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| OCZ Technology |
A Wall Street analyst, in response to questions about the criminal history of Campus Crest Communities CEO Ted Rollins, said investors would be very concerned about such revelations.
Paula Poskon, a senior research analyst at Robert W. Baird and Co., made the remarks a few weeks back in an interview with Legal Schnauzer. Events in the investment world since then indicate Poskon knew exactly what she was talking about.
Investors, it seems, do care deeply about ugly events in a CEO's background. Ryan Petersen resigned on September 17 as CEO of OCZ Technology, a Silicon Valley company that is a leader in solid-state storage technology. Petersen founded OCZ, and the company is on the leading edge of a computing transition from hard drives to solid-state drives (SSDs). But that did not prevent his unceremonious exit after the market learned of unsavory events in his past--and his failure to disclose them.
How did these events come to light? The answer to that question speaks to the growing power of the non-traditional press.
A story broke in April 2011 on seekingalpha.com that Petersen and the company's underwriters had failed to disclose information about the CEO's criminal record. The story specifically broke with Copperfield Research, a contributor at the Seeking Alpha site, and then made its way into the mainstream business press.
A little more than a year later, Ryan Petersen is out as CEO.
What is Copperfield Research? It's a pseudonym for a research team that focuses on publicly traded equities. The researchers publish under anonymous status because of concerns about retaliation from corporate management. The names behind Copperfield Research might not be known, but their work obviously carries weight.
A number of factors might have played into Ryan Petersen's resignation at OCZ Technology. Press reports indicate the company had made a number of business missteps, but the downward slide seemed to start with Copperfield Research's reporting.
Revelations about the CEO's criminal history almost certainly helped stunt the company's performance and put a cloud over its future. Bloomberg produced a story titled "OCZ Technology Plunges After Reports of CEO's Criminal Record."
What was Petersen hiding in his personal closet? From the Copperfield Research report:
OCZ and the underwriters did not disclose material background information on the CEO's criminal record. While we are sympathetic to mistakes made in the past, we believe the importance of the CEO's credibility is essential given the extreme reliance investors and analysts have placed on his story. A national criminal records search shows the CEO was arrested and/or charged in various Courts for: Grand Theft, Forgery, Unlawful Entry Motor Vehicle, Theft-1, Drug Violations, and Traffic in Stolen Property.
Gulp! I can't imagine why investors would be concerned about all of that.
What do we learn from this story? For one, Seeking Alpha now is a powerful force in business journalism. According to Nielsen Analytics, Seeking Alpha has the leading audience of any financial Web site--including Bloomberg, CNN Money, and The Wall Street Journal.
Two, we learn that investors become displeased when they learn that details about a CEO's criminal record have been kept from them. From the Bloomberg article about OCZ's stock plunge:
OCZ Technology Group Inc. (OCZ), the maker of solid-state disk drives, plunged for a second day in Nasdaq trading following a report that the company didn’t disclose its chief executive officer’s criminal record.
The shares of the San Jose, California-based company fell 74 cents, or 9 percent, to $7.49 as of 4 p.m. New York time, after dropping 14 percent yesterday. . . .
“The criminal record makes investors nervous,” said Aaron Rakers, an analyst at Stifel Nicolaus and Co. “There were people out there that were not fully aware of the aspects of the deal and that put pressure on the stock.” Rakers has a “buy” rating on the shares.
What does this mean for Ted Rollins and Campus Crest Communities? It's hard to say, but our guess is that Ryan Petersen would still be CEO of OCZ Technology if Copperfield Research had not done its homework-- and Seeking Alpha had never existed. Here is a video report on the Ryan Petersen story from Cory Johnson of Bloomberg:
9 comments:
Does the general public have the ability to contact Seeking Alpha to put them on the right track? For instance if someone knows of something specifically that a CEO has done or committed, can they get in touch with this company to disclose the information or tip them off? Just wondering.
Good question. "Seeking Alpha" looks sort of like the business equivalent of Daily Kos. It's a sprawling site with lots of contributors (more than a thousand, I think). I opened an account and became a contributor the other day. Still learning my way around.
Many of the contributors seem to focus strictly on investments, stocks, etc. But some have shown a definite interest in fraud, CEO misbehavior, etc.
The main one I've found so far is Copperfield Research, which is referenced in this post. You might want to click on the link in my post that will take you there. I'm looking for other contributors who show an interest in fraud, etc.
I would encourage LS readers to visit seekingalpha.com and check it out. Sort of a supermarket of business info. I guess you would call it a "crowd sourced" site, driven by a stable of contributors, a bit like Huffington Post.
Good grief!
Grant theft, forgery, traffic in stolen property, drug violations.
This guy thinks the public isn't going to find out about this stuff?
If you check out the Bloomberg video, this CEO told the reporter that he thought this information was "irrelevant."
Priceless.
Speaking of relevant and irrelevant, the arresting of citizens is a very interesting trail of ... "Grant theft, forgery, traffic in stolen property, drug violations..."
Et Cetera ...
PUBLIC SAFETY. This is how we are sold the modern ideology that we are having a "free and exceptional life in America!"
A criminal conspiracy is defined, when a/the SECRET hidden hand, is in charge of the so called "national sovereignty" of an "independent state," IE EG, U.S.A.
... "FREE MARKET" ....
First of all, no one appears in actual understanding of how we citizens get arrested for crimes which we allegedly commit.
Because the crimes are in essence, manufactured by the creditors,' who and whom need citizens to be arrested and of course, incarcerated, for "retirees."
Cha ching. Vanguard Investments, in the PUBLIC RETIREMENT, and Dick Cheney primary investor, "JAIL."
STOCKS, must be 100% transparent and therefore, PUBLIC investment "safe."
RATHER, we get sold that investing is safe, and all the while the CEOs are criminals. Gosh, golly, gee, the B.A.R. in each state appear to be oblivious and yet, the RETIREMENT PORTFOLIOS, PERS, are filled with the criminals that are best SUITED for the "cause."
Thank the internet and the great journalists "Roger," et al for light at the end, of our tunnel vision.
I wonder if folks would find it "INTERESTING" if they knew Karl Rove's buddy-Ralph Reed was still humping his corporate accounts:
http://www.nytimes.com/2012/09/23/us/politics/ralph-reed-hopes-to-nudge-mitt-romney-to-a-victory.html?smid=tw-share&_r=0
http://www.nytimes.com/2008/07/07/business/worldbusiness/07iht-07weather.14282515.html
Anon at 4:27--
Speaking of Vanguard, they are one of the largest investors in Campus Crest Communities, Ted Rollins' company. They are based in Philadelphia.
One measure of the coalition’s potential influence is its contributors, who represent a broader Republican constituency than simply the religious right. The group is not required to disclose its donors, but a partial list was obtained by The New York Times.
**
Come on Ralph. Disclose all the shareholders--I mean all the donors!
So maybe Copperfield Research got one thing somewhat right out of their maliciously fabricated posts. They exaggerate the truth and even lie for the purpose of their own short positions. They don't post to uncover fraud and deceit; their posts are fraud and deceit themselves. Petersen was convicted of a felony but it was later amended to a misdemeanor. Yes, he was trafficking in stolen property in exchange for marijuana; he was caught with a stolen car stereo. Is it important to the business that he co-founded? Maybe, but this world is filled with thieves and Copperfield Research is one of them and they aren't just petty thieves like Petersen in his youth; they have made millions off of innocent investors with their short and distort formula.
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