Legal

Octagon Principal Settles Insider PIPE Trading Case

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Octagon Capital Partners principal Steven Hart agreed to a $1.3 million settlement after regulators accused him of insider trading and sham trading involving PIPE issuers and other companies. In settling with the Securities and Exchange Commission, Hart did not dispute allegations that he generated gains with matched trades causing losses to another fund and violated confidentiality in numerous securities deals. New York-based Octagon has invested $5.4 million in twenty PIPEs since 2011 according to PlacementTracker, most recently in a LightPath Technologies (LPTH) deal this June. The commission's suit was filed in Manhattan's U.S. District Court on Dec. 11.

Legal
World Health Alternatives

Jail the Finale in WHA Reverse Merger Saga

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The former president of defunct PIPE issuer World Health Alternatives (WHAIQ) has been sentenced to more than a decade in prison for crimes including manipulating earnings numbers and diverting to himself at least $2 million generated when the company issued stock. Former president, CEO and board member Richard McDonald received a 130 month prison sentence from a U.S. District Court judge. Leechburg, Penn., resident McDonald was found guilty of criminal charges of wire fraud, securities fraud, providing false regulatory statements, tax evasion and failing to remit payroll taxes. "World Health Alternatives was a publicly traded company, and ultimately became defunct and filed for bankruptcy protection as a result of the defendant’s criminal conduct," Judge Joy Flowers Conti wrote in her findings. "Less than a week after defendant’s resignation, the value of World Health Alternative shares decreased from $3.55 per share to $0.49 per share."

Legal

SEC Doubles Down on Bogus Opinion Attorneys

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Regulators are cracking down on two securities attorneys who allegedly failed to heed previous warnings to stop writing improper legal opinions to sell shares. In separate actions, the Securities and Exchange Commission filed suit against Dominican Republic resident Guy Jean-Pierre and began administrative proceedings against William Reilly, who was licensed to practice in New York. Legal opinions are required to allow the sale of restricted shares without going through the paperwork involved in registering an offering. The use of bogus opinions to remove restrictive legends has often played a role in allowing the improper sale of insider shares to the public, often in conjunction with the use of misleading publicity to boost stock prices. In such cases, retail buyers are often unaware that the sale of huge numbers of shares is diluting the value of the issuer's equity.

Markets
VC

Late Stage Investors Bring the Bucks to Likes of Kabam, Coveo

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With IPO markets lolling in a post-Facebook (FB) malaise, public offerings are not an easy way to raise capital. Yet late-stage venture investing continues to provide growing, robust companies with substantial infusions of cash. Companies currently enjoying late stage rounds include 23andMe, Coveo, Kabam and One Kings Lane. Personal genetics specialist 23andMe is on the receiving end of $50 million in a Series D round with Investors including Yuri Milner of Digital Sky Technologies fame. DST has lead substantial investments in the likes of Facebook, Zynga (ZNGA), Groupon (GRPN) and Chinese web mall 360buy.com.