5 ms·

Wild that nobody at any point tried to verify anything. They must be really convincing.

runnr_az 4y ago
Or just more convenient to not ask
BbzzbB 4y ago
Theranos was valued $9B yet no one sleuthed the actual machine. Nikola Motor Co was valued $22B with a "fully functional" truck rolling downhill. Maddoff ponzied $65B without a business. It really is wild that so much money gets thrown at frauds without proper due diligence.
- quickthrower2 4y ago
  Because it is a gold rush.
  - vlovich123 4y ago
    There’s a difference between a gold rush and a mad scramble to steal everything possible before the ship sinks.
- netheril96 4y ago
  Everybody just assumes that somebody else has done the due diligence. Why else would the company be valued so much? They think. The more the value, the more people jump in assuming others have done the due diligence. So all it takes is a few people with enough money or influence jumping in at the beginning.
  - tluyben2 4y ago
    This exactly; when your banking or investment app shows the stock, you assume already that it has been vetted by people who know so much more about all this than you.
- everybodyknows 4y ago
  Managers at GM who signed off on the Nikola stake then had an overwhelming career incentive to hide any bad news, however criminal.
irjustin 4y ago
We see this time and again - to be clear, it will continue forever. The goal is take meetings with those who don't probe too deep. Who doesn't ask too many questions? Personally a trend I've seen it starts with groups/investors who want to break into the space and jump at any deal because that's all they have. After you get a lead, it's relatively easy to get follow on money that almost never asks questions. If you're willing to out right lie you can get very far. It catches up as eventually you run out of groups who are willing to believe the lies.
KingOfCoders 4y ago
Why verify if you want to make money with it by increasing the worth and then selling?
missedthecue 4y ago
I've only sold short one company. It was called Parateum, and claimed to sell IoT products to telecoms in emerging economies. They were worth about $550 million at the time. It caught my eye when I was looking through their accounts and saw a very dubious clause that defined the way they recognized revenue. Basically it said management can unilaterally decide when revenue happens, and they were deciding it happened whenever they dispersed a press release about a supposed new major contract being signed. The money never existed. I decided they were a fraud for certain when I used Google Earth to search the addresses of their offices in various countries they claimed to do business in. Time after time, the result was a dead end dirt road in the African bush, or some dingy hovel in South East Asia occupied by a suspicious looking night club. It was that easy. I had the short on for about a year until a major hedge fund released a report on it. Shares fell ~90% pretty quickly. They've been delisted since.
- zone411 4y ago
  I shorted this Nasdaq-listed fraud: https://www.sec.gov/litigation/litreleases/2020/lr24706.htm https://www.sec.gov/litigation/litreleases/2020/lr24706.htm. It was a wild story that included a 2000% price increase after they bought a blockchain company, Russell 2000 inclusion and reversal, a CEO who is "a true believer in disruptive technologies and believes that every piece of information is worth millions [and] in the alchemy of structured trade finance," CNBC appearances, a picture of their U.S. operations consisting of three empty desks, and a long trading halt. https://www.cnbc.com/2018/04/04/controversial-crypto-stock-longfin-surges-then-halted-after-its-announced-ceo-to-appear-on-cnbcs-fast-money.html https://www.cnbc.com/2018/04/04/controversial-crypto-stock-l... https://www.wsj.com/articles/longfin-collapse-puts-focus-on-lax-ipo-rules-1522788520 https://www.wsj.com/articles/longfin-collapse-puts-focus-on-...
- baobabKoodaa 4y ago
  I assume you got out before the delisting?
  - missedthecue 4y ago
    I did, but even if you didn't you can still buy back the shares on the OTC market and close your position. The company is now only worth $600k. I should have waited!

Or just more convenient to not ask

Theranos was valued $9B yet no one sleuthed the actual machine. Nikola Motor Co was valued $22B with a "fully functional" truck rolling downhill. Maddoff ponzied $65B without a business. It really is wild that so much money gets thrown at frauds without proper due diligence.

quickthrower2 4y ago
Because it is a gold rush.
- vlovich123 4y ago
  There’s a difference between a gold rush and a mad scramble to steal everything possible before the ship sinks.
netheril96 4y ago
Everybody just assumes that somebody else has done the due diligence. Why else would the company be valued so much? They think. The more the value, the more people jump in assuming others have done the due diligence. So all it takes is a few people with enough money or influence jumping in at the beginning.
- tluyben2 4y ago
  This exactly; when your banking or investment app shows the stock, you assume already that it has been vetted by people who know so much more about all this than you.
everybodyknows 4y ago
Managers at GM who signed off on the Nikola stake then had an overwhelming career incentive to hide any bad news, however criminal.

irjustin 4y ago

We see this time and again - to be clear, it will continue forever. The goal is take meetings with those who don't probe too deep. Who doesn't ask too many questions? Personally a trend I've seen it starts with groups/investors who want to break into the space and jump at any deal because that's all they have. After you get a lead, it's relatively easy to get follow on money that almost never asks questions. If you're willing to out right lie you can get very far. It catches up as eventually you run out of groups who are willing to believe the lies.

KingOfCoders 4y ago

Why verify if you want to make money with it by increasing the worth and then selling?

missedthecue 4y ago

I've only sold short one company. It was called Parateum, and claimed to sell IoT products to telecoms in emerging economies. They were worth about $550 million at the time. It caught my eye when I was looking through their accounts and saw a very dubious clause that defined the way they recognized revenue. Basically it said management can unilaterally decide when revenue happens, and they were deciding it happened whenever they dispersed a press release about a supposed new major contract being signed. The money never existed. I decided they were a fraud for certain when I used Google Earth to search the addresses of their offices in various countries they claimed to do business in. Time after time, the result was a dead end dirt road in the African bush, or some dingy hovel in South East Asia occupied by a suspicious looking night club. It was that easy. I had the short on for about a year until a major hedge fund released a report on it. Shares fell ~90% pretty quickly. They've been delisted since.

zone411 4y ago
I shorted this Nasdaq-listed fraud: https://www.sec.gov/litigation/litreleases/2020/lr24706.htm https://www.sec.gov/litigation/litreleases/2020/lr24706.htm. It was a wild story that included a 2000% price increase after they bought a blockchain company, Russell 2000 inclusion and reversal, a CEO who is "a true believer in disruptive technologies and believes that every piece of information is worth millions [and] in the alchemy of structured trade finance," CNBC appearances, a picture of their U.S. operations consisting of three empty desks, and a long trading halt. https://www.cnbc.com/2018/04/04/controversial-crypto-stock-longfin-surges-then-halted-after-its-announced-ceo-to-appear-on-cnbcs-fast-money.html https://www.cnbc.com/2018/04/04/controversial-crypto-stock-l... https://www.wsj.com/articles/longfin-collapse-puts-focus-on-lax-ipo-rules-1522788520 https://www.wsj.com/articles/longfin-collapse-puts-focus-on-...
baobabKoodaa 4y ago
I assume you got out before the delisting?
- missedthecue 4y ago
  I did, but even if you didn't you can still buy back the shares on the OTC market and close your position. The company is now only worth $600k. I should have waited!