Legal

Ardsley Settles with SEC over Rule 105 Violations

By |

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.

Markets

ATM, CMPO Opportunities Expand for Growth Companies

By |

As a growing number of emerging growth capital investors base private placement decisions on fundamentals instead of fast-money arbitrage strategies, small growth companies are reaping the benefits. 

Growth issuers with a market capitalization of less than $1 billion and a share price of at least $1 are raising more capital through equity private placements (EPPs) than traditional PIPEs, and more placement agents are meeting the needs of the smaller companies by expanding at-the-market (ATM) stock sale programs, confidentially-marketed public offerings (CMPOs), and registered direct (RD) deals. In 2012, emerging growth companies completed just 146 traditional unregistered common stock PIPEs to raise $2.9 billion for an average of $19.7 million per deal, according to PlacementTracker, the EPP market monitoring division of Sagient Research. But such issuers raised $4 billion in 95 CMPO transactions for an average deal size of $41.8 million. They also raised $1.1 billion in 65 registered direct placements for a deal average of nearly $17 million. What’s more, growth companies agreed to 62 ATM offerings in 2012 that could raise as much as $3.7 billion.

Premium

ATM Offerings and Equity Lines: Three Differences Issuers Need to Understand

By |

At-the-market (ATM) offerings and equity line facilities are methods of raising capital that publicly traded issuers in growth industries such as biotech have been using for a number of years. These issuers have been seeking additional ways, other than the traditional PIPE or registered direct offerings, to raise capital that lowers their cost of capital and gives them additional flexibility in accessing the capital markets. The graphs below illustrate the trends in usage of ATMs and equity lines over the last three years in the life sciences industry. At first glance, ATMs and equity lines appear to be very similar. People often confuse these two methods of raising capital.

Legal
CHMO chart

Reverse Merger Company China Mobile Borrows Millions, Fizzles

By |

Reverse merger company China Mobile Media (CHMO) ran into trouble with debt financing, according to a lender suit that says the company owes $35 million for defaulting on debt and triggering default covenants involving warrants and registration of the company's stock. Investors Abax Lotus Ltd. and Abax Nai Xin Ltd. filed the suit on Jan. 7 in the New York State Supreme Court.