Genius Group Ltd. GNS, a Singapore-based education company, said Wednesday it is launching legal action against various parties over illegal trading in its shares. The news comes after the company in January appointed a former F.B.I. director to lead a task force investigating alleged illegal trading in its stock that it first disclosed in early January. The company is concerned that it has been the target of naked short selling, which is illegal under Securities and Exchange Commission rules. In regular short trading, an investor borrows shares from someone else, then sells them and waits for the stock price to fall. When that happens the shares are bought cheaper and returned to the prior owner, with the short seller pocketing the difference as profit. In naked short selling, investors don’t bother borrowing the stock first and simply sell shares with a promise to deliver them at a later date. When that promise is not fulfilled, it’s known as failure to deliver. Genius CEO Roger Hamilton told MarketWatch in January that it wanted the activity, which had pressured its stock price, to stop. “They’re taking value away from our shareholders. They’re predators. They’re doing something illegal, and we want it to stop, whether that means getting regulators to enforce existing regulations or put new ones in place.” The company hired the legal teams of Christian Levine Law Group, LLC, and Warshaw Burstein, LLP, and share tracking company ShareIntel and has not instructed them to commence legal actions. “The company is currently pursuing a combination of negotiations, legal action and shareholder actions with an aim to minimize and recover the costs that illegal market manipulation has had on our share price,” Hamilton said in a Wednesday release. The stock was down 1.5% premarket. For more, see: Genius Group CEO on why his company is fighting back against naked short sellers — and it’s not alone
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