Elite Stock Manipulation EXPOSED

In a rare deep-research expedition, Global Intel Hub has uncovered what could possibly be one of the biggest stock manipulation scams of all time.  The reason this case is so monumental is because it flies in the face of 'regulation' that claims to 'prevent fraud and manipulation' when this is happening on a public market!  

First let's have a little background - the stock is Revlon (REV) and the source article is here: Raiders of the Lost Corporate Ark: Revlon

Summary

Revlon is controlled by a single insider for 30 years billionaire Ronald Perelman.

Perelman has developed in his career a method of hostile takeovers that dates far before Revlon.

Due to a rule, if he is able to get 90% of Revlon he'll get voting rights of all 100%.

The float (available shares for purchase) is low 2.29 M, almost all of which are held short.

Recently, Barna Capital purchased a 2% stake, putting the institutional control above 10.1%, making a Perelman takeover impossible.

We wanted to dig deeper so we contacted the source on this article, Barna Capital.  What they had to say blew our mind (although we know markets are manipulated, it's one thing to say it and another thing to dissect the technicalities of how the manipulation works, and see it in real time).

Information we collected from Barna Capital (some of this copied from source article)

We asked Chief Strategist of Barna Capital Egor Romanyuk a single question:  How can you prove that Revlon (REV) is being manipulated?  He provided a detailed answer, over the course of several days of back and forth communication, paraphrased here:

Today is one of those days. Right off the open an algo starts selling 100 shares into the bid. The spread is 3%. If I place a bid higher than last sale, let's say 500 shares. It will sell me 500 shares. And will sell 100 shares at whatever bid is lower than last. This is just bluntly manipulation.  It's just moving share price lower. It's only job.

Take a look at lv2 for instance. There's at least a 5 to 1 ration ask to bid at all times. Strange for a stock that doesn't exist for sale.

When Perelman buys stock, his 15k algo buys move the stock from 50 cents to a dollar. When 8 buy 15k shares. The stock usually goes down. So I'm working against a short. And he's not.

About 2 million shares out the remaining float is in ETF. So that basically not tradable as they only rebalance their portfolios and do not trade actively. That lease roughly 500k shares tradable period. With 2.6 million already shorted. Magic i suppose :)

Also Barna confirmed that Mittleman and the other shareholders are not allowing their stock for borrowing - which means the short seller can only be Ronald Perelman (RP).

Take a look at this Level2 window for REV in which you will see a wall of offers:

Source: Barna Capital

As you can see, there are offers on multiple exchanges, NYSE, BATS, EDGA, ARCA, and BYX - all at the same price. At another point in time, you can see even more offers:

Source: Barna Capital

To get to the bottom of this we interviewed Egor Romanyuk, Chief Strategist of Barna Capital. He told us:

Today is one of those days. Right off the open an algo starts selling 100 shares into the bid. The spread is 3%. If I place a bid higher than last sale, let's say 500 shares. It will sell me 500 shares. And will sell 100 shares at whatever bid is lower than last. It's just moving share price lower. It's only job. And here's one more thing. When the algo buys stock, the 15k algo buys move the stock from 50 cents to a dollar. When I buy 15k shares, the stock usually goes down. So I'm working against a short.

Source:Barna Capital

If you think this is an anomaly, let's look at the Level 2 from the previous day:

You can see on the screen there is a wall of sell orders. But the float is so small, who can be the seller? We don't know for sure, as data is not transparent; however, the point is there is a short interest here. That short interest - caught in a squeeze - could be forced to panic cover driving REV through the roof. That's how a short squeeze by definition works.

So why would the majority owner of a stock manipulate it lower?  

Now for a small background on RP - he has a history of Corporate Raids and his own Wikipedia page: (see below from 'controversies' section) - 

Greenmail

In the late 1980s, Perelman was accused of engaging in greenmail.^[72] "Greenmail" occurs when someone buys a large block of a company's stock and threatens to take over the company unless he is paid a substantial premium over his purchase price. In the case of someone with a reputation as a corporate raider, the mere act of buying up shares could send a company into a panic and investors into a buying frenzy.^[73] Perelman insists he seriously intended to buy every corporation he bought into.^[74]

He was first accused of greenmail in late 1986 during a run at CPC International when he bought 8.2% of CPC at around $75 a share and indirectly sold it back to CPC through Salomon Brothers a month later at $88.5 a share for a $40 million profit. Both CPC and Perelman denied it was greenmail despite appearances to the contrary, including what looked like an artificial price increase by Salomon shortly before they sold Perelman's shares.^[75]

Another accusation of greenmailing levied against him was the best-known and stemmed from his attempt to purchase Gillette in November 1986. Perelman opened negotiations with a bid of $4.12 billion. Gillette responded with an unsuccessful lawsuit and public insinuations of insider trading. Perelman accumulated 13.8% of Gillette before he made what he would later call the worst decision he ever made and sold his stake to Gillette later that month for a $34 million profit. Gillette had put word out that Ralston Purina had agreed to buy a 20% block of stock, making any attempt by Perelman to buy Gillette much more difficult. Perelman decided to sell his share to Ralston Purina, but before he did so Gillette's executives called him up, asking if he'd sell his shares to them and they'd sell the shares to Ralston Purina. He sold his shares to Gillette and Ralston backed out of the deal.^[76]

Panavision

In April 2001, M&F Worldwide bought Perelman's 83% stake in Panavision for $128 million. This would be unremarkable except that Perelman controlled M&F Worldwide and the price paid for his stake was four times market value. At the time, M&F Worldwide was a healthy company with an excellent balance sheet while Panavision was bleeding red ink. M&F Worldwide's other shareholders cried foul, alleging the only person who stood to benefit from the deal was Perelman and took their complaints to the courts.^[77] Perelman insisted the deal was an excellent one and in the best interest of the shareholders because Panavision was well-positioned to profit from the move to digital cinematography.^[78]The share price tumbled from six to three after the deal and reflected M&F Worldwide shareholders' lack of confidence.^[79] Perelman tried to pacify M&F Worldwide's shareholders with a $15 million settlement, but the judge rejected it as grossly inadequate. Ultimately, Perelman agreed to undo the deal.^[80]

Fred Tepperman

Perelman hired Fred Tepperman as his CFO after Tepperman left Warner Communications in 1985. Starting with Pantry Pride, Tepperman worked on every single business deal Perelman orchestrated throughout Tepperman's seven-year stint at MacAndrews & Forbes. Tepperman's tenure came to an abrupt end just after Christmas in 1991 when Perelman fired him for being derelict in his duties. Tepperman had been distracted, he claimed, by caring for his Alzheimer's-afflicted wife of 30 years. A clause in Tepperman's contract entitled him to a large portion of his salary and benefits in the event of an injury that prevented him from being able to work; Tepperman claimed he had suffered such an injury, albeit psychologically, as a result of the effect his wife's condition had on him. His demands totaled $30 million. That number stems partially from Tepperman's salary, which started at $275,000 and rose to $1.2 million in 1990^[81] and partially from his large benefits package.^[82] Perelman was quick to file a countersuit for fraud, claiming that Tepperman had sneakily changed the company's retirement plan in such a way that Tepperman would personally gain millions of dollars.^[81] It took over three years for the case to make it to court. The case ended with a sealed settlement.^[81]

Now fast forward to the Revlon case, in which RP has a single goal - take the company private.  He wants to buy the remaining shares for as low price as possible.  If this seems outlandish, just take a look at his career.  But really the proof is in the analysis of the trading data - there is no possible way that anyone other than RP can loan shares out which are keeping the price artificially deflated.  

What's the end game?  A potential short squeeze is one, and RP should thank us for exposing this situation as a short squeeze could create a huge profit for him, as he owns more than 84% (plus or minus a few points here) of the entire Revlon.  

If this were a penny stock, it wouldn't be news.  But Revlon is a huge brand name and it trades on the NYSE which is owned by the ICE, based in Atlanta, GA.

Here goes the ICE, being cautious about Crypto because it can be 'manipulated' where they have good ol' traditional stocks being manipulated right under their nose!

For traders this is a buy signal for a potential squeeze.  For lawyers and securities activists, this is a must watch as this case unfolds into a potential game changer for regulated markets.  One thing is clear, with the internet and move towards transparency and democratization of markets - everything will be exposed in the end.  

This conversation is being recorded, on multiple layers - starting with your ISP!

For groundbreaking intelligence and REAL news, checkout Global Intel Hub.  Props to our friends at Pre IPO Swap that broke this story on SA first - great work guys.

Getting on the Cap Table

Pre IPO Swap (New York, NY) 1/29/2019 – Pre IPO Swap wants to explain to investors how important it is to get on the cap table and why it matters.  First let’s explain what is a cap table – it is basically the ledger of shares in a private company.  That means it is the list of who owns what stock.  That’s it!  It looks something like this:

Image Source: Carta.com

The idea is simple, however this fact is obfuscated from investors for a very nefarious and greedy reason.  Pre IPO Funds which offer access to Pre IPO companies do allow you to participate in the investment but only as a passenger.  They, their fund name, are the ones whose name will be on the cap table – NOT YOU.

They take 20% of your profits, charge other fees like exit fees – and strip you of your shareholder rights.  They may give you your rights should a bad situation occur – but why should investors sign away their shareholder rights in the first place?

Pre IPO Swap is not a fund so that means if you buy shares of Lyft you will buy directly from the seller, and subject to a minimum investment will be placed on the cap table with all the other shareholders.  Your name may even appear in the Prospectus (this would depend on many factors too complicated to explain here).

Note that Pre IPO investing is for accredited investors only.

We want to also point out that getting on the cap table isn’t for anyone special – it’s for all investors.  Access is not ‘restricted’ – it is just that you have to know what it is and know how to get it.  Get it directly @ Pre IPO Swap.

The TRUTH About Pre IPO Funds

Pre IPO Swap – (New York, NY 1/26/2019) – Pre IPO is when you transact shares of a company which is about to become a public company, a process known as IPO.  The Pre IPO market is for accredited investors only.  Popular names currently on the table include Lyft, Palantir, SpaceX, Klarna, Pinterest, and Stripe.  This is well known.

What is NOT known is how most companies are structuring this transaction.  They create a fund to do it.  So investors are actually making an investment into the fund – NOT into the shares.  What’s the difference?  Well for one, if something goes wrong – you have no rights.  Second, there are more fees – including but not limited to 20% of your profits.  And an exit fee.  That’s right – you have to pay up to 5% commissions when you buy AND when you sell!  Of course they will say – it’s all part of investing and if you make more than the fees then you are still ahead.  That’s fine – they need to eat too – but they aren’t providing any sort of advice or additional Alpha when you can get the shares directly without all the fees at places like Pre IPO Swap.

They are holding your shares hostage – for a huge ransom – 20% of your profits.

You don’t get on the Cap Table – they don’t even tell you what a Cap Table is because you are wrapped in an LLC which acts like an investment pool (this is the fund).  It tracks the shares as if you bought the shares – but you don’t actually own the shares.  So you are really investing in Example Pre IPO Fund LLC and not Palantir, SpaceX, Uber.

What do Pre IPO Swap purchasers all have in common?

• They understand value.
• They are looking for an edge.
• They are looking for that next disruptive technologies and companies.
• They value their time and they know that time is best spent with loved ones and enjoying the world’s treasures.
• They don’t need to look at quotes every minute because they purchased prior to the IPO.
• They have a vision of their financial future.
• They want to have control over their financial future.
• They recognize that finance is not a spectator sport.
• They (themselves, not through an LLC) get on the cap table.

So why do Pre IPO investors invest alongside billionaires?

Answer: Because they can!

What are some other problems with funds?  Funds can’t be hedged.  What does that mean?

If you own shares of an IPO which is about to go IPO shares will be restricted however the restrictions vary greatly in time and other details.  But you can always hedge your shares because you own them – they are yours.  That means you can sell covered calls on them, and many other things.  Here’s a famous example by none other than Mark Cuban, who protected 1.4 Billion in restricted stock during the sale of broadcast.com:

Back in 1998, Mark Cuban and his partner Todd Wagner sold Broadcast.com, a giant multimedia company focused on streaming audio and video, to Yahoo! for $5.7 billion. At the time, Mark Cuban received 14.6 million shares of Yahoo trading at $95, thus his concentrated position had a market value of $1.4 billion. In order to protect the value of the 14.6 million stocks he decided to set up a costless Options Collar, which allowed him to protect his billions without paying any insurance premium. Probably because there was a lock-in period for him to sell the Yahoo share, or he used these Yahoo shares as collateral for a bank loan, or he didn’t want to miss the opportunity if Yahoo continued to rally, he chose to enter a collar to lock in his share value without selling the shares.

This is one way to protect your position in Pre IPO without actually selling the shares.  But if you’re stuck in a fund – you can’t do that.  And there’s lots of other things you can’t do.  Hopefully you’ll make friends quickly with the other LLC members, after all you are all on the raft together.

And one more thing.  We shouldn’t presume to make statements about “Pre IPO Funds” as there are many and they are all different – there can be worse scenarios like fund specific lock ups, fees or penalties, and other features of a fund that are just the nature of being in them.

We’re not judging – we just feel that funds should be more forthcoming about explaining these nuances as it seems they are presented differently.  The language is clearly misleading however since investors must be accredited it’s ‘OK’ to use misleading language because accredited investors are supposed to know the difference between buying into a fund and buying shares directly.  But that’s not the point – investors just don’t know that it’s possible to do otherwise, that means the funds lead them to believe only through these fund vehicles is it even possible to get these shares – when that clearly is not the case.  Investors can transact direct and get on the cap table no LLC, and no 20% profit sharing fee.  (We note here, fees have their place – such as managed accounts, or a hedge fund quantitative strategy.  But sharing 20% of the profit from a single stock trade with your broker seems egregious.

To learn more about Pre IPO Investing, see www.preiposwap.com 

DISCLAIMER: FOR ACCREDITED INVESTORS ONLY

Raiders Of The Lost Corporate Ark - Revlon

Pre IPO Swap @ Seeking Alpha (Analysis Division) – 1/25/2019

Pre IPO Swap is now a contributor for Seeking Alpha, a site that is focused on actionable intelligence for securities.  Interestingly, Seeking Alpha does publish stories on Pre IPO which is why we signed up.   Our first article covers what could be one of the most interesting stock trading cases of all time.

CLICK HERE TO READ THE WHOLE ARTICLE ON SEEKING ALPHA

Summary

• Revlon is controlled by a single insider for 30 years billionaire Ronald Perelman.
• Perelman has developed in his career a method of hostile takeovers that dates far before Revlon.
• Due to a rule, if he is able to get 90% of Revlon he’ll get voting rights of all 100%.
• The float (available shares for purchase) is low 2.29 M, almost all of which are held short.

Recently, Barna Capital purchased a 2% stake, putting the institutional control above 10.1%, making a Perelman takeover impossible.

Revlon (REV) is an American multinational cosmetics, skin care, fragrance, and personal care company founded in 1932 and based in New York City. That is commonly known; it is a brand name.

However, what you may not know unless you are a securities attorney is that Revlon is the cause of one of the largest and most significant corporate securities decisions of a generation regarding corporate takeovers. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) was a landmark decision of the Delaware Supreme Court on hostile takeovers:

The Court declared that, in certain limited circumstances indicating that the ‘sale’ or ‘break up’ of the company is inevitable, the fiduciary obligation of the directors of a target corporation are narrowed significantly, the singular responsibility of the board being to maximize immediate stockholder value by securing the highest price available. The role of the board of directors transforms from ‘defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company.’ Accordingly, the board’s actions are evaluated in a different frame of reference. In such a context, that conduct can not be judicially reviewed pursuant to the traditional business judgment rule, but instead will be scrutinized for reasonableness in relation to this discrete obligation.

This case is so significant in securities and corporate law that it has been cited 3,640 times:

And what’s interesting is that the guy who caused the case – Ronald Perelman – is still at the center of a shareholder dispute that started in 2013:

CLICK HERE TO READ THE WHOLE ARTICLE ON SEEKING ALPHA

Potential Trillionaire blows up 14 million flash crash loss

From the Slope of Hope: 

This is a tale of how greed and lack of risk management can blow up in a big way. Brace yourselves.

Allow me to introduce you to one Matt Todorovski, a resident of Australia who wanted to become a trillionaire - - yes, a trillionaire - - by sitting in front of his computer trading the FOREX markets.

Now there is absolutely nothing wrong with being ambitious, setting goals, and trying to beat the markets. Millions of people around the world do it, and the vast majority of them fail. It's a tough business. That's why the handful of winners make so much money. Because almost everyone else loses.

For years, Mr. Todorovski did plenty of losing. From his start in 2009 up through the beginning of 2018, his efforts yielded nothing but financial pain (being a resident of Australia, his reporting was naturally in Australian dollars, each of which is about 0.72 of a U.S. dollar). About a year ago, he was looking at lifetime "winnings" of about negative seven hundred thousand dollars.

Then, for reasons unknown to me, his trading luck started turning around. He finally wiped out his losses in September 2018, and then he started making..........profits! And, million by million, he proudly noted the date of each milestone. He also, strangely, decided that the sky was the limit, and he would put in placeholders for future profit milestones, up to and including $1 trillion. Because God knows the way to get ten times richer than Jeff Bezos is to trading FOREX on your personal computer.

This fellow wasn't shy about sharing the specifics of his account, either. He would regularly update followers on the various automated systems he was using and the gains or losses from each one. As shown below, he had amassed over $13 million in profits as recently as about a month ago.

And then, late in December, things took their first serious turn for the worse:

Perhaps to bolster his spirits - - and keep naysayers at bay - - he started amassing a bunch of bromides, motivational lines, and inspirational quotes.

And then, positive thinking notwithstanding, he losses accelerated.

As illustrated below, there was a big move in the USD/JPY, and this one-day wonder was enough to wreck the guy. (In just a few weeks, however, the damage to the chart vanished).

Which reminds me of a similar wipeout James Cordier went through with OptionSellers.com and its own centimillion-dollar wipeout. (Here, again, the destruction would have never happened if he had somehow been able to hold on just a few weeks).

But getting back to our hero in Australia..........having lost so much in such a short amount of time, and with public visibility, he started getting pounded with I-told-you-so style hate mail, some of which he shared.

Within the span of hours, he was wiped out. The entire $14 million of his account was gone.

You probably know where this is leading..........

Although he shouldn't hold his breath. Someone (maybe a relative) kicked in $100, and about ten days later some big-hearted soul augmented it with five dollars of his own.

I suppose the lesson learned here, at a minimum, is one that Matt expressed in his own "Methods Of Procedure":

https://www.zerohedge.com/news/2019-01-21/trillionaire 

Jamaica's 37-Company Exchange Was 2018's Best Performing Stock Market

The Jamaican stock exchange, unknown to most of the world and which is open for trading only three and a half hours a day, was 2018's best performing stock market.

The exchange - which started 50 years ago, by Edward Seaga, a Jamaican Harvard graduate who worked as a record producer in the 1950s and 1960s - saw its main index up 29% during 2018, the most among 94 national benchmarks according to Bloomberg . Over the last five years, Jamaica's impressive market returns are even more pronounced: Jamaican stocks are up almost 300%, more than quadrupling the next national benchmark and outperforming the S&P 500 nearly seven times.

The blistering ascent of the local stock market took place despite real growth in Jamaica averaging less than 1% over the last four years; in 2018, growth in Jamaica was expected to come in at 1.7%. However, the small size of the local market has kept it relatively insulated from the broader economy, and helped Jamaican equities move as quickly as they have. As a result, the total value of the 37 stocks on the main index is less than $11 billion.

And now, capital is starting to trickle into Kingston as it tries to reinvent itself as a financial hub. Paul Simpson, a 36-year-old banker and investor in Kingston told Bloomberg:  “Clearly, capital goes where it’s comfortable. To see capital coming here means people must be comfortable." That, or they are simply hoping to recreate past returns.

The floor of the Jamaican stock exchange

The financial industry in the country is located mostly in the neighborhood of New Kingston. It isn’t a tourist destination like Negril and it isn't impoverished, like Trench Town. Instead, it’s an area where you’ll find Porsche dealerships and Starbucks.

Similar to China, over the past decade, the country's financial sector assets have tripled and its number of financial institutions have multiplied by a factor of eight.

It gets better: the World Bank now ranks Jamaica as the sixth best nation for ease of starting a business. Economist Uma Ramakrishnan, the IMF’s Jamaica mission chief said that "If I could hold a megaphone and tell investors now’s the time, I’d do it."

Still, before US hedge funds start arriving with dreams of massive alpha, the limitations of local stocks are pronounced, especially when one considers the small size of the market. Additionally, the shares available to the public are limited as many of the companies are mostly owned by large institutions and conglomerates. Like with Japanese government bonds, it is commonplace for some stocks not to trade for days and the number of unchanged stocks on a daily basis often outnumbers both gainers and losers.

In other words, in a world desperate for liquidity, Jamaica may not be your best bet.

Which is also why the managing director of the exchange, Marlene Street Forrest, is working on improving its logistics. Trades now settle in two days instead of three to comply with international standards and the exchange is looking to introduce market making this year. Margin accounts and short selling are both also on the agenda for the coming year  - yes, there is no way to short stocks right now, and in a throwback to more normal times there are no HFTs or ETFs (there are no Jamaican stocks in U.S. ETFs, even those tracking “frontier” countries such as Kazakhstan, Sri Lanka, and Vietnam, the most emerging of the emerging markets).

Still, the market is growing: there are 20 new IPOs scheduled for this year, and while the exchange evolving, as things often go in the islands, it's doing it at its own pace. 

“We ensure that we are going to get it right before we move,” Street Forrest said. 

https://www.zerohedge.com/news/2019-01-19/jamaicas-37-company-exchange-was-2018s-best-performing-stock-market