Legal

China Hydroelectric Sues Dissidents in Value Fracas

By |

An ongoing dispute between China Hydroelectric Corp. (CHC) and a group of its investors escalated recently when the company sued an “insurgent” investor group. While the conflict developed in a public venue through a series of trenchant regulatory filings, the company’s suit accuses investors including  NewQuest Capital and subsidiary CPI of “acting in secret” to take over China Hydroelectric. The suit was filed Sept. 10 in Manhattan’s U.S. District Court.

Legal

Variable-priced PIPEs Hastened Demise of Digital Domain

By |

Digital Domain Media Group (DDMG), the Port St. Lucie, Fla.-based digital special effects company that filed for Chapter 11 bankruptcy on Tuesday, a mere 10 months after the company's IPO, pocketed $50 million in three private placements over the last few months as its cash position deteriorated. The variable-priced conversion terms of those deals hastened its voluntary filing as it strove to control costs, which included a recent decision to shut down an animation studio and layoff 300 workers. A week before Digital Domain filed for bankruptcy, it defaulted on a $35 million convertible debt transaction that closed in May. Hudson Bay Capital Management, Tenor Capital Management and Empery Asset Management subscribed to the deal, which featured a five-year term and an interest rate of 9%, according to PlacementTracker, a service of Sagient Research.

Markets

PIPE Player Rodman Goes Belly Up

By |

Investment bank and longstanding PIPEs market player Rodman & Renshaw is closing its securities business. The company, now a subsidiary of Direct Markets Holdings Corp. (MKTS), is terminating those operations after running low on funds. “Rodman & Renshaw advised FINRA that it was no longer in compliance with the SEC’s Net Capital Rule 15c3-1, and, accordingly, that such subsidiary would cease conducting its securities business, other than liquidating transactions, unless and until it can achieve compliance with the rule,” according to a regulatory filing. As Growth Capitalist reported last month, Rodman was recently fined $315,000 compliance issues relating to the Chinese Wall between banking and research.

Legal

SEC Sues China Sky One for Fake Revenue

By |

Weight loss supplement maker China Sky One Technologies (CSKI) pumped up its revenues illegally, according to a Securities and Exchange Commission lawsuit alleging that the company concocted almost $20 million in fictional revenues it improperly reported in 2007 and 2008. In March, the complaint says, Nasdaq halted trading in the China-based company’s shares following the resignation of 26 mid-level managers, including nine from the accounting department and two handling internal controls. China Sky allegedly recorded revenues of $12.2 million and $7.5 million in 2007 and 2008 respectively for sales of weight loss patches to Takasima Industries, a Malaysian company that in reality purchased only about $167,000 worth of the products. The commission sued the company and its CEO Yan-qing Liu, who allegedly signed misleading regulatory filings. The suit seeks to have Liu repay incentive-based compensation and to have him barred from serving as officer or director of a public company.