Asensio.CoN Part 2
In Part One we presented Manuel Asensio's
claim to have severed ties with asensio.com and Asensio & Company on October
31, 2003. He says that both businesses are now in the hands of anonymous
"new owners" who have no affiliation with him—just the
right to use the names of his former companies.
We say baloney. For more about why, read on.
Terms that Talk
A bizarre Agreement greets visitors to asensio.com. They must consent to
it in order to enter the site.
The terms are intriguing. Consider this:
seeks as its primary objective before all other goals to ... avoid any
government and non-government regulations that may seek jurisdiction over
the operation of the site and its content.
Asensio told a NASD panel that he separated his publishing from
his brokerage in hopes of freeing the former from regulation. Is it mere coincidence that asensio.com's
"new owners" have exactly the
Then there is this:
Certain rulings have been constructed [sic] to
allow shareholders of publicly-traded companies to litigate claims against
publishers based on ”Fraud-on-the-Market” legal and economic loss
theories. Cases have been allowed to proceed even under circumstances
where the shareholder made no payments to the publisher, the published
material was factual and complete, and the publisher had no relationship
whatsoever with the shareholder.
asensio.com users are prohibited from making any claims against
asensio.com and/or Asensio & Company, Inc. or its directors, officers,
shareholders or agents, or anyone contacted [sic] with publications
contained in asensio.com, based on or in reliance on any “Fraud-on-the
Market” or similar legal or economic loss theory.
Very interesting. Because according to a motion he filed in the
Carolina case, Asensio is the only independent analyst publishing research
reports for the public who has been found by a jury to have violated the
anti-fraud provisions of the SEC Act. Is it mere coincidence that the "new
owners" are obsessed with preventing a repeat of something that has
happened only once? Where the legal theory presented was likewise fraud
on the market?
The references to a case where "the shareholder made no payment to the publisher" and
"the publisher had no relationship whatsoever with the shareholder"
describes the South Carolina case. Asensio had no relationship with the
investors who sued him and they made no payment to him.
Again, mere coincidence that the Agreement seeks to prevent a scenario in
only Asensio has found himself?
Finally, consider this:
asensio.com users hereby further agree that they will not under any
circumstances use any technical approach such as stylometry or content or
content-independent commonalities analysis to attempt to identify
asensio.com’s real-life author and/or authors. asensio.com users further
agree not to use any method whatsoever, including but not limited to legal
arguments, text extraction or segmentation, linguistic forensics, heuristics
clues, topic-based or connections analysis, logistic regression, unconscious
elements of author style, high frequency words, or pairs of synonymous [sic] to
identify asensio.com’s real-life author and/or authors.
Whew! The "new owners" are not a just little paranoid about being identified. They are
totally paranoid. Could it be that disclosure of who is
behind the site would reveal the very sort of
fraud the owner prides himself on exposing?
No Need to Guess
According to the letter announcing Asensio's departure, the original Asensio & Company and asensio.com ceased
operations on October 31,
2003. The new owners have supposedly been running both since
then, while Asensio has been engaged solely in "private equity" work.
could point out that, to the contrary, Reuters quoted Asensio on April
7, 2006 in regard to an asensio.com pick announced only a week
earlier. But who needs circumstantial evidence? We have
direct evidence as to ownership.
On February 17, 2005—more than 15 months after Asensio supposedly ended
his association with both companies—his attorney,
Michael Feiler, filed a document with the court on behalf
of Asensio & Company. The address of Asensio & Company shown on
the document? Feiler's law firm. The
person executing this 2005 document on behalf of Asensio & Company?
None other than Manuel
Yet that very day, here is what asensio.com said about the
relationship between Asensio and Asensio & Company:
Mr. Asensio is private investor and investment manager. He is not a
shareholder, director or employee of asensio.com or the present day Asensio &
What's Going On?
Why would a publicity hound like Manuel Asensio go into hiding like this?
Why would he construct a complex story denying ownership of the companies that
have borne his name for more than a decade?
It's not a mystery. The wording of the Agreement and the timing
of the announcement make the motive clear.
Asensio's supposed departure was announced less than two weeks after the
Circuit Court of Appeals upheld the fraud verdict
returned against his company in 2002. The verdict was unusual; the jury
found that his reports defrauded investors, but awarded no damages. That might
seem almost a victory for Asensio, but it wasn't. The verdict has
long-term implications that are potentially devastating for him.
During his career as a hedge fund flack, Asensio's litigation had been
exclusively with corporate targets (and his lawyers). This time, retail investors filed suit. Asensio
may have expected it to fail because, in his mind, there was nothing here "in connection
with the sale of securities." He didn't sell stock to
the investors; in fact, he'd never met them. But the trial court
held that his company's reports were activity "in
connection with the sale of securities."
When the Appeals Court upheld the verdict,
Asensio no doubt realized that a precedent had been set. It
allows investors in the
to sue his companies if they believe they have been defrauded by his reports.**
Although no precedent has been set outside of the Fourth Circuit,
the ruling could still influence other courts.
We suspect this so shook Asensio (and his hedge fund clients, who have far deeper pockets) that he decided to
invent a scenario to free himself of potential
liability. It doesn't look like it mattered whether the scenario itself was a "fraud on the market."
Hence the poorly thought out story posted to
his website on April 27, 2004 and the ongoing pretense that he is no longer associated with asensio.com and Asensio &
Apparently it never occurred to Asensio that there is a much better way to
avoid legal liability. It's called cleaning up your act. Deceptive practices—such as falsifying ownership of a firm that attacks publicly traded companies—often trigger lawsuits. Fair and honest practices rarely do.
Maryland, North Carolina, South
Carolina, Virginia, West Virginia
** As we understand the case, the court allowed the lawsuit to proceed
only against the corporate defendants. Therefore, the case does
not set a precedent regarding investment websites operated by individuals.
Page Created 7/12/06