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MagneGas CEO slams blogger who fueled 20% plunge

The CEO of a U.S. alternative energy company has hit back at an anonymous report that fueled a 20 percent plunge in the company's share price on Monday.

Responding to the article on the Seeking Alpha website, MagneGas CEO Ermanno Santilli said the company's legal department had been contacted, but he refrained to comment directly on the 14 issues the blogpost raised.

"We disagree with many of them (the points)," he told CNBC Tuesday. "It's an anonymous blogger. He is posting on a website which has done this from time to time. They post spurious things."


The article, published on Monday, highlighted a potential downside of 93 percent for MagneGas shares. The blogpost helped send the stock 20 percent lower, although the shares are still up 120 percent this year in a tough environment for the energy sector. The company – which turns waste liquids into fuel – has a market capitalization of just under $62 million and an annual turnover of $1.4 million, according to Reuters data.

The article was written under the pseudonym The Pump Stopper. The author stated above the article that he/she is not "receiving compensation for it" and has "no business relationship with any company whose stock is mentioned in this article." The writer wasn't immediately available for comment when contacted by CNBC via an online form on the author's personal website.

"People who know the company look at these points and say, 'You know, the vast majority of these are wrong, this guy should be arrested. He's a shorter. He's now profited by something, he's anonymous'," Santilli said.

"This has happened before, it'll happen again. Social media has really decentralized news. That coupled with very lax laws on shorting means that companies in the micro-(capitalized) space are really challenged with this from time to time."

Santilli also claimed that supportive comments on the blogpost had been deleted.

In response, Eli Hoffmann, CEO and editor-in-chief of Seeking Alpha, told CNBC via email that the website had a "fair and transparent dispute process" but had yet to receive any disputes on this particular article.

"Our comment moderation team does delete non-constructive comments (mudslinging at the author, calling the article rubbish without offering any reasons, etc.). However, we do not delete constructive comments whether in support of or in contention with the author," he added.

"We allow contributors to post anonymously ... note that while authors are anonymous to the public, they are not anonymous to us."