Legal

Reverse Merger Company Says Digerati Shell Took over, May Grab $8M in Cash

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A reverse merger between oil field services provider Waste Deep and shell Digerati Technologies ended with shell management controlling the surviving company, and the survivor's regulatory filings reveal different parties claiming control. One group has filed a lawsuit against Waste Deep shareholder Oleum Capital, alleging that Oleum is illegally seeking to take over the company in a move that unilaterally added $22 million to the original purchase price. Arthur Smith, who has held management positions with the shell for a decade, signed the company's Jan. 30 8-K filing as CEO. The filing states that the company's board appointed Smith CEO and that the suit against Oleum was filed by "unauthorized parties."

Legal
SEC

PIPE Investor Berger Settles SEC Cherry Picking Claims for $6.8M

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Howard Berger, a principal of two PIPE funds, settled with regulators over claims that he "cherry picked" trades in order to generate profits for himself at the expense of the funds. Syosset, N.Y., resident Berger co-founded and co-managed the Professional Traders Fund and Professional Offshore Opportunity Fund Ltd. "Berger profited from fraudulently allocating profitable trades to an account in his wife’s name while oftentimes allocating his unprofitable trades to [fund] accounts," according to a settlement with the Securities and Exchange Commission. The complaint alleged that Berger received at least $6.8 million from improper trades and avoiding losses in his wife's account from July 2008 through March 2010. Berger did not dispute the commission's allegations when he consented to a final judgment requiring the Bergers to disgorge about $5.4 million.

Legal

Ribotsky Rejects AJW Bankruptcy Filing Claims, Fairhills Named in Sham Deal

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The liquidators of several AJW offshore funds once managed by NIR Group have obtained recognition of their proceedings in the U.S. through Chapter 15 bankruptcy proceedings. Former NIR head Corey Ribotsky has filed court papers objecting to claims and tactics of the liquidators. Funds managed by NIR, which include four AJW entities and New Millennium Capital Partners II, committed $225 million to 144 PIPEs from 1999 through 2010, according to PlacementTracker data. In January, liquidators Ian Stokoe and David Walker of PwC Corporate Finance and Recovery (Cayman) Ltd. said in court documents that it started the bankruptcy process in the U.S. for a
variety of reasons, including the need to obtain records held in the U.S. and assess potential claims against Ribotsky, NIR Group, and several entities of Fairhills Capital Group controlled by Edward Bronson.

Legal

Ardsley Settles with SEC over Rule 105 Violations

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Ardsley Advisory Partners has settled a regulatory proceeding in which the fund manager did not dispute allegations that it violated Rule 105 short selling regulations in three trades in 2009 and 2010. The settlement with the Securities and Exchange Commission requires Stamford, Conn.-based Ardsley tighten its compliance procedures and pay disgorgement of $506,000 and a civil penalty of $55,000. Rule 105 prohibits investors from short selling within five days ahead of a public offering and using shares from the offering to cover the short position. Selling ahead of the secondary could lead to downward manipulation of stock prices. The three trades all involved public secondary offerings.