Legal

Law Firm Fights Back in PIPE Dissipation Case

By |

Investors in a $12.5 million PIPE issued by Aamaxan Transport Group (AAXT) allege an individual involved in the deal stole the proceeds through ATM withdrawals and other personal transactions. Deheng Law Firm recently asked the court to be dismissed from the case on the basis that actions of a former employee close to the deal did not make the firm liable for the dissipation. The case began in September 2010, when investors filed suit in a New York U.S. District Court and then submitted an amended complaint a few weeks later. The complaint was dismissed, but the investors were allowed to file another complaint Deheng is seeking to dismiss. The PIPE took place in 2008, when funds including Alder Capital Partners, Pope Investments, Chestnut Ridge Partners and Paragon Capital purchased convertible preferred stock from Aamaxan (aDelaware corporation with operations inChina).

Legal

Hedge Funds Claim Hyperdynamics Misled Investors

By |

Four hedge funds have filed a lawsuit alleging that Hyperdynamics Corp. (HDY) fraudulently misled investors in order to close a funding round. The Houston-based oil explorer intentionally dragged its heels on exploratory drilling, knowing poor results would have scared off investors, according to allegations in the suit filed by Iroquois Master Fund, Hudson Bay Capital, Cranshire Capital and Kingsbrook Opportunities Master Fund. The suit was filed on May 9 in the New York State Supreme Court. Another suit by an individual investor is ongoing inHouston’s U.S. District Court, where a third class action was also filed in May.

Legal

Felix Facebook Funds Fined $250,000 by FINRA

By |

FINRA settled an enforcement action with secondary market player Felix Investments, which did not deny allegations that it sold interests in private placements without registering the securities or determining whether they were appropriate for investors. The company and four brokers agreed to pay a $250,000 fine and make changes to their compliance procedures. Felix brokers “pitched their unregistered offerings to over 1,000 people, often through mass mailings of boiler-plate email, without first establishing a substantive relationship with each person solicited,” according to FINRA findings. One principal also employed cold calls to tout the risky investments, according to FINRA. The company also downplayed risks inherent in the investments and did not disclose facts relevant to the sales, FINRA alleged.

Legal

Growth Companies Enter the Spotlight

By |

Advocates for the reform of small growth company finance regulations have been demanding better treatment for years. The emphasis on job creation in a presidential election year tarred with an unemployment rate above 8% may provide that opportunity. At the least, the new JOBS Act and other actions geared toward improving the lot of small issuers should bring more attention to the group’s role in creating JOBS and fostering innovation. At the most, the measures could ignite a capital-raising frenzy. Despite the sunnier outlook, a host of challenges remain.