Category: Securities Fraud

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California Pharma Co. CytRx Sued in Potential Class Action Case

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California-based biopharmaceutical company CytRx Corp. found themselves facing a proposed securities class action lawsuit in California federal court over allegations that the company concealed “bad news” affecting business after the FDA put a hold on its cancer trial drug Aldoxorubicin.

The suit alleges that CytRx stock was trading at inflated prices because the company did not disclose material information related to the FDA’s hold on their trial drug. When the company revealed the information, the stock price plummeted, causing significant losses for investors.

According to the complaint, “These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the company and its financial well-being and prospects, thus causing the company’s securities to be overvalued and artificially inflated.”

The proposed class action could include thousands of individuals who purchased CytRx stock.

In a separate matter, CytRx was sued over Aldoxorubicin in a derivative action in Delaware, where board members were accused of giving themselves “spring-loaded stock options” before positive results for clinical trials were released. Those claims were settled in June of last year, with the company repricing roughly 2 million stock options that were awarded to board members and other executives.

CytRx CEO Steven Kriegsman and CFO John Kaloz were named individually in the suit.

Call a Los Angeles Stock Fraud Attorney Today

If you suffered significant losses in CytRx stock, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

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Los Angeles Investment Banker Pleads Guilty to Stock Scam

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An investment banker, along with his father and two brothers, were accused of reaping illegal profits by manipulating a reinsurer’s stock price.

Jason Galanis, once known as “Porn’s New King,” admitted to creating a stock scam, committing securities fraud, investment adviser fraud and two charges of conspiracy. As a result of his plea, Galanis agreed to forfeit nearly $38 million plus two properties he owns.

Galanis and his family were alleged to have orchestrated a $60 million bond scheme that targeted South Dakota’s Oglala Sioux Nation, using the proceeds towards other investments and personal luxury items.

Gerova Financial Group Ltd. was the reinsurer used for Galanis’ scheme. With the assistance of Gerova’s chairman, Gary Hirst, Galanis was able to amass more than 5 million shares and had his ownership interest hidden by a shell company. Galanis then allegedly bribed investment advisers to have their clients purchase Gerova shares.

As a result of the stock scam, Galanis netted himself approximately $20 million between 2007 and 2011. Along with Galanis, a broker named Gavin Hamels also pled guilty, while the alleged straw holder, Ymer Shahini, remains at large.

Galanis gained fame over a decade ago after purchasing the nation’s largest credit card payment processor for Internet pornography.

Call a Los Angeles Stock Fraud Attorney Today

If you invested in Gerova or with Galanis, Gavin Hamels, or members of Galanis’ family, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles stock fraud attorney today for a consultation to discuss your rights and options.

California Man Caught in $18 Million Bond Scheme

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A California resident has agreed to hand over almost $18 million to settle allegations in a Delaware federal court that he bilked approximately 200 investors in a bond scheme between 2007 and 2011, according to the Securities & Exchange Commission (SEC).

Andrew Proctor, acting through his company Atlas JG, is alleged to have raised $22 million by offering investors a return of between 8-9% on their investment. Most of the targeted investors came from Taiwan.

Proctor told investors that their returns would come from purchasing receivables from home-building contractors at a discount, then turning a profit when the builders eventually paid the invoices. Instead, less than 10% of the funds raised were used as promised, with the last legitimate purchase taking place in 2008. According to the SEC, the money was moved through a myriad of shell companies and accounts that made following the trail difficult.

Of the gains Andrew Proctor made, $3 million went to personal use, including mortgage payments, credit cards, and his children’s tuition. Another $7 million was sent to an associate in Hong Kong, and $3.1 million was invested in risky stock and options trades. About $11 million was used to make interest and principal payments to investors.

As part of his settlement, Proctor agreed to pay more than $5 million in fines plus disgorgement of $11 million plus interest.

Call a Los Angeles Securities Fraud Lawyer Today

If you invested with Andrew Proctor or Atlas JG, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.

Brokers to Face $97 Million in Oil Securities Claims

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Two men who helped sell interests in oil securities in a bankrupt oil company in California face $97 million in oil securities claims with charges of fiduciary duty, constructive fraud, and negligence.

Behrooz Sarafraz and Alfred Lopez were sued in 2013 after $97 million in securities of Tri-Valley Corporation were sold. Approximately $95 million of the securities were sold through unlicensed brokers who were paid commissions unlawfully.

Sarafraz and Lopez worked together and were aware of the alleged misconduct, according to attorneys for investors. The two men marketed and sold Opus investments, which were special investments sold in $1 million increments but then broken down into smaller parts via aggregators.

The U.S. Securities and Exchange Commission (SEC) investigated Sarafraz for the oil securities claims, resulting in a judgment finding that he violated securities laws in connection with his sale of Opus investments.

Call a Los Angeles Securities Fraud Attorney Today

If you invested with Behrooz Sarafraz, Alfred Lopez, or in Tri-Valley Corporation, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

SEC Whistleblower Program Awards Anonymous Tipster

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The Securities & Exchange Commission (SEC) announced that it awarded $17 million to a former company employee whose tip was instrumental in the SEC’s investigation and subsequent enforcement proceeding. No details of the enforcement have been made public.

The award is the second largest payout ever under the SEC’s relatively new whistleblower program. The terms of the program provide anonymity for would-be tipsters to encourage reporting. Based on awards which range from 10-30% of the sanctions the agency secures, it appears that the action brought in between $56 million and $170 million.

This award continues a recent trend of company insiders who have been rewarded for alerting the SEC about potential securities law violations. In the past month alone, $26 million has been awarded to five anonymous tipsters who blew the whistle on companies that were violating securities laws.

Any money paid to tipsters comes from the monetary sanctions of securities law violators, not from harmed investors.

Call a Los Angeles Whistleblower Attorney Today

If you have information that your company is violating securities law, you may be eligible to receive an award if your information leads to sanctions, and your information will remain anonymous.

Contact an experienced Los Angeles whistleblower attorney today for a consultation to discuss your rights and options.

JSG Capital Charged in $10M Ponzi Scheme

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Two California men have been charged with defrauding $10 million from retail investors by promising exclusive investment opportunities “previously only available to the one-percent.”

The SEC filed a complaint against Jaswant “Jason” Gill, founder and CEO of JSG Capital Investments, and Javier Rios. Both men have been accused of pocketing at least $2.8 million in investor funds, using at least some of investors’ money to pay for meals at high-end restaurants, trips to Las Vegas, and tickets to professional sporting events.

JSG Capital billed itself as a “boutique advisory firm” with offices in Los Angeles, San Francisco, and New York. Investors were told that they could secure annual returns of up to 60% by investing in tantalizing pre-IPO stocks including Airbnb, Uber, and Alibaba.

The JSG Capital website enticed investors by promising access to alternative investment strategies previously reserved for the ultra-rich, and touting their Wall Street experience – Gill’s biography claimed he had been a managing director at Morgan Stanley.

According to the SEC, Morgan Stanley has never employed Gill and Rios has a background in the food service industry, not financial services.

Rios and Gill also have been charged with criminal wire fraud in addition to operating a Ponzi scheme. Less than 1% of investor funds were actually transferred to JSG trading accounts.

Call a Los Angeles Securities Fraud Attorney Today

If you invested with Gill, Rios, or JSG Capital, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

What Should I Do If I Suspect Stockbroker Fraud?

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What is Stock Fraud?

Stockbroker fraud is any deceptive practice used to induce you to purchase or sell securities on the basis of misleading, false, or wrong information.

Types of Stock Fraud

Fraud comes in all types and forms, including activities that are not illegal per se, but whose cumulative activities make them fraudulent. For example, if your broker conducts a trade on your account which generates little or no profit, there may not be anything inherently improper or illegal. But if this becomes a repeated pattern, it is possible your broker is making trades or “churning” your account to generate commissions, without regard for whether the trades make sense for you.

Stockbroker fraud also likely occurs when your broker:  (a) offers you a “guaranteed winner,” (b) trades without your permission, (c) over-concentrates your accounts in a single security or industry, (d) is negligent, or (e) recommends unsuitable investments for your portfolio.

Brokers must follow your explicit instructions and recommend only those investments that are consistent with you risk profile and investment objectives. If you suspect your broker has failed to meet these obligations or has failed to provide you with accurate information regarding a transaction, you may be the victim of broker fraud.

What Can I Do?

Before you choose a broker check their disciplinary records by using FINRA’s Broker Check tool that will allow you to search by name and firm. Then if you suspect wrongdoing in your account, you should get a second opinion about your broker’s activity by calling a stockbroker fraud lawyer.

Call a Los Angeles Stock Fraud Attorney Today!

If you have lost money in your account and you suspect your broker misled you about the risks of an investment or an investment strategy or otherwise made unsuitable investments, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles stockbroker fraud attorney today for a consultation to discuss your rights and options.

California Couple Charged with Securities Fraud in $25 Million EB-5 Investment Scam

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A Los Angeles-area couple has been charged with securities fraud in a $25 million EB-5 investment scam. The couple defrauded Chinese investors out of $25 million after telling investors that their money would be used to build a cancer center, named the Pacific Proton Therapy Regional Center. The couple told investors that their investment would make them eligible for a visa under the government’s EB-5 immigrant investor program.

Reportedly, at least 50 investors gave money to Charles Liu and his wife, Xin “Lisa” Wang to invest in the Pacific Proton Therapy Regional Center, yet no construction took place at the proposed site, even after 18 months. Instead, approximately $11 million went to three marketing firms in China (one of which Liu is chairman and CEO of) and the other $7 million went into Liu’s and Wang’s personal accounts.

Under the EB-5 program, investors are eligible for a two-year work and residency visa, with potential for a permanent visa, after investing at least $500,000 in a commercial enterprise in the U.S.

The judge in this case has issued a temporary restraining order freezing the couple’s assets and prohibiting them from raising any additional funds. Liu and Wang have been charged with fraud in the sale of securities and fraud in connection with the purchase or sale of securities.

Call a Los Angeles Securities Fraud Attorney Today

If you invested with Liu or Wang or their Pacific Proton Therapy Regional Center, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.

SEC Freezes Trader’s Assets Over Fake Filing

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The Securities & Exchange Commission (SEC) has sued a Pakistani trader, securing an emergency asset freeze. The SEC alleged that the trader manipulated the stock of a Silicon Valley tech company by issuing a fake securities filing in order to profit on his call options.

Nauman A. Aly is alleged to have created a fake report in the SEC’s securities filing system in order to turn a quick profit on call options he owned relating to shares of Integrated Device Technology Inc. (IDTI). In a matter of minutes, Aly’s scheme would have netted profits of $425,000 if left unchecked.

According to the complaint, Aly purchased $18,500 in call options for IDTI on April 12, when the company’s share price was $19.01. The options expired three days later and had a strike price of $20, which means that Aly would have turned a profit only if the stock rose by at least one dollar.

In an effort to create a certain profit on his option trade, Aly obtained a unique key number allowing him to file regulatory forms with the SEC’s EDGAR system. He filed a fake form through EDGAR just eight minutes after purchasing his call options, which represented that he and six Chinese citizens collectively had acquired a 5.1% ownership interest in IDTI. Aly’s filing stated that his “group” sent a letter to IDTI’s board of directors offering to buy shares for a 65% premium on its share price.

Within minutes of his filing, the stock shot up more than 25%, rising to nearly $24, and Aly sold his call options. Though he made money, his entire scheme lasted less than 30 minutes. IDTI claimed it had no knowledge of Aly’s actions and never received a letter from him.

Have you suffered as a result of Securities Fraud?

If you invested suffered significant investment losses or were not made aware of the risks of investing, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities attorney today for a free consultation or case evaluation to discuss your rights and options.

Los Angeles Securities Lawyer: When is the Right Time to Exercise Employee Stock Options?

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An employee stock option gives an employee the right to buy their employer’s stock at a pre-set price within a certain period of time. The holder of the option can choose not to exercise their right, which is why the holder has the “option” to buy the stock.

Employees of a company may be given “options” to purchase company stock at a price and time specified by the employer. Employee stock options generally are provided as a hiring incentive or as part of an employee’s compensation. An employer can allow options to vest all at once or over a period of time – this is known as the vesting period.

When or Whether to Exercise Your Stock Options According to a Los Angeles Securities Lawyer

Knowing when (and whether) to exercise your stock options can be complicated. If the exercise price of the stock option is below the stock’s current market value, then the stock options are said to be “in the money” and would produce an immediate profit when the options are exercised. Of course, after purchasing the shares the company could go out business or the stock’s price could decline for other reasons. As a result, many employees choose to exercise their stock options and immediately sell the shares to realize a profit and to eliminate the risks of owning the stock. Employers may pressure employees not to sell shares that they have purchased. Continuing to hold a large stock position, which can comprise a significant portion of an employee’s savings, can expose the employee to significant risk of loss. If an employee chooses to continue to hold a large number of shares of his employer’s stock there are investment strategies that can be employed in an effort to protect a large stock position.

Make sure you are fully aware of both your rights and the risks involved when deciding whether to exercise your employee stock options. There are tax consequences to consider and investment diversification and risk protection strategies for which employees should seek guidance when contemplating what to do with their employee stock options.

Call a Los Angeles Securities Lawyer Today

If you suffered significant losses relating to your employee stock options or stocks purchased after exercising your stock options you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities lawyer today for a consultation to discuss your rights and options.