Its been a week since we publicly raised questions about why Jon Najarian of CNBC had not filed any Form 4s relating to shares he claimed to have purchased in Net Element Inc. (NETE). It remains unclear to us why he still has not filed these forms as required by the SEC, but the more time that passes the more we are inclined to believe that he never actually purchased the shares.
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Prior to our article, an article in Barron’s raised numerous and very serious questions about the NETE, its management, and its sources of financing. Since we believe “there is never just one cockroach,” we decided to look even closer at NETE. What we found only increased our confidence that NETE’s stock is massively overvalued and will soon trade at much lower prices.
One of the things we discovered is that NETE uses an investor relations firm, Mission Investor Relations (MissionIR), that we consider to be highly questionable because we believe it very aggressively promotes stocks on various websites that often cater to (less sophisticated) retail investors.
On its website MissionIR claims “Unlike other investor relations firms, we have a network of investor-oriented websites that attract the affluent audience companies strive to impress. Each of these websites utilize proven methods of effective communication and have established a significant presence among the investment community. We also use the latest social networking tools and advanced SEO capabilities to broaden our clients' influence and ability to attract new investors.”
Importantly, we are not the only ones who have issues with MissionIR. Last year MissionIR was subject to a Cease and Desist Order by the SEC whereby, among other things Michael McCarthy (who owns MissionIR and The Dreamteam Group) paid the SEC over $120,000. According the SEC, MissionIR “operated as a fraud upon investors and violated, and caused violations of, the anti-touting provisions of the federal securities law.”
Two of McCarthy’s clients cited in the SEC Order were CytRx Corp. (CYTX) and Galena Biopharma, Inc. (GALE). Both companies were clients of McCarthy in 2013 and their stocks have subsequently collapsed. At the end of 2013, CYTX was trading at $35, much higher than its current stock price of $0.25. GALE’s stock price also collapsed, has been the subject of securities class action lawsuits and last traded at around $0.30 at the end of 2017 prior to its merger with another company. Given this track record, we believe NETE shareholders will soon be facing similar losses.
All of this makes us wonder:
- Of all the possible investor relations firms NETE could have hired, why did it hire MissionIR?
- Why has Jon Najarian still not filed any form 4s for his purchases of NETE stock?
- Why does CNBC allow Najarian to continue to be a Board Director of NETE considering the many red flags we and Barron’s have raised regarding the company?