The second that we came upon the Green Innovations (OTCPK:GNIN) promotional mailers, we concluded that the company would attempt to craft sprinkles of legitimacy to lift shares in order to create massive amounts of wealth (currently in excess of $70 million) for certain players, instead of successfully building a viable long-term enterprise.
We stumbled upon GNIN at around the same time that we found Echo Automotive (OTCPK:ECAU) that appeared to be preparing for a pump. Within 11 days from the beginning of a "third party" pump campaign, ECAU rose 330% to reach a high of $3.61 on January 29, 2013. Just 12 days later ECAU broke the $1.00 mark to the downside. You can see our negative research report on ECAU here.
The lesson to be learned: The P&D game ends as fast as it begins. And GNIN's time could be coming to an end, as a simple Google (NASDAQ:GOOG) search will show that many investors are on to its charade. We alerted our Premium members this morning to the following when GNIN was trading above $3.00 per share.
GNIN represents itself as a company that:
"is in the business of importing and distributing bamboo-based hygienic products in North America through a licensing agreement with American Hygienics Corporation, a privately-owned corporation in the People's Republic of China."
Through some web research performed over the last week, we learned that investors are claiming that GNIN is being promoted through an outfit that goes under the name Brighton Markets (AKA World Street Fundamentals) that some claim orchestrates a boiler room operation.
"I have come into information that may be pertinent to you as it relates to Green Innovations, Ltd. ("GNIN") a USA orchestrated Stock Scam. The group behind this fraud is the same group that orchestrated: PUNL, IDNG, and others."
"This information along with other key information I did not disclose here has been forwarded two weeks ago to the FBI, Department of Justice, US SEC, Bafin, SFBC, DTC, and the US brokerage houses compliance operations."
Brighton promises to send two to twelve stock email alerts per year to individuals that sign up to its site. Brighton is bad news for fundamental investors. We became aware of at least two pump and dump follies they promoted, Independence Energy (OTCQB:IDNG) and Punchline Resources (OTC:PUNL).
Citron Research sent a statement to its subscribers about IDNG which now trades at $0.05 after reaching $0.97 (adjusted for a 5 for 1 stock split) on June 21, 2012:
"If you are lucky enough to short Independence Energy Corp. ("IDNG")...do not be shy. This is a full blown OTC scam if there ever was one. Citron has been uncovering pump and dumps for years and this is as bad as it gets. Numerous attempts to contact the company have been fruitless."
We will also show that GNIN is following a similar tact that helped fuel a P&D move in shares of First Quantum Ventures (PINK:DIMI) which now trades at $0.01.
Aside from "third party" promotional activity, GNIN shares have been supported by a constant flow of press releases discussing distribution agreements, the achievement of sales milestones and shareholder "friendly" initiatives.
GNIN is just one of those too-good-to-be-true stories that has yet to report any revenues, but sports a market cap of about $230 million if you take into account convertible preferred stock and has created a trading environment for the sale of 20 million free trading shares created prior to GNIN's reverse merger.
Our negative bias toward GNIN is supported by at least seven reverse merged public companies that Bruce Harmon, President of GNIN, has been involved with that ended up as total flops and at least two trading suspensions that are still in place today. The pre-public auditor of three of these companies (ACCY, ABCC and OGNT) were involved in an SEC complaint charging the auditor:
"with violating the antifraud provisions of the federal securities laws by issuing the fraudulent audit reports, and with aiding and abetting violations of the reporting requirements of the securities laws."
Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in OTCPK:GNIN over the next 72 hours.
Business relationship disclosure: We will attempt to take an initial short position in GNIN but are mindful that the promotional efforts could lead to a temporary upside in its shares.