Trading was just halted in Neuromama (OTC:NERO), a startup with a $35 billion market cap. They have a search engine (https://neuromama.com/), a social network (http://vica.life/), and claim "heavy ion fusion" and oceanfront property in Mexico. The CEO got out of prison 6 years ago.
Very helpful explanation from a thread about this on reddit (narrated from the first person perspective of the scammer):
It's pretty beautiful in an illegal sort of way:
So the clever short sellers borrow and sell 100,000 shares of stock at $2 each, hoping to profit when it crashes to zero.
By hypothesis, there are no buyers. But we buy. We buy those 100,000 shares for $2 each, laying out $200,000.
Now we own 300.1 million shares, out of 300 million outstanding.
On Thursday we go to our brokers and say "you know what, we changed our minds, we want our stock back from whoever you loaned it to."
So the brokers call in the short sales.
The short sellers can't borrow the stock anywhere else. We own it all. So they have to close out their short sales by buying in the stock.
But they can't buy the stock anywhere else either. We own it all. So they have to buy it from us.
How much do we charge?
Yeah, $15. Or $20 or whatever, I don't know. We can charge whatever we want. If the short sellers don't buy the stock, they're breaking the law. So they'll pay whatever we ask.
They pay $20 to buy back the shares they sold us at $2, making us a $1.8 million profit.
Wow. That social network feels like a kinda creepy way to remember someone. Seems a little too attached. Additionally, it has a store (because why not?) and I figured I would check it out because at this point I'm mildly impressed by the effort they've put forth. The store is just Amazon affiliate links.
"He left prison in August 2010 after being sentenced for five years for defrauding investors, in a $1.8 million scheme through misrepresentations tied to the renovation of a Las Vegas casino. The Ukrainian immigrant was sued by the SEC in the 1990s for orchestrating a $12 million penny stock scam. He was ordered to pay more than $21.6 million in disgorgement and penalties for selling unregistered securities from 1993 to 1996."
With the apparent gold mine of batshit footage[0][1][2][∞], horrifying failed PR stunts[4], pdfs[5], and fake products, I really, really, hope someone with the right skills picks up the documentary ball here...
> The SEC has pushed to keep shell companies out of the hands of fraudsters, who manipulate their shares to make illegal profits through a so-called pump-and-dump scheme.
So if you wondered what a shell company is, one way to get a publicly traded company is to buy the "shell" of an existing company that is already public but wound down operations.
Sort of a take over of just the name, incorporation documents and exchange documents that let it list. You'd then delist and have your shares only trade OTC. This helps explain why they haven't filed any financials for the past few years.
If you look at its trading history, NERO US Equity<HP GO> if you have a Bloomberg terminal, you can see that it traded a few hundred shares a day and slowly climbed up each day. This probably indicates that the shares are very tightly held. So the owners can't really cash out by selling their shares, but they can possibly use the shares as collateral.
Being so tightly held also eliminates the possibility of shorting the company, though shorting any OTC symbol is always a bit sketchy.
I think the crazy and cringe factor is deliberate. Remember the goal is to find short sellers who think this is stuff is overvalued, total failure, crazy etc and then proceed to short sell it.
Not saying owners are not crazy, but in this case crazy happens to also help them.
"To fully understand the difference between our Business Opportunity ad and all the other business opportunity ads you've been reading, the first thing you must know is that we are offering an overflowing profit palette of business 'opportunities', not just a single business 'opportunity.'..."
I found this on the "Special Password Protected Area for Original Baja California Investors" page:
> Why would it make sense for APPLE Computers to acquire NeuroMama, Ltd.
> (1) If APPLE acquired NeuroMama, Ltd. it could potentially generate $100 billion, by selling advertising, in new revenues per year within 5 years by replacing GOOGLE with Neuromama.com’s Search Engine based on Neural Technology in APPLE's browser - SAFARI. Of course, it no longer will be NeuroMama.com search engine .... it will be APPLE Search Engine.
(Sorry bout this folks - just trying to wrap my head around it)
What we seem to know and the unanswered questions:
- this seems to be an atrociously bad startup (their "search engine" proxies Google but can be easily tripped)
- it seems to have been a genuine IPO (2000???) that then failed (see search engine) and yet the outstanding shares trade OTC (between large institutions privately - a very common method)
- the scam that seems to be happening is curious (See good explanation about Eve down thread). The idea is bad scammers can trap genuine hedge funds into a short squeeze on this very rarely traded stock. But no sane hedge fund will short the stock without also buying a call option - and so it seems only insane hedge funds get ripped off here.
My questions:
Why on earth are these stocks still lying around and being traded OTC. This seems the sort of thing that would never get allowed on any genuine exchange (the company could barely fulfill minimum reporting requirements)
Why did anyone take this as a "naked short"? Options trading is risk risk risk and people do this for a living aren't fools. Are they?
Even if this got public in the dotcom boom, why is such a scammy company still allowed to operate with outstanding shares ? I mean they have only just halted trading on a company that proxies Google ... Why give the imprimatur of SEC over the past few years to such crap?
But no sane hedge fund will short the stock without also buying a call option
Bill Ackman reads this and says "Oh, shit ... you can do that? Why didn't someone tell me that before I lost about $1 billion shorting that POS Herbalife pyramid scheme?"
In other words, sometimes "insane" hedge funds are run by BSDs[1] who are convinced they are the smartest guys in the room. They're so convinced that a stock is worthless that they don't bother doing something prudent like buying protective calls.
And then guys like Carl Icahn buy HLF stock just for the lulz, knowing that they are giving Ackman a very painful galactic wedgie.
Wall Street is definitely Adult Swim. And occasionally joker hedge funds need to be reminded of that.
> no sane hedge fund will short the stock without also buying a call option
Short plus a call is a put. If you can buy a call you can just buy a put. Thinly-traded stocks such as this one would not have exchange-listed options.
All their website does is scrape Google and return the results. I found this by causing an error by accident which shockingly exposes this error page: (http://i.imgur.com/w0tgNUA.png)
Why on earth does NASDAQ make it look so much like Neuromama (NERO) is a real NASDAQ-listed company? If I was trying to fool investors, this is the link I would use:
This makes no sense...OTC stocks are almost never bigger than a billion dollars. This used to be at $28 in 2012, which meant is was still worth over $20 billion but the SEC didn;t notice then. No information about this company. not even a wiki page. I think the $35 billion may be a typo and it's only $35 million. There is something missing in the reporting. Maybe it traded at a penny and went to $55 ,maybe it wound be worth billions but it never got lower than $10
There were strange things going on with the numbers of shares outstanding in 2013, I wouldn't jump to conclusions about historical prices/market-caps without double checking.
It's a 68 page, haphazardly stitched mess of documents. Can't say they're not confident in their product:
From page 37: "NeuroBrowser of NeuroMama.com is the best, easiest to use, and blocks all kind of viruses and
pop-outs on your screen...In 2 years the NeuroMama stock will be the most popular and will make NeuroMama
shareholders and employees very, very rich. NeuroMama.com is the best Search Engine in the world."
My favorite: "I can provide a lot of references, who will say that I always keep my word, although on
many occasions due to unforeseen circumstancesit could take longer for me to deliver on
my promises."
Wow - They don't even bother actually building a realistic-looking product. Their NeuroMama search engine doesn't seem to work at all and it has pictures of (Russian-looking) priests and clowns in the background.
I think this is pretty much like gambling though... Not so different from how most people deal with the NYSE or NASDAQ (most people know nothing and make decisions based entirely on hype/media). People gamble on horses and lottery, and they also gamble on stocks...
I think if someone can pull this off, they deserve the money as much as any legitimate company on the NASDAQ or NYSE.
A lot of these NASDAQ/NYSE companies have overinflated valuations (far beyond their real intrinsic value); it's the same thing except in this case, the intrinsic value is 0.
Tiajuana, Mexico? Siberia?
Sounds like the makings for a 'Red Dawn 2: Putin and El Chapo" where Trump is holed up with the NRA as patriotic rebels protecting Hillary, the POTUS ;)
The 2012 film remake of Red Dawn made China the bad guys compared with 1984 original Red Dawn where Russia and Cuba were the bad guys.
But seriously, could this be used to launder money, or the scam wouldn't allow for it based upon the setup of the short squeeze? Could money be put in the system this way and cleaned and turn a profit at the same time?
NeuroMama, LTD. is a development stage company which designs and implements the Internet Platform containing all of the popular components used by majority of population. NeuroPlatform offers its users more search relevancy, privacy and FSR - Frequent Search Rewards. NeuroPlatform consists of NeuroMama.com search engine, based on Neural Technology (Artificial Intelligence), secure e-mail service - Neuro-Mail, NeuroBrowser with a special version for children, NeuroMania social network with multitude of features such as Video management system, marketplace and auction, TviMama.com Video On-Demand and Live Broadcasting Infrastructure, functioning as the next generation Internet Content Distribution Platform (CDP). The NeuroZone online shopping mall is in implementation stage that will offer its users and vendors unique online shopping experiences, provide its e-commerce merchants with ability for instant integration to NeuroZone platform, and reward users for shopping at NeuroZone merchants. The flagship store for NeuroZone will be NeuroMania Department Store with large variety of products sold under the NeuroBrand such as NeuroPad, NeuroPhone, NeuroBook, etc. The company is currently in the process of establishing its presence in China to sell advertising and to establish Joint Ventures with manufacturers in China in order to deliver large profit margins in NeuroMania online store and brick and mortar store locations as part of its licensing program. NeuroMama, Ltd. is in the process of researching, designing and implementing its licensing program to accelerate growth of revenues worldwide. NeuroMama, Ltd. is currently implementing revenue generating infrastructure to sell advertising on its Internet Platform.
I trade this market professionally, and it is quite easy to massively elevate your stock price if you control most of the floating shares. These sorts of price run-ups happen very regularly, but, to their credit, the SEC normally stops them before they get this far. They are typically able to halt trading by the time it's worth a billion dollars, two tops. :/
Some con artist gets expelled from US after spending 6 years in prison for investment fraud.
Tries new pump and dump gig from Mexico called NeuroMama, deliberately hilariously crazy stupid.
Issues some 650M shares, sells 200 for 50$, probably to himself, gets stopped by SEC. Holds the remaining 650M-200 shares, that's where the trillion dollar figure comes from.
Time to stop calling virtual shares 'market cap' or even 'worth'!
That's pretty old and boring, the 'new' attempted twist is called short squeeze, see and thank @thegranderson for explanation.
WHY WOULD THEY JUST SUSPEND THE STOCK TRADING, WHAT IS THE ILEGALITY HERE? THAT THEIR STOCK TRADES AT $56DLLS AND THEY HAVE LOW VOLUME? OR THAT THEY HAVE NOT FILED THEIR FINANCIAL DOCUMENTS? I HAVE READ ON ONE OF THEIR CONTRACTS THAT THEY PERFECTLY STATE THAT THEIR COMPANIE USES INVESTORS CAPITAL SEED TO FUND PROJECTS. WELL LETS JUST WAIT AND SEE WHAT HAPPENS ON THE 26TH OF THIS MONTH
Animats|9 years ago
WTF?
thegranderson|9 years ago
It's pretty beautiful in an illegal sort of way: So the clever short sellers borrow and sell 100,000 shares of stock at $2 each, hoping to profit when it crashes to zero.
By hypothesis, there are no buyers. But we buy. We buy those 100,000 shares for $2 each, laying out $200,000. Now we own 300.1 million shares, out of 300 million outstanding.
On Thursday we go to our brokers and say "you know what, we changed our minds, we want our stock back from whoever you loaned it to."
So the brokers call in the short sales.
The short sellers can't borrow the stock anywhere else. We own it all. So they have to close out their short sales by buying in the stock.
But they can't buy the stock anywhere else either. We own it all. So they have to buy it from us. How much do we charge?
Yeah, $15. Or $20 or whatever, I don't know. We can charge whatever we want. If the short sellers don't buy the stock, they're breaking the law. So they'll pay whatever we ask.
They pay $20 to buy back the shares they sold us at $2, making us a $1.8 million profit.
source: https://www.reddit.com/r/investing/comments/4wvlkv/a_scam_wi...
[edit: formatting]
fuddle|9 years ago
tetrep|9 years ago
semi-extrinsic|9 years ago
I am entirely unsure how this search engine works.
homero|9 years ago
overcast|9 years ago
unknown|9 years ago
[deleted]
beedogs|9 years ago
honkhonkpants|9 years ago
Why isn't this guy on the bad actors list?
cloudjacker|9 years ago
ultrasandwich|9 years ago
[0] - https://www.youtube.com/watch?v=ok-8uVR4Pa0
[1] - https://www.youtube.com/watch?v=tZhI5zRJ8zw
[2] - https://www.youtube.com/watch?v=hreCQlJB7bE
[3] - https://www.youtube.com/watch?v=23C_fKGuSls
[4] - https://www.youtube.com/watch?v=A1rbxisJGJ4
[5] - https://encrypted.google.com/search?hl=en&biw=&bih=&q=site%3...
[∞] - https://www.youtube.com/channel/UCbSwch2hCQcgy-ecz1Z_guQ
edit: spacing
chollida1|9 years ago
So if you wondered what a shell company is, one way to get a publicly traded company is to buy the "shell" of an existing company that is already public but wound down operations.
Sort of a take over of just the name, incorporation documents and exchange documents that let it list. You'd then delist and have your shares only trade OTC. This helps explain why they haven't filed any financials for the past few years.
If you look at its trading history, NERO US Equity<HP GO> if you have a Bloomberg terminal, you can see that it traded a few hundred shares a day and slowly climbed up each day. This probably indicates that the shares are very tightly held. So the owners can't really cash out by selling their shares, but they can possibly use the shares as collateral.
Being so tightly held also eliminates the possibility of shorting the company, though shorting any OTC symbol is always a bit sketchy.
syassami|9 years ago
TazeTSchnitzel|9 years ago
Note the fake NASDAQ symbol.
I only watched 5 minutes of it. Interestingly, Neuromama.com does indeed return Microsoft as the top result for "computer software": https://neuromama.com/get/web/computer+software
But the rest is the same as Google.
rdtsc|9 years ago
Not saying owners are not crazy, but in this case crazy happens to also help them.
Yhippa|9 years ago
jupiter90000|9 years ago
paulddraper|9 years ago
http://investor.neuromama.com/uploads/2/4/6/9/24695823/impor...
SXX|9 years ago
dmix|9 years ago
This rise in value was orchestrated no doubt.
astronautjones|9 years ago
jonah|9 years ago
"To fully understand the difference between our Business Opportunity ad and all the other business opportunity ads you've been reading, the first thing you must know is that we are offering an overflowing profit palette of business 'opportunities', not just a single business 'opportunity.'..."
Plus 30 more paragraphs of similar madness.
[1] http://investor.neuromama.com/licensing-territories.html
gragas|9 years ago
> Why would it make sense for APPLE Computers to acquire NeuroMama, Ltd.
> (1) If APPLE acquired NeuroMama, Ltd. it could potentially generate $100 billion, by selling advertising, in new revenues per year within 5 years by replacing GOOGLE with Neuromama.com’s Search Engine based on Neural Technology in APPLE's browser - SAFARI. Of course, it no longer will be NeuroMama.com search engine .... it will be APPLE Search Engine.
...what?
Cyph0n|9 years ago
Of course.
lifeisstillgood|9 years ago
What we seem to know and the unanswered questions:
- this seems to be an atrociously bad startup (their "search engine" proxies Google but can be easily tripped)
- it seems to have been a genuine IPO (2000???) that then failed (see search engine) and yet the outstanding shares trade OTC (between large institutions privately - a very common method)
- the scam that seems to be happening is curious (See good explanation about Eve down thread). The idea is bad scammers can trap genuine hedge funds into a short squeeze on this very rarely traded stock. But no sane hedge fund will short the stock without also buying a call option - and so it seems only insane hedge funds get ripped off here.
My questions:
Why on earth are these stocks still lying around and being traded OTC. This seems the sort of thing that would never get allowed on any genuine exchange (the company could barely fulfill minimum reporting requirements)
Why did anyone take this as a "naked short"? Options trading is risk risk risk and people do this for a living aren't fools. Are they?
Even if this got public in the dotcom boom, why is such a scammy company still allowed to operate with outstanding shares ? I mean they have only just halted trading on a company that proxies Google ... Why give the imprimatur of SEC over the past few years to such crap?
PhantomGremlin|9 years ago
Bill Ackman reads this and says "Oh, shit ... you can do that? Why didn't someone tell me that before I lost about $1 billion shorting that POS Herbalife pyramid scheme?"
In other words, sometimes "insane" hedge funds are run by BSDs[1] who are convinced they are the smartest guys in the room. They're so convinced that a stock is worthless that they don't bother doing something prudent like buying protective calls.
And then guys like Carl Icahn buy HLF stock just for the lulz, knowing that they are giving Ackman a very painful galactic wedgie.
Wall Street is definitely Adult Swim. And occasionally joker hedge funds need to be reminded of that.
[1] not Berkeley, but Liar's Poker
pjc50|9 years ago
Presumably they couldn't find someone to write the call option at a reasonable price. Which makes sense for a volatile thinly traded stock.
JumpCrisscross|9 years ago
Short plus a call is a put. If you can buy a call you can just buy a put. Thinly-traded stocks such as this one would not have exchange-listed options.
dn95|9 years ago
mintplant|9 years ago
https://i.imgur.com/pSWLXIx.png
The rotating carousel backgrounds on their homepage are comically bad Photoshop jobs, and the logo looks like it's traveled here from the early 2000s.
ipsin|9 years ago
http://www.nasdaq.com/symbol/nero/stock-chart
partiallypro|9 years ago
"This $35 billion company supposedly owns 'a clone of Amazon’ and is developing atomic fusion — and the SEC thinks something might be wrong."
paulpauper|9 years ago
kgwgk|9 years ago
ElliotH|9 years ago
hashmymustache|9 years ago
It's a 68 page, haphazardly stitched mess of documents. Can't say they're not confident in their product:
From page 37: "NeuroBrowser of NeuroMama.com is the best, easiest to use, and blocks all kind of viruses and pop-outs on your screen...In 2 years the NeuroMama stock will be the most popular and will make NeuroMama shareholders and employees very, very rich. NeuroMama.com is the best Search Engine in the world."
wwwdonohue|9 years ago
jondubois|9 years ago
I think this is pretty much like gambling though... Not so different from how most people deal with the NYSE or NASDAQ (most people know nothing and make decisions based entirely on hype/media). People gamble on horses and lottery, and they also gamble on stocks... I think if someone can pull this off, they deserve the money as much as any legitimate company on the NASDAQ or NYSE.
A lot of these NASDAQ/NYSE companies have overinflated valuations (far beyond their real intrinsic value); it's the same thing except in this case, the intrinsic value is 0.
largote|9 years ago
harryh|9 years ago
aczerepinski|9 years ago
ChartsNGraffs|9 years ago
rhubarbquid|9 years ago
eggy|9 years ago
The 2012 film remake of Red Dawn made China the bad guys compared with 1984 original Red Dawn where Russia and Cuba were the bad guys.
But seriously, could this be used to launder money, or the scam wouldn't allow for it based upon the setup of the short squeeze? Could money be put in the system this way and cleaned and turn a profit at the same time?
unknown|9 years ago
[deleted]
executive|9 years ago
http://seekingalpha.com/symbol/NERO
ryporter|9 years ago
singularity2001|9 years ago
Some con artist gets expelled from US after spending 6 years in prison for investment fraud. Tries new pump and dump gig from Mexico called NeuroMama, deliberately hilariously crazy stupid.
Issues some 650M shares, sells 200 for 50$, probably to himself, gets stopped by SEC. Holds the remaining 650M-200 shares, that's where the trillion dollar figure comes from.
Time to stop calling virtual shares 'market cap' or even 'worth'!
That's pretty old and boring, the 'new' attempted twist is called short squeeze, see and thank @thegranderson for explanation.
Shun the Neuromama meme.
This gives a whole new dimension to the word 'pump and dump con artist': https://www.youtube.com/watch?v=A1rbxisJGJ4
haddr|9 years ago
http://pastebin.com/RnsB33Ea
DON1|9 years ago
ekiara|9 years ago
`ErrorException in getResults.php line 45:`
https://neuromama.com/get/web/blender
dzlobin|9 years ago
This forum post has links to some of their financials which are just comical.
tlrobinson|9 years ago
adamontherun|9 years ago
unknown|9 years ago
[deleted]
gruez|9 years ago
...with no link to click on
walrus01|9 years ago
davidgerard|9 years ago
jokoon|9 years ago
KasianFranks|9 years ago
[deleted]
gfaure|9 years ago
ww520|9 years ago
themartorana|9 years ago
KasianFranks|9 years ago
[deleted]
unknown|9 years ago
[deleted]
IPv5|9 years ago
[deleted]