Following the recent market wobble, the "evil short-sellers" (as opposed to wonderful stock pushers) have come out of the woodwork in force, and piggybacking on the Valeant fiasco which was the result of two research reports which caught something that no other sellside analysts had seen and have sent the stock plummeting, feeling emboldened that their time in the sun has come again. Case in point microcap Straight Path Communications, or STRP, which a week ago tumbled following a report by Kerrisdale Capital revealed "a company with only seven employees and $426,000 of annual core revenue headed by a 29-year-old whose previous job was serving as the rabbi of a 50-person synagogue in the Bronx – a far cry from telecom" and slammed the supposed value of its Spectrum assets, hinting the value of the stock far lower than its actual price. The company responded with the usual boilerplate: Davidi Jonas, Chairman and CEO of Straight Path, stated, “The report appears to be designed to depress the market value of our common stock and ignores key facts about our company and our announced long-term strategy. We know that there is a significant short position in our stock and those holders are facing significant pressure due to our stock’s recent performance and the positive developments at the FCC with regard to our spectrum holdings. Now, however, a new allegation has emerged in addition to the value of STRP's questionable spectrum valuation: namely fraud, as we read in a report by another "short-focused" research entity, Sinclair Upton Research, whose work we have profiled on numerous occasions in the past. It says "There is overwhelming evidence that the vast majority of Straight Path Communications' ("Straight Path") 39 GHz spectrum licenses' Required Notification of Construction/Coverage Applications were obtained under fraudulent misrepresentation, because the systems were never built on the sites as specified in the filings." The conclusion of the report's author (who prudently disclaims "Due to the danger of retaliation from the company and individuals involved, this report was written under a pseudonym, Sinclair Upton Research. People who commit fraud for millions of dollars are willing to do anything to keep their illegitimate gains.") is that the stock is most likely worthless: Thus, the fair value of Straight Path stock without ownership of the 39 GHz licenses and being banned from future FCC spectrum participation is $1.00-2.00 per share, or approximately liquidation value. It adds a recommendation to the Federal Communications Commission (FCC) and regulatory authorities "to immediately open an investigation into the license renewal process of Straight Path's 39 GHz licenses and ask Straight Path for proof that the Required Constructions were met for all of the systems claimed to be built in the 173 Basic Economic Areas. Companies should not be allowed to lie to the US Government and get away with it." Its conclusion: The truth about Straight Path’s licenses and the false construction/coverage claims will eventually come out from the source. The fraud is just too massive, too spread out, and too easily verifiable. If the individuals and corporations involved attempt to cover up the truth, they will just compound their mistakes. Lying to the Federal Government is already really bad, covering it up is even worse. We recommend any individuals involved to come clean to the FCC and other regulatory bodies immediately. As short sellers, we have economic incentives in seeing Straight Path’s stock decline. But we aren’t doing this solely for the money. Like police detectives, who earn a living by making our society a better place, we also are paid to illuminate the truth, expose fraud, and uphold justice. Despite the debate, uproar and controversy that will erupt after the claims of this report are verified, please keep in mind that short selling is good for investors, good for the markets, and ultimately good for America. The stock is already reacting. The full report below