Last week, we wrote a short item about some longshoremen who were busted for cocaine-smuggling and a pump-and-dump scheme (“pump-and-dump” = buy a stock, tout the stock, sell the stock).It was a titillating but dime-a-dozen scam story, the kind we hear about several times a month. We learned about it in the New York Post.
In our own write-up of the story, we mentioned that a web site called PennyWinners had used phrases in its stock-touting that matched phrases used by the unnamed firm in the Post’s story (we discovered this via a quick Google search). We didn’t–and don’t–know whether PennyWinners was the firm connected to the pump-and-dump scheme, but the phrases matched.
We also mentioned in passing some stocks that PennyWinners has been touting lately: HEME, MXMI, SSOL, TSPG, and BTDG. We found these stocks among the many PennyWinners has touted in its Twitter stream. (The firm’s last Tweet appeared on October 3rd, around the time that the pump-and-dump story came out).
We published our story and thought that that would be the end of it–another sad, sordid chapter in the long history of penny-stock scams.
Shortly after we published our story, we heard from Paul LaBarre, the CEO of one of the companies whose stock PennyWinners had been touting, B2 Digital (BTDG). Mr. LaBarre was upset that we had noted that BTDG was being touted by PennyWinners, a site he said he was unaware of and had no relationship with. Mr. LaBarre asked that we publish a retraction saying that his company had not retained Pennywinners to tout its stock.
Well, we had not said (or even implied) that BTDG had retained PennyWinners to tout its stock. (We had no idea why PennyWinners was touting BTDG’s stock–or even what BTDG was.) We cannot “retract” things we haven’t said, and our post had been accurate–PennyWinners had touted BTDG’s stock. We do strive to be fair, however. So we offered to publish a statement from Mr. LaBarre saying that BTDG had not retained Pennywinners to tout its stock.
Mr. LaBarre emailed us again, thanking us for our prompt response and providing the text of the retraction he wanted us to print (which we’ve included below). But he declined to take us up on our offer to print a statement from him–which he said would be “insufficient.”
Since our last communication with Mr. LaBarre, we have also received an email from a publication called OTCListings that cited quotes from our email to Mr. LaBarre (who apparently either forwarded our email directly to OTCListings or to someone who did). OTCListings said it was preparing to write an article about our refusal to issue a “retraction” in this matter, and asked us a long list of questions.
These questions boiled down to:
- Are any shortsellers paying you to mention these stocks?
- Why did you mention these particular stocks from among the many touted in the pennywinners Twitter stream and web site?
For the benefit of OTCListings and Mr. LaBarre, we have decided to answer these questions publicly. We will also briefly describe our bizarre adventures in penny-stock land, for the benefit of anyone who is tempted to venture there.
The answer to the first question is “no.” We are not getting paid by shortsellers (or anyone else) to mention these or any other stocks. We are always happy to hear from shortsellers, as they often provide us with interesting information, but we did not hear from (or get paid by) any shortsellers in this case.
The answer to the second question–why did we mention these particular stocks from among the many touted by PennyWinners–is that these stocks were among the ones most recently touted in PennyWinners’ Twitter stream. We will show you what we mean in the following pages.
IT BEGINS: Last week, the New York Post reported that nine longshoremen had been busted in a coke-smuggling and pump-and-dump scheme. (Good story!)
So, Gus poked around to see what sorts of stocks PennyWinners was touting. For example, he checked out PennyWinners' Twitter stream
But, in any event, Mr. Paul LeBarre, the CEO of BTDG, is asking that we print a retraction for noting that his stock is being touted by PennyWinners
After we declined to print Mr. LaBarre's suggested retraction, we heard from a Mr Mark Bragg at a publication called OTCListings
We don't have time to answer all of OTC's questions, but we do think it's important to answer the ones below...
1. Did any shortsellers (or anyone else) pay us to mention the 5 stocks we mentioned instead of all the other ones PennyWinners has been touting?
2. Did we short any of these stocks ourselves?
3. Why did we mention those 5 stocks instead of some of the others PennyWinners has been touting?
ANSWER: Because they appeared close to the top of the PennyWinners Twitter stream.
4. Do we have any concern whatsoever with Gus Lubin's competence as a reporter?