cry me a river
What the author left out was this Market Analyst probably got HUGE bonuses from the 2008 bailout which is why he’s now a day-trader.
yea, can’t feel sorry for Wall St. guys who get taken advantage of.
So, now he knows how the rest of America feels when they get shafted by a Wall St. crook and left hanging without a retirement fund.
Looks like this guy’s days on Wall St. were pre-bailout. Still, he most likely got HUGE bonuses, etc….which is why he was moving to a cushy suburb at 39.
yea, I don’t feel sorry for him.
On top of that, if I’m reading this correctly he didn’t even lose money. He lost POTENTIAL money because he wasn’t able to sell at peak value. He only put down $100k of his own actual money. Of course, part 2 isn’t out yet so more shenanigans with the stocks @ the lower value might still have happened. However, thus far in the story he has lost zero actual money which is a far cry from “After a stock analyst lost $1 million on one penny stock…” If you go to the casino with $100 and win another $100 you have won $100 total. If you take that profit $100 and keep playing and end up losing it before you’ve cashed your chips in you have not lost $100, you have broken even as you still have the original $100 you came with. It is still an interesting and valuable article, but from the info we currently have from Part 1 you can’t say he lost a million dollars because he never actually had that million dollars to begin with.
Yeah, this bothered me too. I was expecting a short sale to have been involved. This guy didn’t lose $1M.
Wallstreet is a thief’s paradice and the bosses are criminal moneychangers. Wallstreeters rob America for a living. They steal future values using the mechanics of price fraud – typically banks. Janet Yellen is their thief in chief. When she says – “I might raise rates in the future”, the translation is “SELL. I CANT LOWER RATES WITHOUT CRASHING THE DOLLAR”.
Fraudulent pricing – 99.9% of all stocks – is a conjob to loot the American economy and i can prove it. #BDS WALLSTREET.
great article.
here’s another
https://theintercept.com/2016/01/02/i-was-wrong-big-banks-actually-were-exactly-like-counterfeiters/
I just knew you’d love this article…..;)
naturally.
Doesn’t sound like the sort of “finance professional” I want handling my portfolio.
the current Dow, S&P, Nas are a pump and dump by Yellen and Obomba
I hope there’s a good journalistic reason to leave on a cliff hanger like this… if I wanted a soap opera I’d watch Days of Our Lives.
Also, it sounds like he didn’t exactly lose a million… it’s kind of an important detail to be clear about to be able to take the rest of this article seriously.
Just hope that whatever is coming here is worth the big buildup.
Death Spiral Convertible?
Day-um, Dayen, we need Part II! Don’t leave folks hanging like this!
Sorry David but you’d better hurry with Part 2, cuz I just found out something about this company and the guy running it.
I don’t want to steal your thunder, but you really should issue stories piece-meal.
He’s a real charmer, this Adrian Stone.
sorry…that’s “shouldn’t” issue stories piece-meal…….
are you talking about “knight trading”? If you are a market master, then you already know all you need to know about the knight.
ps- goldman sachs did or tried to implement it’s own trading platform some years back. Not sure if they succeeded. My guess is that they wanted to monopolise the trading in issues they traded in for that day – owning that market as it were. My current suspicion is that the banksters use the public market for pricing only and conduct the large transactions in private. I don’t believe it’s 100% legal but you know they dont care.
I also wonder if they are still turning over unsalable stocks to their fed reserve for cash. And i wonder if they are still publishing the very short term treasury loans for stock price support.
No, talking about Best Rate Travel. This whole thing is a scam. If the author doesn’t post or explain what I’ve found, I’ll post it.
This is exactly why it’s good to due some due diligence. It only took me 5 minutes to find this information online. Damn, this guy’s a fool.
You do realized that this happened in 2006/07 . If you can find it out now in 5 Minutes – may be someone has done his homework since then?
No, not where I got my information. There’s no real homework to be done. The moment the merger with the travel company happened, he should have called the FBI.
What did you find?
I glanced around online and nothing of obvious significance.
Yea, it’s not in that obvious of a place that the casual person looking to invest might look. It’s regarding Best Rate Travel and Adrian Stone. This wouldn’t have stopped his initial $100K investment, but it would have made him realize what kind of trouble he was in.
I’ll post it once the 2nd half of the article comes out, if the author doesn’t also highlite it. Most likely he will.
I have now posted it in the comments section of Part Deux. See my links there.
If he was 39 in 2006, then he was just turning 50 at the time this story was written. Judging from this photo, it’s been a long, hard road to 50. The stress and wear and tear on his body is clearly evident. It backs the notion that working in equities is a non-stop cortisol ride until the body or sanity just give out–whichever comes first.
After 2008, I think most Americans generally agree that “pump and dump” is a term that applies to what this industry has been doing on a macro level in addition to the random fraud cases. However, there unfortunately are still many who believe Dilorio’s peers are “job creators.”
This article seems to point in the direction of connecting established, reputable firms to blatantly unscrupulous activities. In which case, its potential as a PR tool in the effort to counter the so-called “supply-side revolution” is undeniable.
I’m no financial expert but seems like investing your retirement savings on a penny stock was risky x100.
Even if the investor got shafted by forces outside of his control, he put himself in that stupid position of owning $100k in one penny (volatile) stock.
Maybe part two will show us this is not an isolated case with one idiot getting ripped off.
Wait, his initial investment was $100,000, it peaked to $1.3 million, then… he ‘lost’ $1 million so he ended up with $300,000.
Did he really lose $1 million? Seriously?
They’re making a simplified statement. But read the details.. 373,599 shares at $0.06 = $22416
Shhh! Their whole, phony finance-capitalism world would crumble if they couldn’t pretend that unrealized gains and subsequent “losses” were real.
I had the same thought. He tripled his money to $300K, I inferred. Boo hoo! Over just a few years, it sounds like. That said, it’s odd the stock spiked so high then fell so fast, so yeah, waiting for part II.
That wasn’t clear from the article. Did he make $200k or lose $1,000,000.
He never put $1 million because he never had $1 million to his name. So how could he possibly lose money that he never had? Indeed, the lucky s.o.b. managed to triple his speculative investment so he’s one of the lucky ones. He and Hillary of cow futures.
Or… are we talking ‘new math’ here?
By the way, had he ‘made’ $1 million more, some other poor s.o.b.’s would have lost $1 million in the process because that’s how the stock market works. It’s usually a zero-sum game so he ‘making’ only $200,000 is actually a good thing because others lost less than they would have otherwise, had he been successful.
Yeah, they’re blurring the lines between an unrealized (paper loss) and realized losses…
The author has not yet given us enough information to really understand what happened with this stock’s price, but assuming the guy ended up with $300k and sold it he’d recognize a $200k gain on his initial investment. If this was a pump-n-dump, he may have been a beneficiary. I guess we’ll find out in Part 2!!
“Recalls it peaking”? His recollection doesn’t instill much confidence. Doesn’t the guy have statements or the author have access to historical OTC market prices?
Yet he fell victim to a pump promoter!?
Aww, poor little climbing capitalist.
I hope that the final chapter shows him having to take up real gainful employment — carpentry, cooking or adult daycare, perhaps.
Part 2! Part 2! Part 2!!!!
You have me sucked in for part 2. To be clear it does not look like he lost $1,000,000 as that was a paper gain on the original “investment”. Also, highly suspicious that he got a 100 fold better reverse split result than little guy investors who really would have been burned badly.
At the end of the day someone will be found to have better information, and to have had a means to short BTVL. Press manipulation is frequently used by WS to ripoff the little guy.
This society is always quick with the strict, irrational rules… and there’s always someone they don’t apply to who comes out with all the cash. Somehow I’m reminded of http://www.thestranger.com/news/2016/07/13/24332114/how-washington-state-screwed-over-its-medical-marijuana-dispensaries even though it’s a very different situation – simply because there’s always the smart money and the suckers.
But I don’t understand why this guy didn’t bolt the minute the CEO called him up and asked him to invest more. That sounds like it’s such a red flag – isn’t it?
“CEO called him up and asked him to invest more”
Actually, no…this is not a Red Flag for investors. Raising capital happens in what’s called “Rounds” and are usually labelled Series A, Series B, Series C and it is always funded by previous investors to an extent.
Each new Round of funding generally will attempt to draw in a new Lead Investor for the round, whereas the prior investors put additional capital to
A) Support the round
B) Make sure their stock position is not diluted
The Red Flag is actually the large companies that seemed to be investing in it. It is unusual for a Large Cap company to invest in a penny stock. This is why investors need to do Due Diligence.
I’ve been part of a couple of rounds of investing at my current company and investors require all our agreements, financials, tax returns, legal filings.
The person who has the money, gets to make the demands. Why this person didn’t demand to see these sorts of documents is just begging for trouble.
“The Red Flag is actually the large companies that seemed to be investing in it. It is unusual for a Large Cap company to invest in a penny stock. ”
You should have tagged that with a “Spoiler Alert” I would imagine that is where part 2 – ? is going.