September 28, 2015
What we’re reading this week
Bloomberg reports that Chinese companies are buying back billions of dollars of stock. Brad Gastwirth of ABR Investment Strategy said “It’s a positive sign that they believe in their growth opportunities and their strategies.” Funny, when US companies buy back stock they are often criticized for trying to pad revenue numbers in the face of stagnant growth, innovation, and profit. Or, you know, just trying to make the stock go up.
Depressed commodities prices claims another victim in Alcoa.
The SEC has broadened the definition of what it takes to be whistleblower, see what that looks like here.
You pay for what you get
This financial services firm will start doing it’s job for no money. It’s a common business model for companies to do some work for free in the hope that they will be overpaid in the future for additional work. I don’t love that model but it sure beats the heck out of this one. Not surprisingly they have been compared to tech companies from the late 90’s that tried the same business model…and went out of business.
Fake Press Release
A firm named G Asset Management and its owner, Michael Glickstein, were fined by the SEC for issuing a fake press release. The company bought a bunch of call options for Barnes and Noble before issuing a press release outlining a fabricated plan to purchase the retailer. Obviously the stock priced jumped. The firm made $168,000. The downside is that they were forced to pay $275,000 and were banned from the industry for 5 years. This is where the story should end, but it doesn’t. This firm apparently had a history of making offers like this to Barnes and Noble. Reading Section F of the SEC order, titled Respondents’ Overtures to Barnes and Noble suggests that the company wasn’t just trying to manipulate stocks buy may have actually believed it was buying Barnes and Noble despite managing less than 3 million in assets.
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