Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Thu, 09 Oct 2003 19:44:16 -0400
From: Barry Ritholtz <ritholtz@xxxxxxxxxxxxx>
Subject: Re: [IP] more on Update on Shift Key Breking CD Copy Protection
Technology
To: Dave Farber <dave@xxxxxxxxxx>
Cc: jstyre@xxxxxxxxxx
Hi Dave,
Subsequently, SunnComm's stock price has dropped precipitously, and
today, SunnComm announced that it will pursue legal action against
Halderman
I knew nothing about SunnComm or its stock, until your e-mail. That
motivated me to pull up a chart of the company's stock performance.
You may not be aware of some of the specifics of SunnComm (self
described as an OTC stock), prior to the Princeton grad student's paper.
This is what's known as a "penny" stock -- it's on the pink sheets,
which has about as lax reporting requirements as is possible. Indeed,
even their own Website has a "we're on the pink sheets" disclaimer:
<http://www.sunncomm.com/disclaimer.asp>
For nearly all of the prior 3 years, SunnComm traded under 1/4; In
fact, it was under a dime for most of that period. (See chart shere:
http://finance.yahoo.com/q/bc?s=STEH.PK&t=2y&l=on&z=m&q=l&c= or here:
http://bigcharts.marketwatch.com/quickchart/
quickchart.asp?symb=steh&sid=0&o_symb=steh&freq=2&time=10&x=50&y=16
(When looking at the 3 year chart, ignore the temporary spikes from a
dime up straight to 90 cents and back. These sort of blips typically
reflect trading errors, i.e. 90 cents instead of 9 cents ).
Starting in May 2003, the stock zoomed from 10 cents up to 40 cents.
The subsequent "precipitous" drop was nothing more than the stock
dropping back to its prior trading range -- back under a dime.
What's so curious about this move in May 2003 is that it occurred in
the middle of a long news blackout. That aroused my curiosity, and
makes, in my opinion, the activity in this pink sheet stock suspect. So
I went back and looked at all the news releases this year. Because
there appears that there were no offical news released between April
4th 2003 ("Tattoo Media joins forces with SunnComm Technologies") and
June 2, 2003. (Macrovision, SunnComm Race To Protect Music From
Pirates; <http://www.sunncomm.com/news/listnews.asp>) that could
explain the stock's thrust upwards.
I noticed that sometime in August, the company announced a 2 Million
Share buyback
<http://www.eedesign.com/pressreleases/bizwire/91975>. Why a microcap
pink sheet company feels the need to buy back stock, I couldn't tell
you.
But if I was advising the Princeton student, I would suggest the first
thing he do is have his lawyer find out if any insiders, officers,
board members, or major shareholders did any buying during that period.
If any purchases were made in anticipation of material non public
information, than who ever did so has much bigger problems than some
grad student's paper . . .
Regards,
Barry L. Ritholtz
Chief Market Strategist
Maxim Group
britholtz@xxxxxxxxxxxx
(212) 895-3614
On Thursday, October 9, 2003, at 04:55 PM, Dave Farber wrote:
Here we go yet again. DMCA miss use djf
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Thu, 09 Oct 2003 12:02:26 -0700
From: "James S. Tyre" <jstyre@xxxxxxxxxx>
Subject: Update on Shift Key Breking CD Copy Protection Technology
X-Sender: jstyre@xxxxxxxxxxxxx
To: dave@xxxxxxxxxx, declan@xxxxxxxx
Dave, Declan,
Earlier this week, each of you had items about Princeton grad student
Alex Halderman's report on SunnComm's MediaMax CD3 copy protection
technology.
Subsequently, SunnComm's stock price has dropped precipitously, and
today, SunnComm announced that it will pursue legal action against
Halderman:
http://biz.yahoo.com/bw/031009/95573_1.html
...
SunnComm Technologies Inc. (OTC: STEH - News), a leader in digital
content security and enhancement for optical media, announced today
that it intends to take legal action against the writer of a critical
report titled: "Analysis of the MediaMax CD3 Copy-Prevention System."
According to Peter Jacobs, SunnComm's CEO, "The conclusions contained
in the Princeton University grad student's report issued last Monday
were derived from incorrect assumptions by its author. The author did
not ask for, or receive, SunnComm's MediaMax 'white paper'
documentation available on the technology prior to concluding that
'MediaMax and similar copy-prevention systems are irreparably flawed
...'"
SunnComm believes that by making erroneous assumptions in putting
together his critical review of the MediaMax CD-3 technology,
Halderman came to false conclusions concerning the robustness and
efficacy of SunnComm's MediaMax technology. Based on several of these
incorrect assumptions, Halderman and Princeton University have
significantly damaged SunnComm's reputation and caused the market
value of SunnComm to drop by more than $10 million.
In addition, SunnComm believes that Halderman has violated the
Digital Millennium Copyright Act (DMCA) by disclosing unpublished
MediaMax management files placed on a user's computer after user
approval is granted. Once the file is found and deleted according to
the instructions given in the Princeton grad student's report, the
MediaMax copy management system can be bypassed resulting in the
copyright protected music being converted or misappropriated for
potentially unauthorized and/or illegal use. SunnComm intends to
refer this possible felony to authorities having jurisdiction over
these matters because: 1. The author admits that he disabled the
driver in order to make an unprotected copy of the disc's contents,
and 2. SunnComm believes that the author's report was "disseminated
in a manner which facilitates infringement" in violation of the DMCA
or other applicable law.
....
In another piece, Jacobs hints at one of Halderman's alleged failings:
http://www.nj.com/news/times/index.ssf?/base/news-0/ 106568865740310.xml
...
"The assumption that Alex makes about the ease with which the
technology can be circumvented is incorrect," Jacobs said. "Implicit
in our technology, but not privy to his knowledge, is the manner in
which we are able to improve the technology so it becomes harder and
harder to circumvent it."
....
I'm sure you'll both agree that Alex should be criticized roundly for
analyzing only the currently existent technology while utterly
failing to laud SunnComm for future improvements that it says it will
make.
--------------------------------------------------------------------
James S. Tyre mailto:jstyre@xxxxxxxxxx
Law Offices of James S. Tyre 310-839-4114/310-839-4602(fax)
10736 Jefferson Blvd., #512 Culver City, CA 90230-4969
Co-founder, The Censorware Project http://censorware.net
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