Litigation » Magic Words and Stock Prices

Magic Words and Stock Prices

March 1, 2018

Engraving illustration of a hand holding a bitcoin
Last summer the share price of a biotech company named Bioptix was languishing in the below $10 range. It had negative earnings per share, not much revenue, practically no institutional ownership and rising interest from short traders. Then the virtual currency craze came and any short trader who’d bit took a haircut. Bioptix became Riot Blockchain. The share price, which had been $7.78 in mid-October, hit $37 in December. But the fundamentals pointed to a bubble. The company had no technological expertise in blockchain tech, and no plan to acquire any. Now a class-action lawsuit has been filed charging Riot Blockchain, big shareholder Barry Honig, CEO John O’Rourke and CFO Jeffrey McGonegal, with securities violations. The charges claim that Riot changed its name to generate investor interest as part of an insider scheme that allowed controlling shareholders to dump their stocks at grossly inflated prices. The stock was trading at  $10.01 on Feb. 26.

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