Legal

SEC Revokes China Agritech Registration

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Citing the company's repeated failure to file financial reports, the Securities and Exchange Commission has revoked the registration of shares in PIPE issuer China Agritech (CAGC). The maker of "green" fertilizers has raised $63 million through five PIPEs and one CMPO offering. In the most recent deal, investors in the 2010 CMPO included S.A.C. Capital Advisors, Highbridge International and Straus Capital Management. The offering was priced at $16.10 per share. The stock currently trades around $.15 cents.

Legal

Investors Closer to Seizing Assets in Spongetech Fraud

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Investors in one of the largest small cap stock frauds, Spongetech, are starting to see the SEC make progress in asset recovery. Court documents filed in August in the SEC’s case against Spongetech and its founder, Michael Metter, show some of the assets of BusinesstalkRadio.net have sold. The sales price is not listed in court documents but people involved in the litigation told Growth Capital Investor the sale was for around $100,000. But recent claim filing by a mysterious creditor threatens to come between any proceeds from the asset liquidations and defrauded investors. BusinesstalkRadio.net (BTR ) and its parent Blue Star Media Group were named as relief defendants in the SEC’s securities fraud suit against Spongetech, Metter, and five other men who worked with him.

Legal
crowdfunding

Regulators Sifting Through Crowd of Comments

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Considering the number of issues competing for time at the Securities and Exchange Commission – from poring over comments on its recent general solicitation proposal to implementing a raft of Dodd-Frank provisions – it is widely believed that the regulator will push back the end-of-the-year deadline to propose rules for equity crowdfunding. Nevertheless, crowdfunding proponents and skeptics alike accelerated their posting comments at the commission’s website ahead of an October 5 deadline, hoping to convince staffers to see things their way. Similarly, market participants interested in the funding portal end of the business raced to file comments to the Financial Industry Regulatory Authority before an August 31 deadline. While the SEC is simply asking for ideas concerning the general rules and implementation of equity crowdfunding and portals – or Title III under the act – FINRA is in the position to oversee the registration and regulation of the funding intermediaries. In July it issued a release seeking opinions on portal supervision, advertising, fraud and other issues.

Legal
Corey Ribotsky

Ribotsky Fires Back in SEC Suit

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NIR Group founder Corey Ribotsky filed court documents contesting the Securities and Exchange Commission's claims that Ribotsky mislead PIPE fund investors and diverted over $1 million in clients' assets. 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 August, the commission filed an amended complaint (reported here) containing previously made allegations that Ribotsky engaged in fraudulent accounting, lied to investors and stole over $1 million from one of his funds. New allegations included further details about the regulator’s claims that Ribotsky derived management fees from phantom gains and engaged in improper accounting. Ribotsky's answer to the revised complaint denied over 100 allegations, mostly without comment, and responded to others by stating that allegations required a legal conclusion or were addressed in documents already in the hands of regulators.