more on Update on Shift Key Breking CD Copy Protection Technology WORTHWHILE READING DJF

[Dave Farber <dave () farber net>]

> Delivered-To: dfarber+ () ux13 sp cs cmu edu
> Date: Thu, 09 Oct 2003 19:44:16 -0400
> From: Barry Ritholtz <ritholtz () optonline net>
> Subject: Re: [IP] more on Update on Shift Key Breking CD Copy Protection
>  Technology
> To: Dave Farber <dave () farber net>
> Cc: jstyre () jstyre com
>
>
> 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 () maximgrp com
> (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+ () ux13 sp cs cmu edu
> > > Date: Thu, 09 Oct 2003 12:02:26 -0700
> > > From: "James S. Tyre" <jstyre () jstyre com>
> > > Subject: Update on Shift Key Breking CD Copy Protection Technology
> > > X-Sender: jstyre () earthlink net
> > > To: dave () farber net, declan () well com
> > >
> > >
> > > 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 () jstyre com
> > > 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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