Insanity: doing the same thing over and over again and expecting different results.
As early as 2001 Barrons reported on the questionable link between U.S. companies that skyrocketed after proposed mergers with small privately held Israeli tech companies and then shortly thereafter crashed and burned. The glue that held the proposed mergers together was Broad Capital, owned by Murray Huberfeld and David Bodner.
While the terms “Pump and Dump” were not used in the article, the implications were ever present in the reporting. To quote from the article: “Time has proven suspicions correct.” That was in 2001 and it related to a 1999 merger that went sideways.
We cannot figure out why Nasdaq continued to allow David Bodner or Murray Huberfeld anywhere near investment companies or investors’ money. After all, Bodner had enlisted someone else to take the securities registration exams for him. Does that not say anything?
We are now in 2016 and nothing has changed. Perhaps there is an accountability problem. Perhaps investors are just too damned stupid to keep their money away from shady characters; and organizations like Chabad and Wiesenthal will defend anyone who donates enough money. One can only speculate.
The point here is that we really must give credit to Einstein’s insight.
What’s That Smell
Three tech mergers turned into stinkers
W hen the stocks of three small, unrelated U.S. companies skyrocketed after proposing mergers with little-known, privately held Israeli tech companies, Barron’s thought something smelled fishy. Our suspicions grew after learning that David Bodner and Murray Huberfeld, two gents with a history of run-ins with the Securities & Exchange Commission, had ties to the Israeli companies (“Let’s Make a Deal ,” June 26). Time has proved our suspicions correct. The shares of the three, Multimedia KID, Sensar and Western Power & Equipment , have all fallen by 80% or more. Multimedia KID, an Israeli-based developer of interactive educational products, merged with U.S.-based Jenkon International in August 1999. The merged entity ran out of operating funds last month, and the Nasdaq SmallCap Market delisted its shares, which had fallen to just pennies. The stock traded hands at 2.06 at the time of our story.
Next in our trio comes Sensar, a Salt Lake City-based shell company. It planned to merge with Net2Wireless, an Israeli-based developer of compressed digital cellular technology. Investors were so excited about the promise of Net2Wireless that they sent shares of Sensar soaring to a peak of 89.88 in March. At that price, the merged company would have had a market value of $3.9 billion. But the excitement faded fast after Nextel Finance, a unit of the wireless-phone company, terminated an agreement last fall to purchase one million shares of Net2Wireless at $32 each.
Making matters worse, the Nasdaq objected to the pending merger and said it would delist Sensar shares if the deal went through. “On November 20, 2000, the staff of Nasdaq contacted Sensar and informed [Sensar] that it had concerns arising out of prior regulatory proceedings against certain Net2Wireless stockholders,” Sensar reported in regulatory filings. The stockholders were not named.
Last week, the company announced plans to buy a minority stake in Nex2, an information-service provider to the insurance and health-care industries. The news hasn’t helped Sensar shares, which have fallen from 22.13 at the time of our story to just 1.75. Sensar’s current market capitalization: $14 million.
Then there’s Vancouver, Washington-based Western Power & Equipment. This heavy-equipment distributor was to merge with e-Mobile, an Israeli-based company that hopes to develop handheld devices to access the Internet. This deal fell apart early this month “due to changes in the marketplace’s valuation of technology companies and its concern as to the potential delay in obtaining Nasdaq approval of the transaction,” according to a company press release.
Among other things, the Nasdaq Listing Qualifications department had asked the company for information about its relationship with Murray Huberfeld, David Bodner and their firm, Broad Capital. Western’s shares have fallen to 1.06 down from 6.69.