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The Short Attack on Ekso Bionics (OTC: EKSO) Stock and How to Handle It

An anonymous individual writing under the name "The Pump Stopper" launched a vicious attack on Ekso Bionics Holdings Inc. (OTCBB: EKSO) stock on June 2 that immediately pressured it and caused it to drop 24.28% to close at $1.36 a share on heavy volume. Understandably, that makes a lot of people nervous.

EKSO stock Here's the thing, though.

If you've been in this game long enough, you know what to look for and why stuff like this isn't a big deal in the scheme of things.

Today we're going to talk about how to recognize a legitimate short versus a short attack and what to do about it, especially when it comes to a stock you may own like Ekso.

Here's what you need to know:

First, let's tackle the elephant in the room – stock manipulation.

Most investors are familiar with the phrase "pump and dump." That's what the SEC calls a form of financial fraud used to artificially inflate the price of a stock – usually a small-cap or microcap – for personal gain by distributing misleading and false statements. That's the pump.

The dump comes later when the fraudsters suddenly sell their stock en masse and the price drops catastrophically, causing investors to lose their money.

It used to be done in so-called boiler rooms or small back offices like those depicted in the film The Wolf of Wall Street, but now it's most commonly perpetrated via the Internet and chat boards. Pump and dump is so extensive that these kinds of stock scams may now account for an estimated 5% to 15% of all spam email.

It's blatantly illegal.

The reverse of that is called "short and distort." That's what's happening with EKSO stock.

Instead of buying the stock in question, the perpetrators typically short the targeted company first, then release theoretically independent reports and analysis that is little more than a thinly veiled smear campaign. Once the stock has fallen, the parties involved buy to cover, bank their profits, and hopefully disappear.

This, too, is illegal, but that doesn't change the fact that it happens all the time.

Sadly, the SEC is totally outclassed and seemingly always a step behind. They simply don't have the resources to detect, prosecute, and punish every short-and-distort artist out there.

Many people wonder how this is possible, especially today. It's not as difficult as you would think…

Join the conversation. Click here to jump to comments…

About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. Omar Bham | June 5, 2015

    Thanks for this article, Keith. There's still an alarming amount of panic among us shareholders since the stock price hasn't increased back up much, and ekso has yet to issue that point by point rebuttal. However, it's great to know it's on the way, and that should thing turns green again. Cheers, and thanks again.

  2. Ellis Baxter | June 7, 2015

    I am very concerned that Mr. Fitz-Gerald has not proffered a statement that: he nor any of his companies, what-so-ever, did not receive any funds to promote EKSO !

    Omar, is correct that there is no response to the charges, in print, and the report from the SEC. Way past time … for both …

    • Keith Fitz-Gerald | June 9, 2015

      Ellis,

      Just to clarify, I am not a pitchman for Ekso or any other stock for that matter. I have never discussed EKSO in any media appearance. Like all our recommendations, EKSO rose to the top by virtue of concerted analysis and ongoing independent research related to the company, its products and its potential. Further, our entire organization – myself included – has strict policies against personal ownership, endorsement and compensation to prevent conflicts of interest.

      -Keith

  3. kerry wiggins | June 10, 2015

    where can I find the original analysis of ESKO?

  4. Harold | June 16, 2015

    I for one am down 35% on EKSO and am wondering when you're going to eat your hat on this bad investment.

  5. Michael Dwyer | June 18, 2015

    Thank You for a most informative article.
    Dastardly devils everywhere, evermore . The line up and to the right is never straight.

  6. HAROLD H. | June 22, 2015

    Had me fooled! If that was a pump and dump you coulda woulda fooled me. But I guess it is legit?

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