Asensio and FINRA

July 22, 2013

I am Manuel P. Asensio. Thank you for taking the time to visit this page on asensio.com’s website. You can read a detailed account of the FINRA matter on an accompanying page.

A short seller’s adversaries often benefit from institutional rules. As an activist short seller, I was a unique member of FINRA. While FINRA itself was never my adversary, many of FINRA’s most important member-firms were. At a point I believed it was better for me to withdraw my FINRA membership. This led to a jurisdictional dispute that resulted in a bar sanction for failing to fully respond to a request for information about asensio.com’s PolyMedica reports. The entire matter – believe it or not – could have been settled for $15,000.

FINRA is a private member organization, with its own rules. I chose to become a member of FINRA, and I was the person responsible for compliance with its rules.

The first 23 years of my relationship with FINRA were very constructive. For understandable reasons, the relationship changed drastically when Asensio & Company, Inc. dedicated itself to activist short selling. As you can read on the “Our History” page, asensio.com’s activist short selling work has intersected with major events that have negatively affected important people, including some at FINRA’s largest member firms – for example, Citibank – and some FINRA executives with interests in FINRA’s stock exchange subsidiaries. As one would anticipate, this created conflicts and regulatory scrutiny.

Ironically, PolyMedica, the short target that underlies my jurisdictional dispute with FINRA, was a Medicare fraud that I am proud to have exposed. It was raided by 85 FBI agents, then criminally charged and ultimately filed for bankruptcy protection. Even more ironically, I was barred for failing to fully respond to a request for information, yet FINRA staff acknowledged that the supposed basis for investigating asensio.com’s PolyMedica report was insignificant. (See Section II paragraph 7, 8 and 9 on page 1 of exhibit to SEC appeal filing.) In other words, FINRA admitted that it had enough information to win the jurisdictional dispute, used it to investigate the reports, found nothing significant, but still barred me.

Over the years I have commissioned a number of experts to review the case as a part of several attempts to use administrative procedures to rectify my relationship with FINRA. We have even gone to both houses of Congress to get legislators involved and created a non-profit organization to educate Americans about the role of administrative decision-making in the federal government.

My FINRA sanction entails no accusation of harm to any other party and was the first enforcement action of a new FINRA rule [2217] that applied to investment banking conflicts with research. Again, this is ironic, since asensio.com didn’t engage in investment banking and its reporting on Citibank’s Jack Grubman arguably helped spur the creation of Rule 2217.

I remain confident that, in time, I will be able to rectify my relationship with FINRA. Regardless, asensio.com will continue its tradition of working with innovative, relevant, and unique short selling investments. I thank you for reading.

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
eCompany Now
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About Our Founder
Learn more about asensio.com's founder, Manuel P. Asensio, and the website's origins. Click here to be directed to Mr. Asensio’s professional biography.
Investment Record
Click here to view a list of the companies that have been subjects of asensio.com reporting and click here to see the complete investment record.
Media Record
Click here to see selected articles that discuss asensio.com's work and its unique legacy. asensio.com also strives to maintain a complete record of articles dealing with the companies that are the subject of asensio.com research.
Asensio and FINRA
Asensio & Company, Inc. and Manuel P. Asensio are the only dedicated short sellers ever to have been members of FINRA. This unique-minority membership created complications in the regulatory relationship. Being the first activist short investors and among the first FINRA member firms with a website added to the complexity. A statement by Mr. Asensio is available here. Information necessary to obtain a meaningful understanding of the dispute is available in complete form HERE.