GNUS Stock – Thank you GNUS , very cool : RobinHoodPennyStocks
Genius Brands International: Illegal Pump and Dump
Anson Funds was the driving force behind the manipulative long-short campaign for entertainment company Genius Brands – GNUS.
Rumours are Moez made north of $60 million and has just paid himself a huge bonus (off the back of the GNUS investors he burned) which he is looking to spend on a $10-million lake house in Muskoka**. Good times.**
As Anson Funds prides itself as being a short fund that preys on unsuspecting companies, GNUS prides itself on creating kid-friendly entertainment content. And in the kid-friendly entertainment world, there is nothing bigger than Disney. The best way that Anson could exemplify an exciting GNUS investment thesis was to associate it to Disney.
A strategic plan was initiated by Anson Funds to make the stock price adhere to their long-short rule of “Elevator up, Stairs down” with the addition of a ‘safety net’. They would do all of this while giving GNUS and regulators the impression they were LONG the stock.
In other words, the decline in GNUS stock price needed to be slower than its ascent, giving the impression they weren’t involved in the pump and dump via shorting the stock. The reality, however, is that they had a direct hand in both.
In early June 2020, out of the blue, social media pundits start calling Genius Brands the next Disney. But this wasn’t your typical short squeeze like everyone thought. This was Kassam setting up his manipulative Long-Short strategy by creating unsubstantiated rumors, according to our sources close to Anson. GNUS turned into the most popular stock added to Robinhood accounts during the first week of June. The move created the liquidity demographic required to cover Anson’s and other associated short sellers’ massive positions.
When GNUS stock was peaking above $8+ USD a share, many investors will recall that some anonymous pumpers on social media were speculating that Genius Brands cartoons would become more popular than Disney’s.
On June 5th, at the peak of the GNUS share price madness, Hindenburg Research (Nate Anderson) entered the picture on cue. Hindenburg is a prominent short seller, and according to a lawsuit filed by Catalyst Capital, it has a direct working relationship with Kassam’s Anson Funds. But Nate Anderson does actually have some credibility, not like Moez Kassam and Sunny Puri, so he still has a chance here to save his reputation.
They are all members of a short-selling group that has become known since the Catalyst Capital lawsuit as the “Wolfpack Conspirators”.
Nate Anderson, of course, has denied the allegations, but we know from multiple sources that he is directly associated with Anson Funds—even if he’s regretting any such association at this point. The pattern is clear to see without source confirmation: The days before the Hindenburg report on GNUS was published, significant short positions were taken by Anson Funds and/or its associates.
And to the outside world there is perfect cover: In his report entitled ‘A Bagholder’s Guide to Why We Think Genius Brands Will Be a $1.50 Stock Within a Month’, Nate Anderson argues that the GNUS-Disney social media postings included a bunch of falsehoods. He even suggested that investigators dig deeper into a situation that Moez Kassam manufactured in the first place.
The timing of the release of the report was impeccable. It was also put together, complete with an ostensible investigation, in a matter of a few days. That sort of turnaround time, of course, is impossible, so it is clear that Nate Anderson was given vital facts of vetted information by an insider (in this case Moez Kassam).
That marked the beginning of the end of the GNUS pump campaign.
But there are more details of the Hindenburg report that are worth mentioning here. The report was premised on the knowledge that retail investors were completely oblivious to the fact that 131 million shares and share equivalents issued from GNUS’ recent financing rounds would become available to trade within an estimated 2-4 weeks. And Anson Funds directly and indirectly participated in these financing rounds or advised GNUS in these rounds.
GNUS has generated losses every quarter for almost 10 straight years. Despite this, the self-proclaimed street savvy Anson Funds was GNUS’ biggest institutional investor and supporter for many years.
As large investors and trusted advisors of GNUS, Moez Kassam, Sunny Puri and/or Adam Spears gave management the impression there could actually be a strong value proposition in Genius Brands’ stock.
They managed to convince GNUS (desperate after 10 years of losses) that they were in it for the long haul. Totally dedicated. This got them inside the company and privy to management’s most intimate insider details. Those details were likely protected by a Non-Disclosure Agreement, but NDAs have never bothered Moez Kassam.
All the while, GNUS’ financials were only shaping up to be even worse in the coming quarter. Anson seemed like a safety net, but it was a trap.
Anson Funds slunk out the back door and communicated to Nate Anderson the tidbits needed to create a comprehensive activist short report.
The first tidbit was that Llama Llama, Genius Brands’ most popular show, ended up showing that the company doesn’t own intellectual property and only has a licensing deal—none of which was disclosed to shareholders.
The second tidbit was the fact that GNUS failed to disclose that its flagship show, Rainbow Rangers, was not renewed for a new season on key network Nick Jr.
While some public information backed these assertions in the report, both tidbits were merely supplemental to the key information that was original leaked by Anson Funds itself, with the intention of making money on the short sale.
It didn’t help that GNUS insiders, were blinded by greed to Anson’s intentions. GNUS management was more interested in filing a prospectus statement that sought to allow holders, including its CEO, to sell almost half the shares from a prior $11m convertible debt at a $0.21 strike price before the pump ended and dump was fully completed.
They were purposefully trying to time the release of the statement to coincide with Genius Brands’ launch of the Kartoon Network on June 15th. Anson Funds was likely made aware of this plan by insiders prior to the filing.
But GNUS was willfully blind to the fact they had a fox in the henhouse.