WFC Short Idea – Paradigm shift in global banking LLC – Second Sight Markets Analysis 7/8/2020 — The global banking system is ripe for disruption.  As we have explained in Splitting Pennies the book – the Fedwire system currently in use today in the United States to make wire payments was made in 1937.  Banks are in need of a technology upgrade and strangely have been resistant to it.  While the banking system has financed technology revolutions in other fields, they have resisted their own evolution.  This can be seen most vividly with the large US banks, such as Wells Fargo and Bank of America.  We have singled out these 2 big banks as being particularly terrible.  We wrote about this issue in October 2019 and called $BAC short, for a 27% return.  $BAC was trading at 28.90 when the article was written.

$WFC is trading at yearly lows so it seems easy to kick a dog when it’s down, so we need to provide some context.  We know that the big banks are suffering a demographic crisis.  Yesterday, this author was refused a cash deposit at a physical branch because of new money laundering rules.  Actually the ATM couldn’t automatically read $200 worth of $20 bills.  So after spending an hour fiddling with the ATM and arguing with the tellers, the $200 that was supposed to be sent to someone only got $180.  Perhaps the cash rules are part of the plan to make currency completely digital, but that’s not the point.  What kind of bank refuses cash?  The idea is absurd.  Money laundering $20 ?  That sounds like *real* money laundering (you know, when you forget cash in your pocket and it goes through the washing machine).

$WFC has heaps of problems.  It’s being sued for unfairly distributing PPP loans:

On April 19, 2020, after at least one lawsuit was filed against the Company, reports surfaced that Wells Fargo may have unfairly distributed government-backed loans under the Paycheck Protection Program (“PPP”). On this news the Company’s share price fell $1.54, or over 5%, over two consecutive trading sessions to close at $26.84 per share on April 21, 2020, thereby injuring investors.  Finally, on May 5, 2020, the Company revealed that “it has . . . received formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans.”  On this news, the Company’s share price fell $1.74, or over 6%, over two consecutive trading sessions to close at $25.61 per share on May 6, 2020, thereby injuring investors further.

And that’s just one issue.  Their ‘fake account’ scandal has already racked up $3 Billion in fees.

Wells Fargo has so many scandals, Yahoo Finance put a timeline together so you can understand the history of them.

But are there any alternatives?  You bet there are, tons of them.  One bank is Chime, a no-fee startup.  Signup for Chime bank – the FinTech bank with no fees and no branches, and get $50 for signing up!

That’s not all.  There’s MoneyLion, and there is the new concept of ‘banking as a service’ from companies like Aspiration.  Most of these banks can be invested in the private equity (Pre IPO) market.

$WFC has a market cap of $100 Billion + so it’s not going to fall like a knife, and can rebound.  The suggestion here is to sell the rallies, as these underlying issues seem to be part of a pattern.  Management has created an environment where fraud breeds and goes unpunished.  In the FX scandal, they allowed greedy traders to overcharge customers for simple transactions (converting one currency into another) sometimes in the wholesale markets.

Ultimately, when you are the victim of such practices, you find another solution.  Customers will flock away from $WFC and $BAC for new alternatives like Chime, MoneyLion, and who knows what is next to come in banking.

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Trading and Investing America’s second Civil War LLC – Second Sight Markets Analysis 7/3/2020 — A second civil war is brewing in America and by some accounts has already started.  Regardless of your opinion and proclivities you can’t deny that things are going to get more chaotic before they become more stable.  War is always a volatile situation but we have extensive experience trading through wars.  This is an intelligence brief for traders and investors it is not meant to be a comprehensive guide or a particular recommendation.

First, examine the facts.  Learn how to be an analyst.  Any war throughout history including modern war is primarily an information war and secondly a kinetic war.  Traders favorite book “The Art of War” needs to be read again.  It is perhaps why there has been so much censorship on social media recently.  Here we are going to look at what to buy, what to sell, and what markets are interesting.

Officially, America has been in a state of war since February 1:

On February 1, Defense Secretary Mark T. Esper signed orders directing NORTHCOM to execute nationwide pandemic plans. Secretly, he signed Warning Orders (the WARNORD as it’s called) alerting NORTHCOM and a host of east coast units to “prepare to deploy” in support of potential extraordinary missions.Seven secret plans – some highly compartmented – exist to prepare for these extraordinary missions. Three are transportation related, just to move and support the White House and the federal government as it evacuates and operates from alternate sites. The first is called the Rescue & Evacuation of the Occupants of the Executive Mansion (or RESEM) plan, responsible for protecting President Trump, Vice President Mike Pence, and their families–whether that means moving them at the direction of the Secret Service or, in a catastrophe, digging them out of the rubble of the White House.

So how do we make money and protect our portfolios?

What to go Long

These all may seem ‘obvious’ but remember this is only the beginning.  When going long don’t buy the high, take a small position to be in and then buy the dips, nothing goes straight up.  These are demand driven fundamental plays.

1 $SWBI Smith & Wesson Brands

Smith & Wesson is an American manufacturer of firearms, ammunition and restraints. The corporate headquarters is in Springfield, Massachusetts.

Remember that Civil War 2 will be fought in urban areas by mostly civilians.  So stocks to go long would be small arms, things that individuals could buy.  The US Military’s limited involvement will likely use a wide array of non-lethal weapons.  To read up on this see

Other gun manufacturers will do well, of course.  But not the Lockheed’s – remember it’s small arms and improvised devices that are going to be used.

Checkout the official FBI background check to buy a gun chart, from Zero Hedge:

2 Raytheon $RTX

Raytheon invented the Microwave, developed the majority of 5G technology in use today, as well as many Active Denial Systems (ADS) which can literally make crowds disperse.

Raytheon also provides the security for Area 51, and controls the weather:

Raytheon Technologies delivers key weather capabilities

In September 2015, Raytheon Intelligence & Space delivered AWIPS II, the next-generation upgrade to the AWIPS system. The AWIPS update includes powerful new capabilities that help meteorologists deliver more precise forecasts sooner. As the architect of the AWIPS evolution, Raytheon Intelligence & Space designed, developed and deployed the system’s next-generation hardware and software. AWIPS now supports forecasters in the field and responding on location to weather emergencies. It now features simplified code and system performance coupled with a reduced maintenance burden. All of this has been achieved while retaining a system look and feel that makes the AWIPS evolution appear familiar to the user.

Updated AWIPS Capabilities Include:

  • Scalable from laptops to servers, enabling forecasters to work on location with emergency responders
  • Data from all kinds of sources, such as weather radars and environmental satellites orbiting in space
  • Highest resolution available from each sensor – enabling precision forecasts
  • Open-source software enables low-cost maintenance, stability, and most importantly, continuous improvement to forecast accuracy and timeliness
  • A variety of data types are processed in real time, allowing video game-like visualizations and interaction
  • Maps display and re-project nearly instantaneously, with seamless scrolling and zooming
  • Automated text generation allows weather statements — such as watches and warnings — to be issued rapidly to help protect lives and safeguard property

3 $CAT Caterpillar Inc.

In an urban warfare setting, what we will see is buildings burning, and why not Israeli style bulldozers refitted with battle armor displacing “CHAZ” residents from terrorist controlled territories?  No matter what the scenario, war means physical destruction of real property, which will be rebuilt.  CAT is not the only reconstruction play for sure, but it’s a USA-first household name that certainly will be a first choice if whoever is tasked with rebuilding needs to order 100 cranes in short order.

4 & 5 Microsoft $MSFT & Amazon $AMZN

These 2 Mega Cap companies are so deeply involved with the Federal government it’s hard to see where one entity stops and the other begins.  Some reports say that half of military spending goes to private contractors, but rumor is the number is much higher.

But remember our thesis, Civil War 2 is not a traditional war, so traditional weapons software systems builders like IBM will not profit so much like MSFT and AMZN.  Although, both companies have had a big push to enter the defense industry in recent years. 

Adopting cloud computing is critical to maintaining our military’s technological advantage. Our nation’s warfighters deserve the most innovative and secure solutions at the tactical edge – whether on land, in air, or at sea. The Amazon Web Services (AWS) Cloud provides secure, scalable, and cost-efficient solutions that help agencies meet mandates, drive efficiencies, increase innovation, and secure mission-critical workloads across the U.S. Department of Defense (DoD). That’s why the DoD trusts the cloud with the most tools, technology, and accessibility at the tactical edge.

6 & 7 $LOW Lowe`s Companies Inc & $HD Home Depot Inc

Wartime demands supplies, rebuilding, makeshift equipment and other items found easily in these 2 companies.  In many warzones such as Iraq there was no HD or LOW you can bet if there was, they would be constantly restocking supplies.  They may shift their inventory to focus more on staples and less on luxuries (more generators, less flowers) – but that will only make their business better.  They are spread out all over USA mostly in suburban areas, not near hotzones which typically have been downtowns.

Whoever bought bricks for the protestors, probably bought them at one of these 2 companies.

Other longs include $ADT home security, Zoom Video Communications $ZM, and related companies.  On private markets it’s possible to buy Impossible Foods, Digital Ocean, and other companies that are benefiting from the “COVID times” and it seems will continue to do so.

What to go Short

War will be disruptive for inner cities.  Any company that relies on the consumer in cities like Los Angeles, New York, Chicago, or Miami will be disrupted and potentially suffer long term consequences.  What do big cities thrive on that are butter and not guns?  Most obviously, hotels, fashion, restaurants, tourism, and physical entertainment.  These are wants, but not needs.  The shift is from the physical to the virtual.  People will stay in their homes and stream movies instead of going to theaters.

1 $DRI Darden Restaurants, Inc.

Sorry to say that, during times of war including civil war, people will stock up on food, cook from home, and not go out to eat.  Not necessarily for security reasons, it will just be a sign of the times.  COVID is another factor, people will just stay at home and order Door Dash (You can go long Door Dash in the private equity markets if you are accredited @  So some restaurants will survive based on their delivery business, but Darden is all in on the dine in formal concept.  They will evolve, but there can be a lot of pain and suffering until that evolution becomes a reality.

2 $TIF Tiffany & Co.

Luxury goods are going to plummet, while consumer staples will explode.  People will stockpile toilet paper, batteries, dry food goods, toothpaste, and other items.  It’s true that the wealthy who shop at Tiffany will be largely unaffected and/or able to maneuver through society unlike others of less means, during war traditionally gold and jewelry is sold or traded.  Also, retail locations can be targets for looters.


The windows on the Tiffany & Co. store in downtown Red Bank were boarded up Tuesday morning. (Photo by John T. Ward. Click to enlarge.)

red bank tiffany & co.

The rear entrance and windows of the Tiffany store were boarded over, while neighbor Cos Bar was not. (Photo by John T. Ward. Click to enlarge.)

Tiffany will suffer the same fate as other luxury goods retailers, it is just the most well known brand.  They will reinvent themselves like the restaurants, perhaps selling gold bars or gold plated bullet necklaces all online to their rich customers holding down their castles.  But that will take time, and during the peak violence it will be disruptive at the least and terrible for their short term bottom line in the worst.

3 $M Macy’s

Civil War 2 comes on the back of an already weak retail market.  The whole sector will get hit hard.  Companies that are the size of Macy’s will also reinvent themselves, but the investment in physical infrastructure and their physical business model is huge.  In the meantime, sales will suffer, and Macy’s is a luxury store for many shoppers (you can get clothes at cheaper places that are not in shopping malls).  Plus, why pay retail when you can get the 5 finger discount?

The whole fashion industry is going to get hit but particularly high fashion.  Makers of common jeans and shirts, socks, and staples may see a boost.  What’s also going to get hit hard is the bricks n mortar stores in any big city.

Here’s  lists of publicly traded fashion companies

4 Short Fiat Currency

During times of war, FX is usually the market to trade.  As one side wins or achieves a major victory, its currency and that of its allies will usually appreciate.  The issue is here that the war is internal.  But even if you wanted to short the US Dollar that wouldn’t do you much good, because the USD backs most other major currencies.  So for example it’s logical to think if the USD goes down the EUR might rise.  But the Euro is 55% backed by the USD, and has just as much inflationary policies as the Fed.  Central Banks are in an agreement on global macro policy, and the dissenting Swiss were taken out by brute force in 2011 (The Swiss Franc was previously backed by Gold and a unique commodity backed currency).

So the only way to short fiat currency is to buy physical assets such as Gold, commodity rich real estate that’s not inflated artificially, or a business in those markets where real physical assets that can’t be copied, manipulated, or diluted can still be purchased.  Wait – didn’t you just suggest a move from the physical to the virtual?  Yes, in the cities – but for example people in San Francisco and New York are dumping their apartments for country houses.

For the past 10 years, markets have not gone up the value of currencies has gone down.  This is a physical macro economic fact – because the Quantitative Easing policies of all central banks has not only created more supply, but in many cases, the Fed is actually buying assets driving up prices.  During the “COVID crisis” the Fed increased this inflationary policy substantially.  For a good read on this topic see Splitting Pennies – Understanding Forex.

Futures markets

Prices of food will go up, this can be traded in futures markets.  Markets that will do well (go up):

  • Wheat, Corn and other Ag
  • Metals, especially Gold & Silver
  • Meat, Pork Bellies, Feeder Cattle, Lean Hogs*

*Most futures, with the exception of financial futures, are based on physical commodities which will experience asset inflation, that means go up

Markets that will suffer during this time:

  • Insurance and its derivatives
  • Airlines, tourism, transportation
  • Real estate in general (it will be volatile from market to market)

Conclusion for traders

Buying $AMZN and $MSFT and forgetting about the position for 5 years is one strategy that looks promising.  But if you are an active trader, none of these ideas are going to go straight up or down.  But the advantage you have is now you understand the fundamentals behind the moves that will happen in the next 6 months, especially leading up to the election.  October is typically the month of revolution so we can expect a big event, perhaps a terrorist attack in a city in need of renovations – perhaps Baltimore – to create chaos just before the election.

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LNDC Landec Corporation buys regulation liability with Yucatan brand Guacamole LLC – Second Sight Markets Analysis 7/1/2020 — Largely unknown CA based Landec Corporation (LNDC) develops foods and products that advance health, including biomedical products.  This opportunity is a short that requires patience and research, as most of the stock analyst missed the most important thing in their most recent press release.

Among other things, there is this footnote in a press release which was so buried, the stocks’ leading analysts have missed this massive impairment issue.

Here’s a summary of why we think this stock is going lower.

In late October they hired Latham and Watkins ( a major law firm ) who are over $1000 an hour. Between then and late February they spent over $4 million on a compliance issue — that’s $4 million over four months or $1 million a month! SEC, DOJ are investigating a company that apparently had some bad behavior before they bought it so why are they spending this much money if there is no issue.  Market doesn’t buy it either.

Then there’s the write down in goodwill, trademark, clients, etc.

Those are just a few issues, and when DOJ and SEC is involved, no one is lending them money, no one will buy the shares etc unless it becomes a non issue….so why are they spending 1 million a month if they had nothing to do with this and it’s all about issues that pre-date their purchase of this Yucatán Mexico company.

Then their is the loan covenant violations relating to minimum EBIDTA. How many more waivers will they get?
If they did raise money it would have to be at such a discount, and we must also consider all of these red flags.

Our research notes


(1)  The Company is in the preliminary stages of analyzing its goodwill and intangible assets for impairment.

The initial analysis indicates impairment to Curation Foods’ goodwill, trademarks and tradenames, and customer relationships with respect to its O Olive Oil and Vinegar and Yucatan brands.

The Company will provide further information when it completes its goodwill and intangible impairment analysis and reports its actual results for the fiscal 2020 fourth quarter and full fiscal year.  


HERE’s what’s going on and why…

Landec Corporation: investigation into its Yucatan Foods unit that it acquired in late 2018.

Conduct predates acquisition.

The conduct in question relates to regulatory permitting at the Tanok facility in Mexico.

Landec retained Latham & Watkins in October 2019 for an internal investigation.

LNDC claims it subsequently disclosed to the DOJ and SEC the conduct under investigation, and these agencies have commenced an investigation.

Principal Financial and Accounting Officer Changes

On December 27, 2019, the Company announced that Greg Skinner was resigning from his position as Executive Vice President of Finance and Administration and Chief Financial Officer of the Company, effective as of January 8, 2020.

Named Executive Officer Termination

On January 2, 2020, Parker Javid was terminated from his positions as Chief Customer and Sales Officer for Curation Foods and Vice President of the Company.

Compliance Matters

As previously disclosed, on December 1, 2018, the Company acquired all of the voting interests and substantially all of the assets of Yucatan Foods (the Yucatan Acquisition ), which owns a guacamole manufacturing plant in Mexico called Procesadora Tanok, S de RL de C.V. (Tanok ).

On October 21, 2019, the Company retained Latham & Watkins, LLP to conduct an internal investigation relating to potential environmental and Foreign Corrupt Practices Act (FCPA) compliance matters associated with regulatory permitting at the Tanok facility in Mexico.  The Company subsequently disclosed to the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) the conduct under investigation, and these agencies have commenced an investigation.  The Company is cooperating in the government investigations.  The conduct at issue began prior to the Yucatan Acquisition, and the agreement for the Yucatan Acquisition provides the Company with certain indemnification rights that may allow the Company to recover the cost of all or a portion of the liabilities that have been and may be incurred by the Company in connection with these compliance matters. With these indemnification rights, we do not believe that the effects of these compliance matters will have a material impact on the financial statements. However, at this stage, the ultimate outcome of these or any other investigations or potential claims that may arise from the matters under investigation is uncertain and we cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on our financial statements.

Further Research


About Us

Our Brands

Conclusion – Sell Short or Sell to close

We don’t know what this ‘conduct’ is but apparently it was inherited from their purchase of Yucatan brands.  Their vague and well thought out legal wording of the issue indicates that there is a bigger problem than one might notice on the surface.  Menlo Park, CA based Landec has been around since 1986 so it’s not their first Rodeo.  But the world is changing rapidly and unknown regulatory liabilities in Mexico are not something that a US based firm can easily deal with during a trade war and now COVID.  Stay tuned.

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KGJI Short Report – The tale of fake Chinese Gold LLC – Second Sight Markets Analysis 6/30/2020 — Many traders are tuned in to the fact that China Fraud Inc. is a toxic form of capitalism where losses doesn’t exist and markets go straight up.  It’s like the 1880s before any market regulations existed and it was possible to sell snake oil as a product in stores.  Today’s tale of fake gold is both shocking and not surprising.  It’s not surprising because China has a history of doing this – it’s almost baked into their culture.  It’s shocking because the scale of the forgery is $20 Billion.  It’s right out of a Hollywood movie.  Bottom line, $KGJI is going to zero.

Here is our short research on KGJI

Summary of the facts:

  • Tungsten was wrapped with a copper alloy and Kingold pretended it was gold.
  • This Fake Gold was placed in vaults.
  • The fake gold was insured.
  •  The fake gold was borrowed against.

A.. This Chinese Gold company actually was using a copper alloy to create the illusion of gold bars of value.

B.The co is based in WUHAN but is a DE CORP. Kingold creditors also tested pledged gold bars and found they were fake.

  1. There’s high probability that Hengfeng Bank was an active participant in the Kingold  fraud.
  2. EPIC STORY  OF THIS FRAUD – This is a great read.

  1.   Hengfeng Bank just received a $14B infusion.

Its past Chairman received a death sentence and to avoid the appearance of failing banks, the government put together a consortium to bail out Hengfeng Bank in Shandong Province.

The Hengfeng bailout is particularly interesting because this bailout just occured:

  1. i) Hengfeng Bank has failed to file its financial statements since 2016; and,
  2. ii) The bank’s past two chairmen were each separately investigated and charged with corruption… the first in 2014, the second in 2017.

iii) The bank’s corruption and Kingold’ corruption are interconnected .(below)

  1. iv) Given the fraud, this active participant may be a source real deep pocket.

v} Several industry sources claimed that the institutions were willing to offer loans to Kingold because

Jia (Founder) promised to help them dispose of bad loans.

F, Hengfeng Bank Bank transactions

Hengfeng Bank bank in 2017 provided an 8 billion yuan loan to Kingold, which in return agreed to help the bank write off 500 million yuan of bad loans, bank sources said. Kingold repaid half of the debts in 2018.But the loan issuance involved many irregularities as access to the pledged gold and testing procedures was controlled by Kingold, one Hengfeng employee said. The loan was pushed forward by Song Hao, former head of Hengfeng’s Yantai branch

G INVESTIGATION OF Chairman of Hengfeng Bank starts

On 11-28-17, the date the Chairman of this bank was placed under investigation, the smart money begins to get out of KGJI  Interesting correlation. The market appears to know that that exposing Hengfeng Bank, would expose KINGOLD gold to copper corruption. The Shares in Kingold literally reverse from above $10/per share and the smart money got out.

H, Investigation of Bank  heats up

(3/2018)Song was placed under graft investigation in March 2018 in connection with the bank’s disgraced former Chairman Cai Guohua, whose downfall led to a major revamp in the bank’s management.  (In March 18 material correction in KGJI shares)

  1. 2019 Hengfeng’s new management sued Kingold over the fake gold.

In 2019, Hengfeng’s new management sued Kingold for the unpaid loans and moved to dispose the collateral.

But a test of the gold bars found they are “all copper,” the bank source said.  (Shares had multiple material corrections as this fake gold issue  played out.)

  1.   Status today – shares off 20%.

“It is still unclear whether the collateral was faked in the first place or replaced afterward.”

Sources from Minsheng Trust and Dongguan Trust confirmed that the collateral was examined by third-party testing institutions and strictly monitored by representatives from Kingold, lenders and insurers during the process of delivery.

“I still can’t understand which part went wrong,” a “Minsheng Trust source said. Bank records showed that the vault where the collateral was stored was never opened, the source said.

Conclusion – Short KGJI

This stock is probably going to be delisted at best.  Short it if you can, it’s going to zero.

For a great read on this see Zero Hedge’s break on the story:

In retrospect, it probably meant “copper” future, because as a remarkable expose by Caixin has found, more than a dozen Chinese financial institutions, mainly trust companies (i.e., shadow banks) loaned 20 billion yuan ($2.8 billion) over the past five years to Wuhan Kingold Jewelry with pure gold as collateral and insurance policies to cover any losses. There was just one problem: the “gold” turned out to be gold-plated copper.

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EKSO short opportunity – company is printing stocks and never delivers LLC – Second Sight Markets Analysis 6/29/2020 – In 2006, Ekso Bionics designed and sold the first practical human exoskeleton.  But since then, all they do is print more stocks (dilution) and never deliver.  This company is a master of gaming the system and doing nothing, their stock price is based on market perception based on their PR/marketing engine and nothing else.

Our target is from where it is now 7.55 to go to at least 3.10

From our research:

  • IN 2014 EKSO estimated their sales penetration would be 1-5 units per SCI facility and hospital and that their units would range from 3 to 5 years in these clinical settings
  • By 2016 there was under 200 Ekso GT™ units used all over the world. EKSO has a history of extreme underperformance that we believe will continue
  • May 2016 EKSO did a 1 for 7 reverse split
  • Lockheed Martin, Sarcos / Raytheon, BAE Systems, Panasonic, Honda, Daewoo, Noonee, Revision Military, and Cyberdyne are each developing some form of exoskeleton for military and industrial applications, this has become an extremely competitive industry dominated by companies who are better financed and more resourceful than EKSO

These are just some of the points that we want to reinforce with our short report.  These guys have a history of misleading investors by use of PR.  In a 2017 letter to shareholders the company said their stock was undervalued, while nearly being delisted.  From our research:

Shareholder Letter 2017

To our Shareholders:

As we gather for our annual shareholder meeting, I want to take this opportunity to review our progress over the past year and highlight the opportunities and challenges ahead of us. I also want to address our share price, which has fallen close to 70 percent from last year’s high of $6.58. Our management team and Board of Directors do not believe that our current share price accurately reflects the value and future potential of our products and technologies, and we are executing a strategy designed to create long-term value for patients, customers and shareholders.

In a 2017 letter to shareholders, management told the public their stock was undervalued…,%20INC.&FormType=8-K&View=html

The EKSO stock price went down from 34.80 to 1.12 during the next 6 months, this management team has done one thing consistently, represent rosy projections, then underperform

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

EKSO has done multiple stock splits in order to maintain their listing, this is only one example.  Based on our extensive research on this company, we believe at some point the price will fall.  EKSO is not a fraud, it’s a house of cards with a foundation based on PR and a good understanding of how the stock market works.  People read news reports and don’t dig into the underlying details.  As you can imagine, the Robinhood ownership is growing with the stock price:


Based on all of this we believe EKSO has a long way down to go.  Long holders beware, this is not what it appears to be.   The idea of EKSO is cool, here is a summary from Wikipedia:

Ekso Bionics Holdings Inc. is a company that develops and manufactures powered exoskeleton bionic devices that can be strapped on as wearable robots to enhance the strength, mobility, and endurance of soldiers and paraplegics. These robots have a variety of applications in the medical, military, industrial, and consumer markets. It enables individuals with any amount of lower extremity weakness, including those who are paralyzed, to stand up and walk.

The company’s first commercially available product is called Ekso. Ekso Bionics is the original developer of HULC, now under military development by Lockheed Martin, and the current developers of Ekso (formerly eLEGS), which allows wheelchair users to stand and walk.

Ekso was selected as Wired magazine’s number two “Most Significant Gadget of 2010”,[1] and was included in Time magazine’s “50 Best Innovations of 2010”.[2] Ekso Bionics was also featured in Inc. magazine as one of “5 Big Ideas for the Next 15 Years”.[3]

However, this is all just smoke and mirrors, the reality is management never delivers on their promises, and this is evidenced by the facts.  Based on this, we believe EKSO is going down.  Ultimately you can only blow smoke to the market for so long before reality sets in.  Many companies trade at high PE ratios for a long time, but they have at least some material business – which EKSO has none.

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WINS short report – a SPAC called SMAC – another example of China Fraud, Inc. LLC – Second Sight Markets Analysis 6/27/2020 — WINS is a publicly traded company which is involved in a financial scandal so great, the CFO quit.  They have until July 2nd to appoint a new one, who must sign off on the financials.  If they fail to do so, the stock will likely be delisted from NASDAQ and the value will plummet to zero.  You may ask how such a steaming pile of dung may be able to trade on a market like NASDAQ?  The answer is SPACs, or Special-purpose acquisition company.  In this case, a SPAC called SMAC (Sino Mercury Acquisition Corporation) was formed in 2014, with the purpose of ‘allowing backdoor entry to US markets for Chinese companies:’ according to a report by Seeking Alpha:

The intention of forming the shell company was to raise money and serve as a backdoor for a Chinese company in the non-traditional financial sector to become listed in the US.

Was this SMAC SPAC just another way to launder hot money from mainland China into the US banking system?  Let’s look at what’s going on now.  From our internal research analysis, WINS has all the objective hallmarks of fraud.

B  Objective hallmarks of Fraud.
Failed file annual report for fiscal ended 6-30-19. CFO resigns 6-15-20 as does a board member. The COO appointed in Nov 19 resigns May 25, 2020 as does another board member. On Nov 19, 2019, Chairman resigns from Chairmanship and CFO resigns from board. The Company was sued in 2017
WINS’ auditor (Centurion ZD CPA) Centurion also served as auditor for Yangtze River Port & Logistics,
The SEC grilled the company company in a letter demanding future changes in accounting in the imminent 20F filing. This letter is responded to by the company assuring these changes will be made in the 20F has not been filed. The notice of late filing was 10-31-2019 – or 9 months ago! There is no CFO. There is a hearing date July 2, 2020, just four days from now and the issue is the failure to file financials including the 9 no late annual report which still is not filed. No CFO. The auditor is same as another Chinese atrocity.

Nasdaq will likely delist this company following the July 2nd hearing.

(The company has promised since October 2019, and there’s no CFO. You need a CFO to file an annual report.)

In SEC correspondence, the Company promises to change and clarify its reporting in the next 20F which as you will see is never filed (included at end of report in Research section)

Let’s also mention the findings of Hindenburg Research in a short report:

1. Wins Operating Subsidiary Had Its Assets Frozen by the Chinese Courts the Day Before the Mysterious Stock Spike

2. Wins Has Failed to Disclose That Its Parent Entity, Which Owns 67.7% of Its Equity, Is Insolvent, Has Ceased Trading in Hong Kong, and Is in Liquidation

3. We Visited Wins’ Headquarters in China and Found it Mostly Empty

4. We Visited Wins’ Operating Entity’s Listed Address and Found it Empty—Neighbors Said the Location Had Been Abandoned for a “Year or Two”

5. We Emailed Wins Last Night Inquiring as To Whether The CFO Was Still Active, Given That He Resigned From Wins Subsidiaries in November. This Morning the Company Announced the CFO Had Resigned

6. Wins’ (Now Former) CFO’s Immediate Work History Prior to Wins Including Financial Controller at Agria, Which Later was Delisted by the NYSE and Settled Charges with the SEC Over Alleged Stock Manipulation and Accounting Fraud

7. Wins’ Auditor Has a Storied History of Auditing U.S. Listed Chinese Firms That Have Imploded Amidst Accounting Irregularities

8. Even Wins’ Outdated, Year and a Half Old Financials Show an Organization Crumbling. Recent Disclosures Show $83 Million Has Gone Missing into an Opaque Chinese Entity

9. We Expect WINS Will be Delisted Due to Failure to File Financials. This View Is Reinforced By The Company’s Lack of A CFO, Per Its Announcement This Morning.

So what’s the obvious move here?  Short the stock.  Skip options or other creative ways to profit as the options market is already thin and such contracts may be voided if WINS is delisted.  If you own it, sell it.  Take a look at the chart:


As you can imagine, there are 8,000 Robinhood traders in this stock hoping it will go back to 400 without doing any research.  As we learned with the Crypto bubble popping, hopium can be a powerful drug.

This is also a signal of a trend of Chinese fraud seeping through the regulatory cracks of the U.S. system.  All Chinese companies are not frauds of course, but there are so many shades of grey.  In a recent report issued about GSX Techedu which led to a class action case, nearly 70% of their ‘users’ are fake.  According to Fox News:

GSX Techedu is a “near-total fraud” and worthless, according to one investment firm.Muddy Waters Research says at least 70 percent of the Beijing-based GSX’s users are bots and that the real number is likely 80 percent or more. The company doesn’t generate revenue without users and its expenses are greatly understated, the report found.

What happens in China stays in China.  But when Chinese firms choose to list on US exchanges it opens them up to abide by US rules and especially comply with US transparency standards.  The fact that WINS is part of a trend of Chinese would be ponzi scammers trying to ‘regulate’ their illicit activities just makes this even more toxic.

This is our ‘free sample’ establishing our credibility as a short report author.

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WINS Short Report Research

On July 31, 2019 SEC and WINS were in deep discussion relating classify this as “short-term investments” to “investment securities”
WINS assured the SEC that it would correct its errors in the annual report (odd fiscal year) where WINS filed a notice of Late filing in 10/31/2019. This is for the period ending 6/30/19. This is 1 year ago.
Then a July 31, 2019 letter from the SEC appears to have shaken management which turns over often.
However management has repeatedly promised and missed filing its annual report for 6-30-2019 will be filed by x , y and z dates. Now despite no CFO and turnover in management and audit committee , the company has created and maintained the illusion that “this time” the filing is going to happen and this is why.
Most recently, it’s the hiring of a new audit committee member that Management has used in press releases as magically,

, revealed the following issues with one of its “wealth management products.”

• Balance represented the fair value of the Group’s investment in wealth management products from financial institutions in the PRC which were not yet due nor early redeemed as at the end of each of the reporting periods.

• The Company has set up an investigation committee and engaged an external independent law firm in the PRC with Wins Finance to assist in such investigation. Based on the investigation report dated 9 January 2020, it was discovered that the asset manager and certain other parties had executed some additional documents in respect of the investment of RMB750,000,000 in other investments.

• Wins Finance was not a party to these additional documents and was not aware of these additional documents previously. The Company is taking legal advice as to how to proceed with a view to maximising the interests of the Company and its shareholders.

• The Company reserves its right to and will exhaust all possible remedies in order to seek for compensation for the loss under the investment including without limitation the institution of legal proceedings against the relevant parties.

• As the recoverability of the outstanding principal amount and related interest receivable is highly uncertain, a fair value loss of HK$766,936,000 has been recorded for the six months ended 30 September 2019. Details in relation to the results of the investigation were set out in the announcement of the Company dated 9 January 2020.

The Group, through Wins Finance, held certain wealth management products (the “Products”) managed by certain financial institutions in the PRC (the “Financial Institutions”). One of the Products with original investment amount of RMB750 million and remaining principal amount of RMB740 million (equivalent to HK$812 million as at 30 September 2019) was due to mature on 23 October 2019.
As at the date of this announcement, an outstanding principal amount of RMB580 million (equivalent to HK$637 million as at 30 September 2019) has not been redeemed and no investment portfolio has been returned by the relevant Financial Institutions.
The Company has set up an investigation committee and engaged an external independent law firm in the PRC with Wins Finance to assist in such investigation.

Short report:
Chinese Company with $1B mkt cap this am and an easy business to commit accounting fraud for years before being tagged looks like it’s catching attention of the shorts. The Company buys non marketable bonds and claims they can sell them without impairment when they wish
B Objective hallmarks of Fraud.
Failed file annual report for fiscal ended 6-30-19. CFO resigns 6-15-20 as does a board member. The COO appointed in Nov 19 resigns May 25, 2020 as does another board member. On Nov 19, 2019, Chairman resigns from Chairmanship and CFO resigns from board. The Company was sued in 2017
Wins’ auditor (Centurion ZD CPA) Centurion also served as auditor for Yangtze River Port & Logistics,
The SEC grilled the company company in a letter demanding future changes in accounting in the imminent 20F filing. This letter is responded to by the company assuring these changes will be made in the 20F has not been filed. The notice of late filing was 10-31-2019 – or 9 months ago! There is no CFO. There is a hearing date July 2, 2020, just four days from now and the issue is the failure to file financials including the 9 no late annual report which still is not filed. No CFO. The auditor is same as another Chinese atrocity.

Nasdaq will likely delist this company following the July 2nd hearing.

(The company has promised since October 2019, and there’s no CFO. You need a CFO to file an annual report.)

C. In SEC correspondence, the Company promises to change and clarify its reporting in the next 20F which as you will see is never filed:

We have responded to the comments set forth in the Staff’s Letter on a point-by-point basis. The numbered paragraphs set forth below respond to the Staff’s comments and correspond to the numbered paragraph in the Staff’s Letter.

Form 20-F filed October 31, 2018
Financial Statements, page F-4

1. We note your response to comments 1 and 2 and that it appears that you generally transfer the amounts recognized in the allowance (B/S) and provision (I/S) from guarantee losses to “guarantee paid on behalf of guarantee services customers” related accounts at the time a payment is made. To allow investors to more fully understand the financial reporting related to your guarantee business, in future filings please revise the rollforwards of the “Allowance on financial guarantee” and newly named “Receivable from guarantee customers” as noted in response 10 in your May 31, 2019 letter to present a separate line item for these transfers.

Response: In our future filings we will revise the rollforwards of the “Allowance on financial guarantee” and the newly named “Receivable from guarantee customers” to present a separate line item for these transfers as follows.

2. We note your response to comment 5. We note that ASC 320-10-25-1 requires you to have the positive intent and ability to hold the security to maturity, at the acquisition of the security. Based on disclosure throughout the December 31, 2018 Form 20-F regarding your ability to redeem the investments at any time and information in your response to comment 38 in your July 14, 2015 letter, it is unclear how you are able to assert that you had the intent, at acquisition, to hold each security to maturity. To the extent you cannot assert that you had the positive intent and ability to hold a security to maturity, at acquisition, please revise to account for the security as available-for-sale and revise your disclosure accordingly. If you can make the assertion, please ensure you revise all relevant disclosure in your future filings to disclose information consistent with your held to-maturity classification.

Additionally, in order to provide investors with an understanding of the correction of an error and your change in your accounting policy to available-for-sale or held-to-maturity, please revise future filings to disclose the impact of the change in the financial statement footnotes for the periods presented in accordance with ASC 250-10-50.

Response: Before committing to an investment in asset management products portfolio, management evaluates factors such as the Company’s business strategy and current business plans, the nature and type of securities, including their expected life, the Company’s current financial condition and liquidity demands, the current economic environment and related market conditions and the Company’s past practices. Taking into account such factors, management makes a positive determination at acquisition regarding the Company’s ability and intent to hold such securities to maturity and would invest only in asset management products meeting the standards necessary to allow the Company to have the positive intent and ability to hold to maturity.


The Company will restate all relevant disclosure in its future filings to disclose information consistent with its held-to-maturity classification. Also, the Company will provide the following disclosures in the financial statement footnotes of its 2019 Form 20-F in accordance with ASC 250-10-50:

The Company has determined its previously issued audited consolidated financial statements for the three years ended June 30, 2018 contained an error with respect to ASC 320, Investments – Debt and Equity Securities. Specifically, investments in non-marketable asset management products issued by banks and financial institutions (the issuers) with original maturities of one year to five years should be accounted for as held-to-maturity and recorded at amortized cost, as the Company had the positive intent and ability, at acquisition, to hold each security to maturity.

Such correction of error and change in accounting policy had no impact on the carrying amount of these investments as of June 30, 2018 and 2017, and it had no effect on net income, the Company’s consolidated statements of income and comprehensive income, the consolidated balance sheets, or the consolidated statements of cash flows, except that the description of these investments are changed from “short-term investments” to “investment securities”.

Please contact Giovanni Caruso, our counsel, at 212 407-4866 if you would like additional information with respect to any of the foregoing. Thank you.



D.Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On November 18, 2019. Wins Finance Holdings Inc. (the “Company”) received a notification letter from the NASDAQ Stock Market (“NASDAQ”) stating the Company was not in compliance with NASDAQ Listing Rule 5250(c)(1) due to its failure to timely file its Annual Report on Form 20-F for the year ended June 30, 2019 (the “2019 20-F”). The NASDAQ notification letter provides the Company 60 calendar days from the date of the notification, or until January 17, 2020, to submit a plan to NASDAQ to regain compliance with the NASDAQ’s continued listing requirements. If the plan is accepted, NASDAQ can grant an exception of up to 180 calendar days, or until May 13, 2020, for the Company to regain compliance. The Company may regain compliance at any time by filing its 2019 20-F. If NASDAQ does not accept the Company’s compliance plan, the Company will have the opportunity to appeal that decision to a Hearing Panel under Listing Rule 5815(a). The NASDAQ notification letter has no immediate effect on the listing of the Company’s common stock on the NASDAQ Capital Market. The Company intends to provide a plan of compliance to the NASDAQ Staff on or before January 17, 2020.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 19, 2019, (i) Renhui Mu resigned from his position as Chairman of the Board of Directors of the Company (he remains the Chief Executive Officer and a directors of the Company), and (ii) Junfeng Zhao resigned from his position as a director of the Company (he remains the Chief Financial Officer of the Company).

Also on November 19, 2019, the Company appointed Haoying Yang as Chairman of the Board of Directors of the Company and Zhide Zhou was appointed as Chief Operating Officer of the Company.

Yang Haoying (“Mr. Yang”), aged 40, joined Freeman FinTech Corporation Ltd, the major shareholder of the Company, in August 2016 and was appointed as an Executive Director in October 2016.

Mr. Yang was re-designated as Chief Operating Officer in January 2017 and re-designated from Chief Operating Officer to Chief Executive Officer in July 2018.

– Then-

Mr. Yang resigned as Chief Executive Officer in April 2019 but remains an Executive Director.

Mr. Yang currently also serves as a director of certain subsidiaries of Freeman FinTech Corporation Ltd.

Mr. Yang holds a Master’s degree in IMBA (Financial) from Shanghai Jiaotong University and a Bachelor’s degree in Mechanical Engineering and Automation from Jilin University in China. Mr. Yang has over 12 years of experience in corporate finance, asset management and private equity in Hong Kong and China. Mr. Yang led the private equity department Shenzhen team in Pingan Trust Co., Ltd, from March 2011 to April 2015, and served as a managing director of the private equity department in Zhongtai International Asset Management Limited, an asset management company, from April 2015 to September 2015. Mr. Yang acted as a managing director of the private equity department in Mason Group Holdings Limited (Stock Code: 273) from September 2015 to August 2016 which is a company listed on the main board of the Stock Exchange.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On May 22, 2020, Wins Finance Holdings Inc. (the “Company”) received a delisting determination letter (the “Determination Letter”) from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”). The Determination Letter notified the Company that since it had not filed its Annual Report on Form 20-F for the fiscal year ended June 30, 2019 (the “2019 20-F”) by May 13, 2020, the deadline by which the Company was to file the 2019 20-F in order to regain compliance with Listing Rule 5250(c)(1), the Company’s common stock is subject to delisting from The Nasdaq Capital Market. The Company intends to timely request a hearing before the Nasdaq Hearings Panel (the “Panel”) under Listing Rule 5815(a) to present its plan to regain compliance with Listing Rule 5250(c)(1).

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 25, 2020, (i) Haoying Yang resigned from his position as a member of the Board of Directors of the Company, and (ii) Zhide Zhou resigned from his position as Chief Operating Officer of the Company.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 15, 2020, (i) Shihai Wang resigned from his position as a member of the Board of Directors of the Company, and
(ii) Junfeng Zhao resigned from his position as Chief Financial Officer of the Company.


H. Wins Finance Comments on Unusual Market Activity
BEIJING and NEW YORK, June 11, 2020 /PRNewswire/ — Wins Finance Holdings Inc. (“Wins Finance” or the “Company”) (NASDAQ: WINS), a diversified investment and asset management company that provides integrated financing solutions to small and medium enterprises (“SMEs”) in China, today announced that that while it ordinarily does not comment on market activity or market speculation, in view of the recent high trading volume and significant price increase of the Company’s ordinary shares, Wins Finance wanted to confirm to the market that it is not aware of any material corporate developments that could account for this unusual trading activity.

I. BEIJING and NEW YORK, June 15, 2020 /PRNewswire/ — Wins Finance Holdings Inc. (“Wins Finance” or the “Company”) (NASDAQ: WINS), a diversified investment and asset management company that provides integrated financing solutions to small and medium enterprises (“SMEs”) in China, today announced that it has been granted an extended stay as to the suspension of the Company’s ordinary shares from trading on the Nasdaq Capital Market pending the Company’s scheduled hearing before the Nasdaq Hearings Panel (the “Panel”) on July 2, 2020 and the issuance of a final Panel decision.

On May 29, 2020, the Company submitted a request for a hearing before the Panel under Listing Rule 5815(a) to present its plan to regain compliance with Listing Rule 5250(c)(1). This request automatically stayed the delisting of the Company’s securities until June 15, 2020. The Panel notified the Company that it has extended the stay until it fully reviews the facts of the matter and makes a final determination regarding the Company’s listing status following the July 2, 2020 hearing.

The Company received a delisting determination letter on May 22, 2020 from the staff of the Listing Qualifications Department of Nasdaq which notified the Company that because it had not filed its Annual Report on Form 20-F for the fiscal year ended June 30, 2019 (the “2019 20-F”) by May 13, 2020, the deadline by which the Company was to file the 2019 20-F in order to regain compliance with Listing Rule 5250(c)(1), the Company’s common stock is subject to delisting from The Nasdaq Capital Market.

As disclosed previously, the Company is working assiduously to complete its delayed SEC filings of its financial statements and to regain compliance with the NASDAQ rules as soon as possible.

J. Wins Finance Holdings Inc. Announces Submission of Compliance Plan to Nasdaq JAN 20 2020

Wins Finance Holdings Inc. (“Wins Finance” or the “Company”) (NASDAQ: WINS), a diversified investment and asset management company that provides integrated financing solutions to small and medium enterprises (“SMEs”) in China, today announced that on January 17, 2020, the Company submitted its plan of compliance in connection with its failure to timely file its Annual Report on Form 20-F for the year ended June 30, 2019 (the “2019 20-F”) for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(c)(1).

K, 2019-10-31 16:15:17
The Annual Report on Form 20-F of Wins Finance Holdings Inc. (the “Company”) could not be filed within the prescribed time period due to the process with the Company’s auditors being delayed.”

L. This was the last earnings release from WINS

M. May 2, 2019
Letter from the SEC accountants :

N. May 10th 2019 In addition, on 10 May 2019, the Company received a petition from one of the above lenders in the matter of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) from the High Court of the Hong Kong Special Administrative Region (the “High Court”) that the Company be wound up by the High Court on the ground that the Company is insolvent and unable to pay its debts. These conditions indicate the existence of material uncertainties which may cast significant doubt about the ability of the Group to continue as a going concern.

O. The last 20 F reaked of potential of pervasive audit issued – this is for 6-30-2018. The last audited financials are 2years old

We hold a significant amount of short term investments in asset management products. It is possible that we could lose the principal and interest of these assets, or the current return may not be maintained. Furthermore, it is possible that the banks and financial institutions that manage the short-term investments may not be able to redeem the short-term investments at our request, resulting in our being unable to utilize the related funds to support our business.

As of June 30, 2018, we hold $178.3 million of short-term investments in assets management products managed by banks and financial institutions, which have invested in fixed-income financial products permitted by the CSRC such as government bonds, corporate bonds and central bank notes. We believe that the risk of loss of principal and interest on these assets is very low. However, if the Chinese economic environment changes significantly, for instance, if China’s economy enters a serious recession resulting in many enterprises being unable to repay their bonds and other obligations, or if China’s central bank cuts interest rates significantly, China’s asset management companies may be unable to protect their interests in the assets under management. In such event, we might lose any return or even the principal from these investments. The current annualized return rate for assets held by these asset management companies on behalf of us is between 5% and 9% annually. The return on these funds is highly dependent on the management ability of the asset management companies, and on the market interest rate of the investment products. Current levels of return may not be sustainable if the market interest rate continues to decrease in the near future. Further, the banks and financial institutions that manage the short term investments may be unable to redeem such investments at a price equal to the principal and undistributed interests due to market events or, in extreme circumstances, such as significant redemptions or a deterioration of liquidity in the financial markets, may be unable to redeem them at all. As a result, we may not have access to the capital related to the short-term investments for our business when needed.

We failed to comply with certain laws and regulations and the non-compliance may expose us to potential penalties or legal actions imposed by relevant government authorities.

We failed to comply with certain social insurance contributions and Provident Housing Fund requirements under PRC regulations (collectively “Social Benefit Regulations”). Dongsheng Guarantee failed to make social insurance contributions and Provident Housing Fund contributions for some of its employees. As of the latest practicable date, we had not received any notice from any of the relevant government authorities regarding our non-compliance with Interim Measures for our guarantee business and the Social Benefit Regulations. However, we cannot assure that the relevant regulatory authorities will not impose penalties and/or bring legal action against us retrospectively, which may adversely affect our business and cause a significant penalty payment.

Our risk management framework, policies and procedures and internal controls may not fully protect us against various risks inherent in our business.

We have established an internal risk management framework, policies and procedures to manage our risk exposures, primarily credit risk, operational risk, compliance risk and legal risk as well as liquidity risk. These risk management policies and procedures are based upon historical behaviors and our experience in the industry. They may not be adequate or effective in managing our future risk exposures or protecting us against unidentified or unanticipated risks, which could be significantly greater than those historically experienced. Although we are continuously updating our policies and procedures, we may fail to predict future risks due to rapid changes in the market and regulatory conditions, and new markets we enter. Although we have established internal controls to ensure our risk management policies and procedures are adhered to by our employees as we conduct our business, our internal controls may not effectively prevent or detect any non-compliance of our policies and procedures, which may have a material adverse effect on our business, financial condition and results of operations. Effective implementation of our risk management and internal controls also depends on our employees. Human error or other mistakes may significantly undercut the effectiveness and performance of our risk management and internal controls, resulting in a material adverse effect on our business, results of operations and financial position.

We had material weaknesses in our internal control in financial reporting as of June 30, 2018 and such material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

Our management identified material weaknesses and concluded that our internal control over financial reporting were not effective as of June 30, 2018. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The specific material weaknesses we identified in our internal control over financial reporting as of June 30, 2018 related to:

· lack of sufficient accounting personnel qualified in US GAAP and SEC reporting; and
· insufficient accounting staff, which results in a failure to segregate duties sufficiently to ensure a timely and proper preparation and review of the financial statements.

Although we provided more training to our accounting personnel relating to US GAAP and SEC reporting to partially address the foregoing material weaknesses, we do not believe such weaknesses have been remediated and we can provide no assurance that they will be remediated in a timely manner.

Any failure to maintain effective internal controls could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis as required by the SEC and NASDAQ, we could face severe consequences from those authorities. In either case, this could result in a material adverse effect on our business. Inferior internal control could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock. We can give no assurance that additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future these controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

We may be subject to employee misconduct which is often difficult to detect and could harm our reputation and business.

Employee misconduct may include approving a transaction beyond authorized credit limits, hiding key customer information in the due diligence process, engaging in fraudulent or other improper activities, or otherwise not complying with laws or our risk management procedures. Employee misconduct is often difficult to detect and could take significant time to uncover. We cannot assure you that future incidents of employee misconduct will not subject us to serious penalties or limitations on our business activities. We could also suffer from negative publicity, reputational damage, monetary losses or litigation losses as a result of the misconduct of our employees.


There is often limited information regarding our customers and our ability to perform customer due diligence or detect customer fraud may be compromised as a result.

The information available on SMEs including microenterprises is often limited. Our credit evaluation depends primarily on customer due diligence. We cannot assure you that our customer due diligence will uncover all material information necessary to make a fully informed decision, nor can we assure you that our due diligence efforts will be sufficient to detect fraud committed by our customers. If we fail to perform thorough due diligence or discover customer fraud or intentional deceit, the quality of our credit evaluation may be compromised. A failure to effectively measure and limit the credit risk associated with our guarantee and loan portfolio could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, we may be unable to monitor our customers’ actual use of the financing we guaranteed or provided, or verify if our customers have other undisclosed private money or borrowings. We may not be able to detect our customers’ suspicious or illegal transactions, such as money laundering activities, in our business and we may suffer financial and/or reputational damage as a result.

Reference Articles SEC FOIA reveals evidence of a potential investigation into this market manipulation. 

EBIX down 10% nailed in complaint for breach of contract

6/25/2020 – – In what is building up to be one of the biggest frauds of the year, publicly traded Johns Creek, GA based EBIX has been named in a complaint accusing them of breach of contract of a merger agreement.  Readers can read the complaint here:

2020.06.17-Yatra Online, Inc. v. Ebix, inc. and Ebixcash Travels, inc. COMPL Public Redacted 2020-0444JRS (Del Chancery)

If this was the first such news it might be looked independently.  But EBIX has a history of being involved in such situations, and is being investigated by top securities class action firm Glancy Prongay & Murray.

If you google “EBIX fraud” you’ll find lots of stories looking into various allegations, there is an overwhelming amount of information publicly available on this topic.  For example, Viceroy Research has published a short report on EBIX in 2018:

DECEMBER 13, 2018 – Ebix’s Mumbai office was “searched” by Indian tax authorities in Q3 2018. In other news, CEO Robin Raina claims Ebix has never “been on the wrong side of any regulatory or tax authority”.

The Taxman Cometh – Report Download Link

Viceroy released its preliminary report on Ebix – titled Goodwill Hunting – on 11 December 2017, the contents of which we also discussed at the Kase Learning conference in New York on December 3, 2018.

This report will address the totally inadequate response Ebix issued on December 12, 2018, which was substantially an attempt at authority bias by CEO Robin Raina. Accordingly, we will also shine a light on the statements Raina decided to include in this press release, which we believe to be extremely misleading.

  • Ebix acknowledged our report via a press release on December 12, 2018, however CEO Raina would rather issue a hollow press release than address the issues Viceroy have raised in our preceding report.
  • Robin Raina claims Ebix has “never been on the wrong side of any regulatory or tax authority”. This is inconsistent with:
    • Ebix’s Mumbai office being subject to an undisclosed “search” by Indian Tax Authorities for suspicion of tax evasion in late August 2018;
    • Ebix currently subject to a tax audit by the Australian Taxation office since at least 2016;
    • Ebix historically settling an IRS dispute for >$20m;
    • Ebix being subjected to a prolonged SEC investigation;
    • Ebix being subject to a possible ongoing DOJ investigation;
  • Contrary to Raina’s claims, it appears his conduct was subject to regulatory scrutiny even prior to his rise to CEO. Ebix’s former auditor, Arthur Anderson, was charged by the SEC for improper conduct and fraud relating to the audit of Ebix’s revenue recognition practices at a time where Raina was VP of Sales and Marketing and COO.
  • Robin Raina claims Ebix has had “no differences with any statutory or consolidated auditors across the world in the last two decades”. This is objectively, and verifiably false, as we have already reported.
  • Ebix detracts attention to concerns raised through reinforcement of its commitment to stock buybacks, of which it has announced US$330m since 2015 and only fulfilled US$187.169m.
  • Viceroy is writing to the relevant debt providers shortly with these and other material concerns.

Viceroy’s original report can be found here:

So EBIX being investigated for wrongdoing is not news, but this complaint alleging breach of contract is just a cherry on an already steaming pile of cow dung.

Already, in the last 24 hours since we have released our first article on EBIX issues the stock is down 10% – as this unravels there is no telling how far down EBIX can go.

What’s the difference between a short trade and a long trade from an information perspective?  When you are long, you are betting on future events which are assumed.  When you are short, you are betting on known information (which is public) being understood by the markets.  In other words, you have truth on your side.  The downside of short selling of course is that it may take time for information to proliferate into the market, which is the risk of short selling.

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EBIX Rampant Fraud, Prospects Not Good, Fail To Deal With Bad Situation

Here’s the bottom line:

  • Last year, EBIX was investigated for improper accounting practices.
  • They failed to ‘come clean’ completely with what happened.
  • The company is not on a solid foundation, and the stock has suffered.

EBIX was once a fast growing company cited by Forbes, Fortune, and other financial publications.  Last year the company was embroiled in a scandal that wasn’t completely resolved, at least to the satisfaction of some.  In case you’ve never heard of the Johns Creek, GA based firm, here’s a summary of what they do from their website:

Ebix is a leading international supplier of on-demand infrastructure exchanges to the insurance, financial, and healthcare industries. In the Insurance sector, the Company’s main focus is to develop and deploy a wide variety of insurance and reinsurance exchanges on an on-demand basis, while also, providing Software-as-a-Service (“SaaS”) enterprise solutions in the area of CRM, front-end & back-end systems, outsourced administrative and risk compliance.

The market cap is as of this writing 1.2 Billion and shares are trading at $38 down from a peak of almost $84 one year ago.  Here’s a chart showing this movement:

Data by YCharts

The reason for the drop was the firm was caught with their hands in the corporate cookie jar, in legalese that means: “booking external revenues on transactions between its subsidiaries.”  This caused a number of law firms such as Glancy Prongay & Murray to investigate wrongdoings according to press releases, but nothing materialized in the matter.  This isn’t (EBIX) first tussle with the legal system in USA, there have been cases alleging insider trading, as referenced by AJC:

Rennes, by selling for $77.20 per share ahead of the October announcement, appears to have avoided a potential loss of about $245,000, the AJC found.“The timing is certainly suspicious,” said attorney David Chaiken, who spent nine years as a federal prosecutor for the Atlanta U.S. Attorney’s office and now works in white collar and government investigations for Troutman Sanders. “A quarter of a million dollars is going to catch a prosecutor’s eye, definitely, or an SEC enforcement attorney.”

When EBIX did hire a new auditor to resolve the accounting issues, the new auditor found issues with internal controls, which caused the stock to drop further:

On March 1, 2018, Cherry Bekaert LLP, the Company’s outside auditor, expressed an adverse opinion about Ebix’s internal controls over financial reporting. The group reported, in part, that it had found (A) numerous accounting discrepancies regarding recognition of goodwill and acquisitions, and (B) evidence it believes demonstrates that Ebix is perpetrating a scheme to incorrectly book revenue and earnings.

Then there are cases going back as far as 2011, it seems like this company is attracted to litigation and risk like a magnet.  Or, perhaps, there is something that is still yet to be uncovered properly, such as bad management.  Does EBIX have proper internal controls?  It seems that they haven’t done anything to address the issues of these multiple cases.

Viceroy research has done an excellent job of researching this issue, their detailed reports are available here.

The last trick of tricky executives was the hiring of RSM, as they claim them to be the ‘5th’ largest accounting firm, as if they were part of the “Big 5” – there is no more Big 5 now there is only the Big 4.

One of the notable conclusions in Viceroy’s research, there are many, is the incentive based pay of the Indian based accounting firm RSM.  India is vastly different than USA.  What goes on in India, stays in India.

Incentive based pay means that they will be paid if the audits are made to a degree that are approved by management, i.e. the one who writes the checks.  It may be legal in India, but it certainly is not in the united states.

Indian-Americans that work in high paid Wall St. jobs have the tendency to push the limits of what’s legal, as evidenced by the case of Raj Rajaratnam, seen leaving prison to his fancy Manhattan condo valued in the millions of dollars.  Then there is the case of Hotelier Sant Singh Chatwal that finally pled guilty to ‘campaign fraud’ which is bribing corrupt US politicians, in this case Democratic Senator Hillary Clinton and fellow Democrat in crime Chris Dodd.

This type of abuse of the US system is evidenced in Viceroy’s report of the Raina “Foundation”, available here.  According to the Georgia Secretary of State, the license of the Robin Raina Foundation, Inc. is Expired as of 11/9/2014.  The domain name is owned by Ebix Inc. according to WHOIS records.  Clearly, this foundation is not a genuine foundation, but another example of fraud, a means by which the beneficiaries can siphon off funds from investors while claiming to be ‘do gooders.’  This is the focus of an ongoing investigation into the Clinton Foundation.


EBIX and it’s executives are masters of smoke and mirrors.  They are players in the great game of quarterly results and making things look like, on the surface in the US, everything is OK.  But the sad reality, when you look at the facts, it seems like they are a one trick pony, and that trick is grey area accounting fraud.  When your auditor is paid based on performance, it means they will do whatever you ask them to in order to be paid.  That’s not an independent audit, that’s a white wash.

Based on publicly available research we believe that EBIX will continue to face challenges and the stock will suffer.  For example, if the auditors are on the take, how about stock authors that are paid to promote the stock?  EBIX has proven it will stop at nothing to bribe their way to success.  That may be very American, however times have changed and markets now demand real innovation, not just self-promotion using any means necessary.  EBIX does have a real underlying business there is no question about that.  However, based on their continued behavior of manipulation, it’s likely that the stock is overvalued.  Also, if we were investors, we would want to see all the upper management replaced, with people unrelated to the events of the past few years.  As it stands, EBIX is a stay away or a sell if you have, or a potential short – if you have the patience for the fraud to be uncovered.

For our premium subscribers, we are offering up custom macro analysis and research on EBIX including pending litigation, documents, and other evidence to substantiate our claims.

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EBIX fraud exposed – see data and case filings against the company

EBIX is a fraud, we will outline here details of this fraud.

See the recent complaint filed:

2020.06.17-Yatra Online, Inc. v. Ebix, inc. and Ebixcash Travels, inc. COMPL Public Redacted 2020-0444JRS (Del Chancery)

LabCorp LH stock falls 10% on fake test news and paternity liabilities – see this shocking evidence of fraud

(Global Intel HubZero Hedge Exclusive )– Sunday June 7th we published an article outlining the major fraud happening in the scientific community, named “LH LabCorp again involved in massive DNA and paternity fraud” and as the news circulated around the globe, during the week the stock fell 10% see the below chart:

LabCorp (LH) has been a publicly traded company for some time – it’s one of those stocks that doesn’t move too much, because they are so big and their core legacy business is just assumed.  It’s assumed that LabCorp will continue to be the default goto lab for things like bloodwork, paternity testing, and that supports the stock.  But exposing the fraud in the testing, is shaking the foundations of their bottom line.

Answering some comments and questions from the original article, we want to articulate a few points here.  First, here is the fine print that you sign when you participate in the test:

I hereby consent to procurement of biological samples, photographs and fingerprints for myself and if applicable as a legal representative of the minor child in this case.  I hereby agree to indemnify and hold LH harmless from any liability as a result of any such misrepresentation

“I hereby release LH from any liability relating to any misrepresentations on my part including my legal status as representative of the minor child.   I hereby agree to indemnify and hold LH harmless now and forever as result of any and all misrepresentations.

I understand that the biological samples provided Will be used for DNA testing and the results may be used by a court of law as to assist in the determination of parentage of the child or other relationships as indicated. I further understand that the forms submitted as part of this testing may be considered, may contain social security numbers, addresses, and other identification information which may be disclosed along with the results as required by law or legal process.

All of the legalities become important when mothers get child support or welfare such as SNAP or TANF.  If you are thinking that this is for the poor and degenerate think again; this is a billion dollar business.  According to

The aggregate amount of child support due in 2015 was $33.7 billion, a decrease of $14.0 billion from 2003. About 60 percent of the child support due in 2015 was reported as received, averaging $3,447 per year per custodial parent who was due support.

Out of the $33.7 billion, how many dads are paying for children who are not actually their children?  It’s really easy for any single mom to get money, just fill out the form and get monthly residual income.  There is such a thing as a free lunch, economists were wrong.  But there’s always a catch – Mothers are effectively committing fraud when they knowingly nominate strangers as fathers and bind them to payments.  Unlike other types of financial debts, you can actually be sent to prison for not making child support payments.

You may be thinking how is it possible that LabCorp could create such a complicated fraud involving such a serious part of human life: paternity.  Well they do this through fake science using fake credentials – as with any crime there needs to be an accomplice, and that accomplice is the AABB, a non-profit NGO:

AABB (formerly known as the American Association of Blood Banks) is an international, not-for-profit association representing individuals and institutions involved in the fields of transfusion medicine and cellular therapies. The association works to improve health through the development and delivery of standards, accreditation and educational programs that focus on optimizing patient and donor care and safety.

As we are seeing the credibility of the World Health Organization (WHO) unravel, it’s not so far fetched to consider that the scientific and ‘academic’ fraud is more widespread than most of us can even imagine.

But perhaps the most shocking document is from the AABB which is the institution of accreditation for LabCorp, says:

The standards need to maintain a balance of falsely finding a relationship versus an inconclusive finding or no relationship at all.

This document can be downloaded here at the source.


This is the ‘accredited’ testing done by LabCorp!  Read on, this will shock you:

The number “10” should be changed to “100”. “0.1” should be changed to “0.01”. This should apply to all alleged relationships.
A likelihood ratio (LR) of 10 means an approximately 9% chance that the alternative hypothesis – that a random individual is the true relative – is correct (assuming 50% prior odds). We think that is too high.
The combined weight of the genetic evidence required to render an opinion of relationship (or non relationship) should be standardized across all accredited facilities. Unlike laboratory methods (such as the concentration of a reagent to use in a reaction), the principles of genetics, mathematics, probability, do not vary from lab to lab. We think a minimum LR of at least 100, or below 0.01 for an opinion of non relationship, should be set in all cases. This gives an approximately 99% probability that the hypothesized relationship is the correct relationship (assuming 50% prior odds).
The fact that many alleged relationships such as single grandparentage, sibling, half sibling, avuncular, some genetic reconstructions, etc. may not produce a LR greater than 100 should not matter. The AABB should set a minimum threshold of at least 99% to state that an alleged relationship is supported.

LabCorp (LH) bases their core legacy business on a fake test that uses ‘hypothesized’ relationship as 99% statistical basis, that means when the mother fills out the paperwork and says that the dad is the dad, they are claiming, that 99% of the time it’s correct, so future tests need not actually do genetic sampling because based on history, they are saying – mothers are generally 99% correct in father identification.  Call this many things but we call this a ‘fake test’ because the perception is that LabCorp is doing some kind of genetic test when actually they are basing their test results on statistics and a corrupt view that mothers are objective and correct in identifying fathers.

The reality is that the reason mothers are often to compelled to name a dad who is not the dad is because of money.  Perhaps the real dad is deceased, fled the country or is otherwise unavailable to pay.  Any dad, such as a neighbor, friend, or relative of the dad will do because you see – any father who is named on the form becomes the debtor in a contract worth in the state of North Carolina (a good average) $181,440 for the life of the contract.  Payment is guaranteed by the court system – if you don’t pay $840 a month the court will find you and put you in jail.  Child support is no joke it’s not like credit card debt, it’s secured with your ASSets (your ass).

Take a look at monthly child support by state:

As one might imagine, the professional support of a $33 Billion a year industry is immense.  Just look at some happy customers from CustodyXChange, a service to manage planning (but most importantly BILLING) of child custody, they even have an app:

So going back to the fake tests – is there an incentive to blow this fraud up for the disgusting fraud that it is?  No, in fact there is an incentive to hide it, as it creates thousands of jobs for people like Don Harris, that might otherwise be working for the AG or the public defender.  Then there are the mothers who are living it up with the checks from strangers – who can also afford to hire more Don’s to protect their racket.  Would be curious to know if they meet from time to time or have a lobbyist, just to make sure any investigation into these crimes is squashed.  A conspiracy of moms.  Who would have thought?

Stay tuned to Global Intel Hub for the latest on this fake science criminal fraud.