Neuromama, the company whose market value spiked to $US35 billion before trading was halted by the Securities and Exchange Commission, has apparently fired back at what it called “incorrect” stories about the business.
We say apparently because… you’ll see.
You may remember that Neuromama was trading over-the-counter and the market cap of the firm had ballooned to before it was halted over potential market manipulation.
Neuromama says it operates in a number of industries including: a search engine, a “clone of Amazon and eBay,” live entertainment, movies, smartphones and atomic fusion. It has no revenue, trades over-the-counter, and is either based in Russia or Mexico (more on this later).
The SEC halted trading in Neuromama on suspicions of stock manipulation, possible misrepresentations by the company that it had applied to be listed on the Nasdaq exchange, and the fact that it did not know who was running the company.
After running a story on the halt, the accusations, and all of Neuromama’s claims about its business, Business Insider on Wednesday received a roughly 4,000-word email signed by Neuromama CEO Igor Weselovsky and Advisory Board Chairman Vladislav Zubkis detailing their response to the various accusations.
There’s a few things about this message we should disclose
The email came to us from the Yahoo email account of someone named Steven Schwartzbard. Steven Schwartzbard is an alias that Zubkis uses sometimes in company press releases.
Though the email did appear as a press release on PR.com, we cannot confirm that it is from Zubkis or Weselovsky. Nor can we, for that matter, verify the existence of Weselovsky. Zubkis is real and was named in SEC charges for fraud and media reports in the late 1990s, and Neuromama releases say Zubkis and Schwartzbard are the same person (we cannot independently confirm this).
In attempting to confirm Zubkis’ identity, Business Insider was able to find a Russian social media profile featuring a Vladislav Zubkis that bore a striking similarity to the Steven Schwartzbard featured in numerous Neuromama ads on Youtube.
Here’s a rundown of their reply (all quotes are presented unchanged with the original grammar):
- Weselovsky said he believed that the SEC suspension is fair because short sellers were impacting the stock. “I believe that SEC’s temporary suspension of NERO is the appropriate response by SEC after receiving letters that they possibly had received recently from short-seller/s,” he said.
- Weselovsky directly blamed short seller Edward Schnieder for petitioning the SEC for a suspension and for writing articles on Seeking Alpha that misrepresented the firm.
- Weselovsky believes that the attention will bring attention to Neuromama and as an “Asset Based Company” this could lead to a lucrative deal down the road.
- “As an asset based company Neuromama long term shareholders will benefit from Neuromama becoming down the road maybe the stock market Asset Play, or the Takeover Target, or the Restructuring and Reorganization Candidate, or the Spin-off, or the Management Buyout, or the Merger Candidate.” wrote Weselovsky.
- Weselovsky said that the stock price increase came as a surprise to the company. “In the last few days Neuromama has been confronted with the fact that its NERO shares of common stock trading on OTC market was going up in price,” he wrote. “This increase has surprised Neuromama, as well as provoked attention in professional and financial areas, as well as the media in Russia, US, Europe and Japan.”
- Weselovsky blamed the media for spreading misinformation about the company in order to generate interest. He said that he understands the articles because they help media companies gain advertisers and stay in business.
- “Unfortunately, public is interested in sensations, catastrophes, crimes, mafias etc. Public is not interested to read about businesses, which don’t have ‘extremely bad”, or “extraordinary good’ developments,” Weselovsky wrote. “Public don’t have any interest to regular news. Regular news has interest of only professionals in the industry.”
- Weselovsky said the company has moved its headquarters from Russia to Mexico. He also said the company did not have financial information available (they haven’t filed with the SEC since 2014) because the firm’s former audit firm stopped in the middle of audit because the company was based in Russia. He also said a new audit is underway.
- Weselovsky said that the firm has nothing to do with the recent stock action and that the increase is likely because Neuromama is involved in high growth industries.
- Zubkis, the Chairman, acknowledge that (as Bloomberg noted Monday) he was involved in a large settlement with the SEC in the 1990s. “I was once a Wall Street ‘bad boy’. At one time, I even had the dubious distinction of being the second most heavily fined scofflaw in SEC history,” admitted Zubkis.
- Zubkis, however, denied the claim that this was another such scheme and said he expects articles to be written saying that Neuromama is a fraud.
- “I am not paranoid, not mega-paranoid anyway, and I am not making this up,” he wrote. “I will bet anyone and everyone a million dollars of Monopoly money against one thin dime of real money, that articles, pure propaganda actually, saying substantially what I just said will start appearing on the online and print penny stock fish wrappers within days.”
- Zubkis said that he has complied with the SEC’s punishments from his previous case and Neuromama is different. He continued that the attention and accusations are “a negative side effect caused by our success.”
The letter also admits that Neuromama is a risky investment and that investors should be cautious when investing in the company. The SEC has halted the stock until at least August 26.
The letter is much longer, so we’ve included the full text below: