Cemtrex Inc., a publicly traded Farmingdale company, Thursday denounced claims made by a blogger who raised questions about the company’s auditors and investment bank, and who alleged undocumented stock sales by insiders.
Shares of Cemtrex, a maker of electronics, emission monitors and instruments for industrial processes and environmental control, plummeted 34 percent on Wednesday, the day the blogger’s post appeared on the Seeking Alpha financial website. On Thursday, shares rose 18.2 percent to close at $4.02 after the company held a conference call rebutting the charges. The stock remains lower than its $5.12 closing price on Tuesday.
On the call, Saagar Govil, chief executive of Cemtrex, blasted what he called the “malicious, false and misleading blog post.”
Govil has had a running battle on Twitter with short-sellers who question the trustworthiness of the company’s financials. In a telephone interview Thursday, he said neither he nor his father, Aron Govil, the company’s largest shareholder, sought to profit from an inflated stock price by selling shares.
“There was no pump and dump,” he said, because neither of them has sold since September.
On the conference call, Aron Govil said the recent sharp decline in Cemtrex cost him $10 million.
The most recent sale by the Govils came in September 2016, when Aron Govil sold 325,001 shares, according to a Securities and Exchange Commission filing.
In the Seeking Alpha blog, an investor identified as Richard Pearson raised questions about an investment bank used by Cemtrex. That company, Source Capital Group Inc., based in Westport, Connecticut, requested on Feb. 17 to have its registration terminated by several states and the Financial Industry Regulatory Authority, which oversees financial services companies.
A message seeking comment from Pearson was not immediately returned.
The original intent of Thursday’s conference call, the first conducted by Cemtrex, was to discuss the company’s earnings in the quarter ended Dec. 31. The company posted a 121 percent increase in net sales to $29.4 million on the strength of recent acquisitions.
The company also defended its use of Bharat Parikh & Associates, an accounting firm based in Vadodara, Gujarat, India, that is registered with the Public Company Accounting Oversight Board. The blogger said the accounting firm wasn’t paid much for auditing, a criticism the company sought to rebut.
“We don’t believe in paying too much for anything,” said Saagar Govil. “That includes bankers and lawyers.”