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Lucian Miers writes to AIM Regulation re forward selling by L1 and Cloudtag market abuse

By Tom Winnifrith, The Sheriff of AIM | Sunday 11 December 2016


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Bear raider Lucian Miers has again challenged the Oxymorons at AIM Regulation to take swift and firm action against Cloudtag (CTAG) for market abuse but has also raised the issue of forward selling by death spiral provider L1 Capital. This is effectively running a naked short and should thus be illegal. Miers writes:

Dear Sirs
cc NOMAD Tony Rawlinson at Cairn Financial

I hope you are up to speed with looking at the latest example of flagrant market abuse committed by Cloudtag Inc last week by its failure to report a massive discounted share dilution in a timely manner ( and then to mislead in its version of the timing of the receipt of the notice of conversion).

I would urge you not to neglect the role of L1 Capital Global Opportunities Master Fund in this sordid affair. It should not be difficult to ascertain precisely when it sold short 19m shares prior to issuing the notice of conversion to Cloudtag or to find out who was the counterparty to the transaction and the settlement terms. A short sale of that size surely requires disclosure.

Perhaps it is not considered to be a short sale because Cloudtag is obliged issue L1 Capital with the shares in the future. If this is the case can I suggest that it creates a false market in the shares and could easily be prevented by introducing a simple rule: namely that no shares can be sold by such arrangements until the notice of conversion is made public via RNS.

This would have the effect of making the pernicious "death spiral" financing industry a level playing field for all investors. If this is not within AIM Regulation's scope perhaps it is one for the FCA.

Lastly, slightly off topic, is it not deemed worthy of an RNS that Cloudtag CEO Ben Haim resigned from the company's main operating subsidiary in March this year or that a replacement had been found with the appointment of Massimo Ventimiglia? Was the NOMAD aware of this? Does the NOMAD have any idea as to who Massimo Ventimiglia is, or his role as the sole director of the operating company? Asking for a friend.

Regards
Lucian Miers


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