Is The SEC Investigating The Street, Inc. And Adam Feuerstein Concerning Possible Illegal Manipulation Of Isoray?
Long/Short Equity, Momentum, Full Time Investor
Contributor Since 2013
Summary
- Independent lung study results released showing remarkable results using Cesium-131 on high risk cancers.
- The Street, Inc. releases false and misleading article accusing ISR of misleading investors.
- Several law firms advertise for lawsuit against ISR due to The Street Article.
- SEC complaint filed against The Street, Inc. and Adam Feuerstein for illegal market manipulation.
On May 27, 2015, I filed a formal complaint with the SEC concerning what appears to be serious and substantial illegal stock manipulation buy The Street, Inc. and Adam Feuerstein. Below is a slightly modified version that includes some more recent information that has been forwarded to the SEC as well.
I am asking the Securities and Exchange Commission- SEC to open an investigation into the short selling of IsoRay Inc. to determine if there has been illegal manipulation of the company's stock price. Publicly available information suggests a concerted effort to manipulate the price of shares of IsoRay in a way that furthers the interest of short sellers through articles of Adam Feuerstein and the Street, Inc., who have demonstrated a repeated pattern of using their articles to influence the market price of stock in the biomedical, biotechnology and pharmaceutical industries. IsoRay is a biomedical company focusing on the development of an improved brachytherapy treatment to treat cancers. Their main product being its FDA approved Cesium-131. Their have been several independent clinical studies using Cesium-131 and all have shown outstanding results, some even better than expected.
On May 19th, 2015, BRACHYTHERAPY An International Multidisciplinary Journal published online the results of a multi year independent lung trial that evaluated the outcomes for WR-wedge resection,WRB-wedge resection plus brachytherapy(IsoRay's Cesium-131 was used in the WRB group), and SBRT-stereo tactic body radiation therapy in early-stage non-small cell lung cancer. In the trial results the doctors very clearly stated that Cesium-131 was used with "high risk" patients yet still had superior results 96.2% LC-local control compared to 92.2% in WR and 95.5% in SBRT. Five year survival rate was superior as well with the Cesium-131 group having 100% survival compared to 97.7 in WR and 89.6% in SBRT.
In the conclusion they state that all are excellent treatment options, but for high risk they "favor use of Cesium-131 brachytherapy." Reading the full report, (which Adam Feuerstein states in his article that he did)it explains that the lower risk patients were less likely to experience local recurrence of the cancer by as much as 45%. So, WR and SBRT treated cancers were possibly as much as 45% less likely to have local recurrence than the WR+Cesium-131, yet the Cesium-131 treated patient still had better results. The study goes on to say that Cesium-131 was likely the reason for LC equivalences, since the high risk patients normally have a higher local recurrence rate. Thus making Cesium-131 results remarkable. Adam Feuerstein directly admits, in his article, he had direct knowledge of these facts in the study, yet he knowingly made false and slanderous statements about IsoRay, Inc. appearantly in an attempt to affect the price share price of IsoRay.
May 20, 2015 at 8:15am, before the markets opened ISR released a press release stating "IsoRay's Cesium-131 Lung Cancer Treatment Reports 96% Success In Local Control and 100% Survival at 5 Years in High Risk Patients in Newly Published Report", in the press release ISR also provides a direct link to the report as published online for all to review. IsoRay investors had been waiting over a year for these results. So, when the actual results were released and they were incredibly positive, ISR stock price exploded upward reaching a high of the day of $3.38 and closing at $3.12, almost a 100% increase over the previous days close of $1.61. This uptrend continued into after hours trading and the following day premarket trading, actually reaching a high of $4. Short sellers were not prepared and a direct result was that short sellers were caught off guard and lost a lot of money.
It appears they decided to correct that situation through any means possible, legal or not. Jim Cramer, founder of TheStreet.com, actually describes on video, how they illegally manipulate stock prices and how they get away with it. Mr. Cramer said, and I quote, "You can't foment, because that is a violation of the SEC - you can't foment, you can't create an impression(yourself) that a stock is down (because it is illegal) BUT YOU DO IT ANYWAY, because the SEC doesn't understand it."..... He even says, "This is blatantly illegal." Mr. Cramer then goes on to describe how, "you hit the brokerage houses with a serious of orders that pushes it down, -contact "bozo" reporters and feed them misinformation(lies) about the company or it's products in order to- get it in the press and then get it on CNBC, that's also very important and then you have a vicious cycle down."
It looks as if they followed that illegal manipulation technique to bring down ISR share prices. On May 21st, the day after the positive lung results were released, TheStreet.com released a blatantly false article authored by Adam Feuerstein. The article states such things as "IsoRay Takes Liberties With Lung Cancer Study Results to Prop Up Stock Price", when actually, IsoRay directly quoted the study results and provided a link to the actual published article. TheStreet.com did not provide a link, in my opinion because it would directly refute their article. TheStreet.com article also clearly misleads readers by writing, "In their conclusion, the study authors do not endorse IsoRay's Cesium-131", this is a blatantly false statement. The study authors very clearly state, in their conclusion that, "For high risk WR's, we favor use of Cesium-131 brachytherapy." This is a direct contradiction to Mr. Feuersteins statement. Also, TheStreet.com's article does not even mention, much less explain, as the published medical study does, that Cesium-131 was used on "high risk" cancers and the other treatments were used on lower risk cancers. This difference in higher risk versus lower risk cancers was so important in the outcomes that the study actually goes into detail about why and how this affected the study results and why it shows Cesium-131 actually had much better results than the other treatments.
Within hours of the false and misleading article, several law firms issued press releases announcing they were filing lawsuits for possible stock fraud against IsoRay for misleading statements. The law firms actually state in their press releases that their lawsuits stem from an article published by TheStreet.com and goes on to quote the article. Law firms have continued almost on a daily bases to do press releases with such dramatic and completely false headlines such as "Investigation of IsoRay, Inc. and its Officers for Potential Securities Stock Fraud in Connection with the Doctoring of Study Results", again, all quoting The Street article as their source.
The following day, Mr. Feuerstein continued his false and misleading attack on IsoRay stock by tweeting to his 40,000+ followers, "ISR tried to raise money yesterday, too, according to investor source." I personally spoke with the IsoRay CEO, Dwight Babcock, after seeing this and he said that is a completely false statement and he would refute that. The next few days more press releases were released by other law firms all using TheStreet.com's article as bases for their lawsuits. I spoke with a couple of the law firms, one actually telling me that after further investigation, they see no misrepresentation or anything illegal done by IsoRay. They also said they were no longer advertising for a lead plaintiff.
TheStreet.com article and Mr. Feuerstein's tweets appear to be designed to cause the price of IsoRays stock price to fall at a time when short sellers were financially over exposed. Law firms using The Street's article as basis for their law suit against IsoRay is further bringing IsoRay share prices lower. TheStreet.com and Adam Feuerstein seem to use this same modus operandi on similar small cap biotech companies. They seem to release the articles exactly when short sellers are financially over exposed. The Street, Inc., and Mr. Feuerstein appears to be blatantly violating SEC securities laws in attempts to manipulate IsoRay's share price. It appears they have been doing this for years with impunity. Taken as a whole, this evidence suggests actions intended to manipulate the market in order to protect the interests of short sellers in the stock of IsoRay, who faced the possibility of great financial exposure given the volume of their shares and the then current market price of the stock. Using false and misleading statements, The Street's article appears designed to cause a decline in the company's stock. I believe their actions have merit for a full investigation by the SEC. With your investigatory tools, you can determine if collusion to manipulate the market price of IsoRays stock price in fact took place.
Conclusion
I have since been in contact with the SEC Special Counsel again. This time, they requested I forward them some additional information I had told them about, concerning the possible illegal stock manipulation of IsoRay by Adam Feuerstein and TheStreet.com. I believe there is a possible active investigation into The Street, Inc. and Adam Feuerstein at this time. However, the SEC will neither confirm nor deny this. I will also be forwarding this letter to Preet Bharara, since The Street, Inc. is based in New York. I do believe the SEC will do their job and put and end to the apparent illegal stock manipulation being done by The Street, Inc. and Adam Feuerstein. I also expect the frivolous lawsuits based on TheStreet.com article will be dismissed and IsoRay's revenues will increase dramatically over the next few quarters, due to a massive increased interest in Cesium-131. All of the above should cause IsoRay share price to rise well above the $4 price it hit before the apparent short manipulation began.
Disclosure: The author is long ISR.
Additional disclosure: The information above is not an investment recommendation. Readers should do their own due diligence before investing in any stock.