MiMedx’s problems with short sellers continues.
Destin, Fla.-based wound care company MiMedx’s problems with short sellers continues.
In October, the company filed a lawsuit against short sellers including Vceroy Research, Aurelius Value and Sparrow Fund Research LP “for libel, slander, defamation, false light, and tortious interference with business relations.” The company filed the lawsuit in reaction to what it said were false statements sent to shareholders and potential investors about the company. When the company announced the lawsuit in October, MiMedx Chief Executive Officer Parker H. “Pete” Petit said the false statements were sent out to “manipulate the market” and drive down the price of company stock so short sellers could profit. MiMedx said the fraudulent information was designed to look as if it came from MiMedx management.
“This particular group of short sellers continues to resort to ridiculous and unscrupulous means to attempt to do damage to MiMedx. Of course, their ultimate goal is to depress the price of our stock,” Petit said in a statement in October.
This week at the J.P. Morgan Healthcare Conference in San Francisco, Petit and short seller Marc Cohodes came face-to-face during a breakout session. Citing a video recorded by STAT News reporter Adam Feuerstein, MedCity News said Cohodes questioned why MiMedx had “allegedly fired whistleblowers” and also accused the company of counting distributers as customers in order to inflate sales, which he referred to as “channel-stuffing fraud.”
The exchange between the two men became heated with both “firing accusations at each other,” MedCity News reported.
Cohodes and Petit have a strained history. Last year, Petit sent a letter to Cohodes responding to what the company said was “fraudulent information.” He called Cohodes and other short sellers a “wolf pack” to damage a company.
“I am thoroughly disgusted with your fraudulent and unethical accusations about MiMedx and our employees. Neither you nor your sources are credible in our case. We have countered on our website all the allegations that have been made related to violations of regulations or laws. The other accusations clearly demonstrate your lack of understanding of normal business processes and procedures. They have reached the point of being irrelevant minutia,” Petit wrote in his letter.
The negative short seller attacks against MiMedx began in the fall. In September, short sellers Aurelius Value and Viceroy Research both published negative reports on MiMedx that included accusations of channel-stuffing as well make claims that the U.S. Department of Veterans Affairs is investigating the company. The VA accusation was first raised in an article on The Capital Forum that said the company was the target of an investigation.
According to a statement issued by MiMedx earlier this week, the accusations against the company from short sellers include Petit’s use of a “burner phone,” which he denied, as well as using recording devices in hotel rooms when visitors come to talk business and bugging the automobiles of sales personnel. Petit called them outlandish, but worried they might fool investors.
“Shareholders should recall that this group of short sellers published and placed on a website a fraudulent email, supposedly written by a current MiMedx employee, alleging numerous types of corporate malfeasance. These short sellers were involved in creating this fraudulent email and forwarded it to numerous publication outlets, law firms, regulators, and the company’s competition,” MiMedx said in a statement earlier this week.
Shares of MiMedx are down slightly this morning trading at $14.06 as of 11:05 a.m.
