Expanding The Scope of The Blog

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Up to this point, this blog has been mainly used to post links or updates about shareholder proposal related items. While that will still be the main focus of the blog, I will also be branching out and writing about other financial related topics. For example, I recently spoke with an old friend who was a whistle-blower at his financial firm. I knew both the whistle-blower and the person he exposed. That person was actually supposed to be an early seed investor in a fund I manage, but of course he never lived up to his promise. To be clear, I had no idea of the fraudulent activities that he was perpetrating at his financial firm. His firm was in another state and worlds away. But ever since he has been exposed, I have always been curious with how it could have been prevented or even caught. From talking to the whistle-blower, in this case, as with other cases,  a fraud is a fraud and can be nearly impossible to catch. Harry Markopolos, the man who was blowing the whistle on Madoff when no one would listen, has attained hero status. Additionally, Muddy Waters Research, the group that spotted numerous frauds in the China Reverse Merger listed companies, is heading in the same direction as Markopolous. I’ve always admired those who can catch the fraud before anyone else.

My whistle-blower friend and I are in the very beginning stages of a book. The book will center on not only how to detect frauds, but also prevent an investor from getting burned by one. This blog will be used as a place for me to flush out my ideas as the book comes together. As a reader, if you have ideas of past or current companies I should look at, please post it in the comments or send me an email. I also hope to post book reviews on fraud related books. My first book review will probably be No One Would Listen, by Harry Markopolos.

As an investor who prides himself on having an unlimited universe, I usually find the best bargains in the micro-cap area. Of course this is where the most fraud takes place too. Since I began my investing career, the biggest loss I took was because of the fraud committed at Electronic Game Card Company. The now bankrupt company used to trade under the ticker EGMI. I plan to make writing about my experiences with EGMI as the first of my posts about frauds.

Don’t worry the shareholder proposal material will still be posted regularly, it will just be mixed in with the occasion post/rant about fraud.

Proxy Reimbursement Proposal Submitted to IDSY

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On behalf of a fund that I am an advisor to, I recently submitted a shareholder proposal to I.D. Systems, Inc. (Ticker: IDSY). The proposal is a binding bylaw proposal, and the bylaw addresses proxy reimbursement. If you’re wondering what a “proxy reimbursement” bylaw looks like, think of Healthsouth. Healthsouth was, to my knowledge, the first company to amend its bylaws to offer reimbursement of proxy expenses to certain shareholders.

Disclosure: I, or one of the accounts I serve as an investment advisor to, beneficially owns shares of IDSY. Please also read the Disclaimer page in its entirety.

Hello world!

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This is my first blog post. I created a blog as a way to quickly disseminate information to anyone interested. I will not be a regular blogger, rather there will be periods of large amounts of activity followed by long stretches where nothing happens.