Legal
PUDA

Court Bars ‘Monty Python’ Defense for Puda Coal Directors

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While a suit filed by regulators against Puda Coal (PUDA) management is going nowhere, a Delaware Judge refused to dismiss a shareholder action against independent directors who walked away after learning of wrongdoing at the company. "I'm not sure that the Monty Python response -- and I refer to the scene involving the words 'run away'" is adequate, Delaware Chancery Court Chancellor Leo Strine said in court earlier this month. Strine's reference derives from a scene in the movie "Monty Python and the Holy Grail" where knights flee a rabbit armed with impressive death-dealing powers. The situation holds few laughs for Puda Coal's directors or its shareholders. Puda went public through a reverse merger and subsequently raised over $120 million in PIPE transactions, ostensibly to fund operations of its PRC subsidiary Shanxi Puda Coal Group Co.

Legal
SEC

PIPE Investor Berger Settles SEC Cherry Picking Claims for $6.8M

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Howard Berger, a principal of two PIPE funds, settled with regulators over claims that he "cherry picked" trades in order to generate profits for himself at the expense of the funds. Syosset, N.Y., resident Berger co-founded and co-managed the Professional Traders Fund and Professional Offshore Opportunity Fund Ltd. "Berger profited from fraudulently allocating profitable trades to an account in his wife’s name while oftentimes allocating his unprofitable trades to [fund] accounts," according to a settlement with the Securities and Exchange Commission. The complaint alleged that Berger received at least $6.8 million from improper trades and avoiding losses in his wife's account from July 2008 through March 2010. Berger did not dispute the commission's allegations when he consented to a final judgment requiring the Bergers to disgorge about $5.4 million.

Legal

Ribotsky Rejects AJW Bankruptcy Filing Claims, Fairhills Named in Sham Deal

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The liquidators of several AJW offshore funds once managed by NIR Group have obtained recognition of their proceedings in the U.S. through Chapter 15 bankruptcy proceedings. Former NIR head Corey Ribotsky has filed court papers objecting to claims and tactics of the liquidators. Funds managed by NIR, which include four AJW entities and New Millennium Capital Partners II, committed $225 million to 144 PIPEs from 1999 through 2010, according to PlacementTracker data. In January, liquidators Ian Stokoe and David Walker of PwC Corporate Finance and Recovery (Cayman) Ltd. said in court documents that it started the bankruptcy process in the U.S. for a
variety of reasons, including the need to obtain records held in the U.S. and assess potential claims against Ribotsky, NIR Group, and several entities of Fairhills Capital Group controlled by Edward Bronson.

Legal
CHMO chart

Reverse Merger Company China Mobile Borrows Millions, Fizzles

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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.