Markets

Demand for Emerging Growth Issuers Fuels IPO Run

By |

Initial public offerings are on track to have their best year in a decade as investors display an appetite for riskier bets in emerging growth companies (EGCs). Issuers raised $30.7 billion in 131 IPOs through Aug. 9 this year, according to research firm Dealogic. Over the same period in 2012, only 97 issuers had completed IPOs, although they had raised $32.2 billion in capital. Some of the dollar volume discrepancy could hinge on the market participation of EGCs, which have completed 82% of the IPOs this year and have raised about half of the total proceeds, according to Dealogic.

Markets

APO Redux: New Solicitation Rules Open the Door for Direct Public Offerings

By |

No sooner had the ink begun to dry on the SEC’s recently adopted amendment to Rule 506 of Regulation D allowing the public promotion of equity private placements, and free-thinking securities attorneys and investment bankers began pondering the possibilities of their new-found freedom to hawk their wares from the mountaintops. Ever the innovators never willing to accept the well-trodden path when a cleverly engineered shortcut is available, in no time the cleverest among them began to imagine what was only recently regarded as unthinkable: the rebirth of the APO market. APOs, or “alternative public offerings,” are generally referred to a combination of a public shell company with a private operating business that is concurrent with an equity private placement by the public company, which results in a capitalized public company which owns the private operating business. APOs first became popular in the middle of the past decade, when a perfect financial storm of greed, demand and opportunity came together. The greed came from the surfeit of PIPE deal makers – fund managers, placement agents and deal attorneys – that had grown around the PIPE market during its heyday of 2000-2006, when a public offerings market in disarray and a whole generation of newly public internet companies in financial chaos combined to bring PIPEs issuers into the market by the bushel, offering fat discounts to investors who could lock in their returns with a quick call to their options broker.

Legal

FINRA Alleges Fraud, Stock Manipulation by PIPE Broker Carris

By |

A New York City based broker-dealer active in equity private placements with emerging growth companies has been accused of fraud on grand scale by its regulator FINRA. John Carris Investments, founded by George Carris in 2009, is facing multiple allegations centering on stock manipulation, fraudulent self-offerings of securities, use of firm funds to pay personal expenses, falsifying tax documents and not paying staff payroll taxes withdrawn from employee’s paychecks.  The regulator wants George Carris, along with other principals of the firm, Andrey Tkatchenko and Jason Barter sanctioned for securities fraud. In the FINRA complaint the regulator alleges Carris manipulated the price of shares of then-OTC Pink-quoted FibroCell Sciences (FCSC):

“This scheme was motivated by the Manipulation Respondents' interest in increasing the volume and price of sales of Fibrocell shares, including in ongoing Private Placements of Public Equity ("PIPEs") for which John Carris Investments acted as a placement agent. From these placements, the Manipulation Respondents earned commissions ranging from 7-10% and Fibrocell warrants- from which respondents could profit by cashless exercise. By engaging in prearranged trading during the Manipulation Period, between May 1, 2010 and September 30, 2010, the Respondents created volume and also gave the appearance of greater liquidity, manipulated the price by which the shares were bought and sold, and prevented large sales of blocks of shares from being sold into the market (which would depress the stock price).

Legal
Virginia Sourlis

Attorney Sourlis Accepts Five-year Ban in Share Registration Fraud Case

By |

Reverse merger attorney Virginia Sourlis has agreed to a five year bar from practicing securities law in a settlement after the SEC found her liable for fraud for playing a key role Greenstone Holdings’ hawking of over 6 million unregistered shares. The SEC originally proposed to ban Sourlis in February after the agency claimed she had made false statements regarding the company’s issuance of promissory notes, its note holders, and conversations with investors that the agency’s investigators found to not exist. Sourlis was denied a hearing to appeal the decision, and in July settled for a five-year ban from the SEC with the right to re-apply after the five years had concluded. In the complaint filed in February of last year, the SEC accused Sourlis of writing a Jan. 11, 2006 opinion letter falsely claiming that 12.3 million Greenstone shares could be converted from convertible notes and issued without restriction.