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The Money is Gone

theintercept.com

58 pointsKristine197536 comments

So not only did he not lose $1M (he invested $100k), the article doesn't tell us how (come back for part 2). Pretty disappointing journalism.

Because it is serialized you conclude it is "disappointing journalism"? Hardly seems fair...

The article was a classic pump and dump scheme, in which I emotionally invested.

the real crime

Invested $100k and his shares were worth $22k at the end of the dump. So he lost $78k -- a rough loss, but the article is false advertising.

Part 2 is there now. (Though not really satisfying).

If you scroll down, Part 2 appears as "BIG PLAYERS, LITTLE STOCKS, AND NAKED SHORTS"

Direct link: https://theintercept.com/2016/09/23/big-players-little-stock...

And even Part 2 doesn't explain clearly what's happened.

But you'll be amazed at what's revealed in Part 3!

I would totally have paid $3 for advance access to the rest of the story at that point. I need to know!

Classic sucker play.

Smart Dude knows something, has some experience, moves into something 'related' where he thinks he knows what's going on, ignoring all classic signs of a scam.

Then, when his money is well and truly sunk, he tries to figure out where it went. At least that part is new.

tl:dr; guy invests 100k, a reverse stock split happens which locks up his shares, stock gets pumped then dumped while he watches helplessly. Find out more in part 2 (which doesn't exist).

Part 2 (of 7) will be up tomorrow: https://twitter.com/ddayen/status/779059213527945216

re-post the series back when all 7 are done!

You'll be shocked when you read part 4!

Random comment on twitter said there would be 7 parts, but there is no indication from the author whether it is a two parter (second available tomorrow) or multi-parts.

I hope the couple of sites who have been doing these multi-day releases swiftly see that they are not getting people to the end of the story. I know I have read a few with posts in the 3/7, 1/7 ranges but I haven't touched a multiday article with 7/7.

More clicks is more money I guess, but it seems ironic with the pump and dump scheme as the subject of this article. Pump the article with the first 3 things, dump it with the last 4 that nobody reads.

Is there a product that fixes this problem? I'd like to subscribe to parts 2 thru N, but don't want to subscribe to the author or the site...

maybe if i save it on Pocket it will bubble it up my recommended list?

The best product I can think of is this: don't cock-tease your readers like this.

I don't understand why they're so insecure with their product that they have to trick readers into coming back for more? The other articles I've read on The Intercept in the past seemed reasonably good to my untrained eye. Why do they feel the need to play tricks? I'll never be coming back now and I'll probably avoid reading anything on The Intercept again. It makes no sense to me.

Normally tl;dr is not appropriate; in this case it is.

"He had previously worked on Wall Street as an institutional equity trader and research analyst for a subsidiary of the now-defunct investment bank Donaldson, Lufkin, and Jenrette.

"But DiIorio didn’t know that at the time.""

How does someone who worked on Wall St. not know what penny stocks are? How do they not know the importance of disclosure and regulation?

It's just bizarre for someone to come out of that world without the proper cynicism for investing, but maybe that's because the people I have met from Wall St. make money. Some of them "quite a bit."

I wonder if he worked for one of those institutions that doesn't actually make money and instead lives off of fees.

Hear hear. I am guessing he never actually traded stocks.

From what I see he didn't "lose" $1M. He invested $100K which at one point was worth $1M.

Yeah. Title is misleading.

I agree... he's in the green on a penny stock if the number in the article of $1.3M is correct; he should be jumping for joy.

I assume there's more to the story in part 2 which i will wait for, but so far I have no sympathy or lesson-learned to match the title.

  DiIorio recalls it peaking at $3.50 by September 2006, giving his holdings a value of around $1.3 million.
  the stock plummeted from $3.50 to $0.06 a share within two months.

So by the end of part 1, he's down to $22k.

> at one point was worth $1M.

which isn't even true if you can't sell it. If you can't sell it, it's worth "$0".

I actually don't understand what the article describes, this "lock-out" period. Is it actually a common thing? Isn't the stock price set by people willing to buy? If it can't be sold, how can there be a price?

This lock-out period is something you can subscribe for voluntarily. It is mostly done for company founders whose company goes to the stock exchange; you don't want them to immediately sell all their shares because they would flood the market. In this case the author got a better deal for the conversion of his shares, for which he was apparently willing to lock up his position.

That's why I don't understand the author's surprise that the stock price was moving after the reverse split. Of course there were other parties which didn't sign such a deal.

I don't know about common, but its a thing - likely because of the "preferred shares" class.

This guy doesn't seem too big on reading the fine print: invests in Penny stocks and doesn't realize risk? Invests $100k without finding out details? Doesn't know what preferred shares are? Figured 1:1000 (public deal) and 1:30 / 3:1 (his deal) was exactly the same?

Also he could have walked away with a big profit if he hadn't gone along with the 'advantageous' deal for big shareholders which also happened to lock up his position.

Exactly. We have no idea if he even lost anything. Using the number of BTVL shares he says he ended up with, times the lowest reported share price in the article, he should still have had over $22k unless something else happened the article isn't covering.

"Part 2 is coming soon". I am the sucker for reading that far.

I flagged this article (is that an abuse of that flag system?). Part 2 is now up but is woefully thin on useful detail; we learn nothing about who at UBS or Knight might be manipulating the market or why.

The "To be continued..." format was not a great choice for narrative like this. So much content missing that it could be considered click-bait.

It's a pump and dump article on pumping and dumping. How ironic...

so, i bookmarked, and more parts are showing up.

2 - https://theintercept.com/2016/09/23/big-players-little-stock...

3 - https://theintercept.com/2016/09/24/naked-shorts-cant-stay-n...

4 - https://theintercept.com/2016/09/25/calling-the-sec/

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