An irreverent Wall Street Blog
Short Trader's $106,000 GoFundMe Plea After Getting Clobbered by KBIO
November 19, 2015After having lost his Senate election bid to Stephen Douglas, Abraham Lincoln was asked how he felt, to which he replied that he was "too old to cry but it hurt too much to laugh." All of which reminds me of an ongoing situation on a GoFundMe.com page. By way of brief background, KaloBios Pharmaceuticals, Inc. (symbol "KBIO") closed yesterday (November 18th) at $2.07 per share. That price wasn't unexpected because KBIO had only recently announced in a press release on November 13, 2015 "that it will wind down its operations and that it has engaged the Brenner Group to lead those efforts." See, "KaloBios to Wind Down Operations / Engages The Brenner Group to Manage Wind Down" (PR Newswire, November 13, 2015, 4:40 PM).
Ahhh, but Wall Street isn't always about what things look like or how the expected goes as expected. After the close yesterday, KBIO announced, in part, that:
KaloBios Pharmaceuticals, Inc. (KBIO) today announced that it has been informed that an investor group comprised of Martin Shkreli and associates together have acquired more than 50% of the outstanding shares of KaloBios, and that the company is in discussions with Mr. Shkreli regarding possible direction for the company to continue in operation. Mr. Shkreli is the founder and chief executive officer of Turing Pharmaceuticals, a privately held biopharmaceutical company. . .
"KaloBios Confirms Communications with Majority Shareholder Group" (PR Newswire, November 18, 2015).
If you were long KBIO this morning, it's ka-ching time because shares have traded in a range of $10.48 to $21.05. In contrast, imagine those poor bastards who were short and awoke this morning to an unmitigated disaster.
In keeping with Lincoln's quote, consider this developing story about one such shorter who has posted on GoFundMe.com under the heading "I Owe Etrade $106k, ouch." I can't vouch for the bona fides of the poster or his post and I'm more than a bit skeptical but, what the hell, here is an extract from his plea for money:
To read the full-text of the GoFundMe.com posting and the developing thread of comments, VISIT: https://www.gofundme.com/jwctrek[I] was holding KBIO short overnight for what I thought was a nice $2.00 fade coming. At the close of the bell I saw the quote montage clear out and figured today there was no action after hours in the stock. So I went to my office for a long meeting. I got out of the meeting and saw a message from one of my buddys, he asked if I was ok since I was short KBIO....my heart dropped. "Shoot did I blow up my account, everything I worked for? I don't want to lose all $37,000 that would be terrible." ---It was much worse.The stock was at $16 and my account was negative over 100k. I figured it was a mistake, Etrade would never let that happen, they must have cut the position when my account got to $0....nope. I immediately called them and they confirmed I still owned all the shares. He says that it got out of hand too fast for them to cover me, he says that all he can do right now is cover. I was devistated. I asked him to cover at $16 and he waited trying to find me a good exit. I told him to do it asap and the fill was around $18.50 avg.At the moment not only is my $37k gone, but I now owe ETrade the negative balance of over $106k. I always knew I could blow up an account and I was financially able to "afford" to lose the $37k. Never in my wildest dreams did I imagine that Etrade would NOT have some sort of stop or circuit breaker in place that would automatically cut a position if the account went to $0.....how could they ever let it get to -$144k loss on a account that small! Also, why did I have to call them to find out what was going on, why did they not alert me or call me when it went neg???I'm never one to ask for a handout and honestly I'm kinda not sure if I should post this but here we go. I'm sure it will cause lots of controversy on whether or not I deserve even a $1 donation but it doesn't hurt to ask. Anything you traders can do to help me get a little out of this hole would be a blessing for me. Anything donated will go 100% to simply paying Etrade some of this $106,445.56. . .
November 17, 2015: Veteran industry attorney and BrokeAndBroker.com Blog publisher Bill Singer talks with Brittany Weiner, attorney with Imbesi Law PC, about former Wells Fargo broker Donna Sabb, and a family feud that spilled over into FINRA arbitration, Sabb was sued by her nieces and a nephew over "misappropriation" in accounts that Sabb established and funded. Presently, Weiner is seeking an expungement of the complaint from her records. WATCH
READ: Stockbroker Exonerated After Nephews And Niece Accuse Her Of UTMA Fraud(BrokeAndBroker.com Blog, September 11, 2015)
