Legal

China RTO Maven Siris Accused of Fraud

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Peter Siris and  Guerrilla Capital Management stand accused of fraudulent involvement in reverse mergers involving China-based companies, according to a Securities and Exchange Commission order that requires Siris to respond to the allegations this month. PlacementTracker data indicate that Guerrilla invested $52 million in 66 PIPEs, secondaries and Regulation S deals since 2000. The most recent of those investments was a 2010 CMPO offering from SmartHeat (HEAT), which is currently the defendant in at least two class action suits. One of those suits "alleges that, throughout the Class Period, SmartHeat's Chief Executive Officer, James Jun Wang, sold $23 million of his shares in violation of several SEC rules" according to a news release from the plaintiffs' law firm. "This rapid sale of SmartHeat's stock onto the market caused its stock price to plummet."

Markets
ATM

ATMs On the Rise

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Prior to 2008, at-the-market (ATM) offerings were virtually non-existent. But thanks to expanded shelf offering rules and a rough financing market, ATMs are becoming more prevalent as growth companies pursue capital-formation strategies. The offerings, which are conducted at the company’s request with newly issued shares at market prices, in a short time have become more widely used than equity lines. This year more than $190 million has been raised of a total potential of over $2 billion in 43 ATM offerings through the end of September by emerging growth companies with market caps from $10 million to $1 billion, according to PlacementTracker. This year’s ATM deal pace has already matched that of all of 2011, when $628 million was raised by issuers in 43 deals.

Markets

Real Estate Capital Redefined

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As potential crowdfunders wait for the Securities and Exchange Commission to release rules regarding security sales to the general public next year, one company is already well on its way to using the process to finance a roughly $1.3 million property redevelopment at 1351 H Street NE in Washington, D.C. And the developers suggest that crowdfunding has the potential to substantially change the way that real estate sponsors raise money in the future, especially for neighborhood projects. “This is so diametrically opposed to how real estate is financed today,” said Benjamin Miller, who with his brother is leading the development. "Most people don’t have access to this type of investment, but investing in a nearby building makes a lot more sense to me than in a gold mine in South Africa"

The developers in June began selling Class B units for $100 each in Fundrise 1351 H Street, the owner of a 5,380 sq. ft. two-story building at the site.

Legal
NIR Group

JP Morgan Reporting Snafu Shows Ribotsky Still Acting as NIR Group Valuation Manager

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Investors in N.I.R. Group funds received fund valuation reports in late August prepared by the ousted manager Corey Ribotsky that were sharply at odds with reports sent to them from the funds' court-appointed receiver, PricewaterhouseCoopers (PwC), just days before, according to reports and documents obtained by Growth Capitalist. Ribotsky's valuation report was distributed by JP Morgan Clearing, the custodian for N.I.R.'s limited partner IRA accounts. Morgan told NIR's domestic fund investors that Ribotsky sent it a year-end valuation report, dated January 18, 2012, in late August. This report showed only a 30% loss for 2011 compared to the 97% loss investors had received just days before in their Schedule K-1 statements prepared by PwC's Cayman office. The SEC's investor fraud suit against Ribotsky and his removal as manager of the AJW Funds was widely reported earlier this year so it's odd that JP Morgan Clearing was still accepting valuation reports from Ribotsky.