DJ The Lawyer at the Center of SEC Pump-and-Dump Case -- Barrons.com

美国证券交易委员会(SEC)泵送转储案中心的律师dj-barrons.com

2018/10/05 01:50  道琼斯

DJ The Lawyer at the Center of SEC Pump-and-Dump Case -- Barrons.com


By Bill Alpert

In a stock fraud suit filed last month by the U.S. Securities and Exchange Commission, regulators allege that billionaire drug entrepreneur Phillip Frost and his company Opko Health participated in pump-and-dump schemes organized by investor Barry Honig.

The complaint in Manhattan's federal district court says that Honig and his associates bought stock in three small companies, controlled the firms' managements, and planted promotional articles about them before unloading their shares. The schemers reaped more than $27 million, the SEC charges, before leaving public investors with virtually worthless stock.

Unmentioned in the SEC's case is how all three public companies in the alleged swindles used the same securities law firm and the same stock transfer agency. SEC filings over the past decade show that nearly two dozen public companies backed by Honig, or other defendants in last month's SEC complaint, used securities lawyer Harvey Kesner, a 61-year old partner at the leading small-cap law firm Sichenzia Ross Ference, until he retired from the firm just before the SEC action. Those companies also happened to use Equity Stock Transfer, a New York outfit that SEC registrations show was financed and controlled by Kesner.

A prominent Honig-backed firm that Kesner represented was Riot Blockchain (ticker: RIOT), whose shares rose tenfold in last year's cryptocurrency surge, to $46, before falling back to a recent $3.40. Riot wasn't named in the SEC's case, but its chief executive, John O'Rourke, was. He has resigned and said he'll fight the civil charges that he colluded in Honig's alleged swindles.

Following the SEC charges, Frost stepped down as chairman from the brokerage firm he controls, Ladenburg Thalmann Financial Services (LTS). The 81-year-old Frost and Opko (OPK) deny the wrongdoings alleged in the SEC's action. Honig has made no public statement. He did not respond to Barron's requests for comment. One defendant, John H. Ford, quickly settled the SEC's charges, without admitting or denying allegations that he took undisclosed payments to tout a couple of the stocks on the website SeekingAlpha.com.

Securities lawyers and transfer agents are essential gatekeepers under federal regulations meant to protect the investing public. But one of the three companies featured in the SEC's New York case, the tiny biotech firm MabVax Therapeutics Holdings (MBVX), says that Honig forced it to hire Kesner and the Sichenzia Ross firm as a condition of his financing, according to a little-noted malpractice case that MabVax filed in a San Diego state court after the SEC case became public.

The MabVax suit contends that Kesner and his law firm advanced the interests of Honig at the expense of MabVax, deceiving the company and committing malpractice that led to its delisting from Nasdaq. Although MabVax had retained Kesner's law firm "to keep the company safe," says the biotech's complaint, Kesner's firm instead "put MabVax in harm's way."

Neither Kesner nor Equity Stock Transfer responded to Barron's requests for comment or in court filings. Kesner's former firm strongly denies that it wronged its client MabVax. "There are very serious misstatements and misleading facts alleged in the complaint, as well as errors in law, " says Mark Anesh, a malpractice specialist from the firm Lewis Brisbois, who will represent Sichenzia Ross' lawyers in the California case, but not Kesner. "The firm intends to vigorously defend the lawsuit, and in the end we fully expect that the claims contained therein will be found to be completely and utterly without merit."

Kesner was a rainmaker at many of the firms where he worked. Before Sichenzia Ross Ference Kesner -- as the New York firm was known until Kesner's August departure -- he'd been with the Dallas firm Haynes and Boone until the firm terminated him in 2009. In a lawsuit that was quickly settled, Kesner demanded $15 million from the Dallas firm and alleged that its partners defamed him by telling others "Harvey is dirty" and "had relationships with clients that the firm did not wish to associate with."

A Haynes and Boone spokesman said, "Mr. Kesner left the firm in March of 2009. We resolved our disputes at that time and have had no further contact with him."

After arriving at Sichenzia Ross in 2009, Kesner helped build the firm into one of the busiest securities law practices in America's small-cap stock market. The firm's website has been intermittently offline lately while it scrubs mentions of Kesner, but it had featured many tombstone announcements of deals that SEC filings show were bankrolled by Honig, Frost, and their investing associates. Sichenzia Ross' website said that it "consistently ranked at the top of national league table rankings for issuer, investor and placement-agent legal counsel."

In MabVax's California complaint against the law firm, the biotech says that Honig and his associates forced MabVax to hire Kesner as part of a 2015 financing. The complaint says that Kesner later said that he worked on at least five deals a year for Honig's investment group. MabVax said it had found 22 other companies backed by Honig's group where "Sichenzia and Kesner have been inserted as counsel."

MabVax claims that the advice it got from Kesner was secretly designed to serve clients such as Honig. In 2015, MabVax alleges that Kesner tipped Honig off to a potential legal issue that weakened his control over the company. Honig repaired his position and then forced MabVax to issue $10 million worth of securities -- for free -- to Honig and his investment associates, who secretly included Kesner.

The company also says that Kesner's law firm inserted legal language in Honig's deals so that the investors could deny that they were acting as a controlling group. But doubts about the legitimacy of Kesner's techniques have since forced MabVax to disclaim four years worth of its previous SEC filings, alleges the company, and caused its Nasdaq delisting.

Sichenzia Ross' outside counsel in the MabVax case, Anesh, would not comment on any details alleged by MabVax. As for MabVax, it declined to comment through its outside attorney, Joel Fleming of Block & Leviton.

A key player in the world of small-cap finance is a company's stock transfer agent, which can allow the sale of unregistered shares and convert warrants or preferred shares into common stock. In the SEC action against Honig and his associates, the agency says the group used "false attorney opinion letters" to get a transfer agent to remove restrictions from Honig's share certificates, so that Honig could sell the unregistered stock. The transfer agent for the public companies involved in the SEC case -- and more than another dozen funded by Honig -- was Equity Stock Transfer.

Equity Stock Transfer's initial SEC registration in 2011 says that it was funded by one of Kesner's limited-liability companies and managed by Avital Even-Shoshan, a partner who just left Sichenzia Ross and one of the defendants in MabVax's case. Other SEC filings said that the transfer agency's "control persons" included Kesner, his wife Renee, and an employee of Kesner's law firms, Mohit Bhansali.

In its March 2018 registration with the SEC, the transfer agency said that it still owed money to Kesner and that its ownership was divided between Bhansali and an Atlanta management consultant named Michael Beeghley. Both Bhansali and Beeghley have served as directors of Honig-backed companies, including Riot Blockchain and PolarityTE (PTE), a Salt Lake City biotech startup whose $18 shares value the unprofitable company at about $400 million.

"Stock transfer agents are the gatekeepers of securities," says Bhansali in an online video interview linked on the transfer agency's website. "Security for securities, that's what we do!" Neither Equity Stock Transfer, Bhansali, nor Beeghley responded to Barron's questions about the transfer agency.

Riot Blockchain's interim Chief Executive Chris Ensey says his company no longer uses Kesner as its securities lawyer or Equity Stock Transfer as its transfer agent. PolarityTE still uses the transfer agent, but stopped using Kesner and the Sichenzia Ross law firm in the spring of 2018. Unlike MabVax, PolarityTE's managers say they were satisfied with Kesner's legal advice. "We were never forced to use Mr. Kesner," says PolarityTE Chief Operating Officer Edward Swanson.

Write to Bill Alpert at william.alpert@barrons.com



(END) Dow Jones Newswires

October 04, 2018 13:50 ET (17:50 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.

美国证券交易委员会(SEC)泵送转储案中心的律师dj-barrons.com


比尔·阿尔伯特

在上个月美国证券交易委员会(U.S.SecuritiesandExchangeCommission)提起的一起股票欺诈诉讼中,监管机构指控亿万富翁药品企业家菲利普·弗罗斯特(PhilipFrost)和他的公司OpkoHealth参与了投资者巴里·霍尼格(BarryHonig)组织的

曼哈顿联邦地区法院的诉状称,霍尼格和他的同事购买了三家小公司的股票,控制了这些公司的管理层,并在出售股票之前植入了有关他们的促销文章。证交会指控,这些阴谋家获得了2700万美元以上的收益,然后让公众投资者拥有几乎一文不值的股票。

在证交会的案件中,没有提到三家上市公司在涉嫌欺诈时是如何使用同一家证券律师事务所和同一家股票转让机构的。美国证交会在过去十年提交的文件显示,在霍尼格(Honig)或其他被告的支持下,近20家上市公司使用了证券律师哈维·凯斯纳(HarveyKesner),他现年61岁,是领先的小型律师事务所西西亨齐亚·罗斯·费伦斯的合伙人,直到他在SEC起诉前从该公司退休。这些公司也碰巧使用股票转让,这是一个纽约机构,证交会注册显示,由凯斯纳资助和控制。

Kesner所代表的著名的Honig公司是Riot BlockChain(股票代码:Riot),其股价在去年的加密货币飙升中上涨了10倍,达到46美元,随后回落至最近的3.40美元。在证交会的案件中,没有提到暴动的名字,但其首席执行官约翰·奥鲁克(JohnO‘Rourke)却是。他已经辞职,并表示他将反对他在霍尼格涉嫌诈骗案中串通的民事指控。

在美国证交会提出指控后,弗罗斯特辞去了他控制的经纪公司拉登堡·塔尔曼金融服务公司(LTS)的董事长职务。81岁的弗罗斯特和奥普科(OPK)否认了证交会指控的错误行为。霍尼格没有发表公开声明。他没有回应巴伦的置评请求。被告之一约翰·H·福特(John H.Ford)迅速了结了证交会的指控,但没有承认或否认有关他在SeekingAlpha.com网站上为推销其中几只股票而收取未披露款项的指控。

根据旨在保护投资公众的联邦法规,证券律师和转让代理人是必不可少的看门人。但美国证交会纽约案中的三家公司之一,小型生物技术公司MabVAX治疗控股公司(MBVX)说,霍尼格迫使它雇用凯斯纳和西西恩齐亚罗斯公司作为他的融资条件,这是马巴克斯在证交会案件公之于众后向圣迭戈州法院提起的一桩小小的渎职案。

MabVax的诉讼声称,Kesner和他的律师事务所以MabVax为代价推进了Honig的利益,欺骗了公司,并犯下了导致公司从纳斯达克退市的不当行为。尽管MabVax保留了Kesner的律师事务所“以保证公司的安全,”生物技术公司的诉状说,但是Kesner的公司却“让MabVax受到伤害”。

Kesner和股票转让公司都没有回应Barron的置评请求,也没有在法庭文件中作出回应。凯斯纳的前公司强烈否认它冤枉了客户MabVax。“申诉中有非常严重的错误陈述和误导性事实,以及法律上的错误,”刘易斯·布里斯博伊斯公司(Lewis Brisbois)的医疗事故专家马克·阿内什(Mark Anesh)说。他将在加州的案件中代表西西恩齐亚·罗斯的律师,而不是凯斯纳。该公司打算大力为这一诉讼辩护,最终我们完全预期其中所载的主张将被认为是完全没有根据的。

凯斯纳在他工作的许多公司都是个造雨人。在西西恩齐亚·罗斯·费伦斯·凯斯纳之前-在Kesner 8月份离职之前,纽约的公司就已经知道了-他一直在达拉斯的Haynes and Boone公司工作,直到公司在2009年终止他。在一场很快结案的诉讼中,凯斯纳向这家达拉斯公司索要1500万美元,并指控其合伙人对他进行诽谤,告诉其他人“哈维很脏”,“与公司不愿与之交往的客户有关系”。

海恩斯和布恩的一位发言人说:“凯斯纳先生于2009年3月离开了公司。我们当时解决了我们的纠纷,没有与他进一步接触。”

2009年抵达西西尼亚罗斯后,凯斯纳帮助该公司成为美国小盘股市场中最繁忙的证券法实践之一。该公司的网站最近断断续续地关闭了对凯斯纳(Kesner)的提及,但它发布了许多墓碑式的交易公告,证交会的文件显示,这些交易是由霍尼格(Honig)、弗罗斯特(Frost)及其投资伙伴出资的。西琴齐亚罗斯的网站称,该公司“一直在全国发行人、投资者和中介法律顾问排行榜上名列前茅。”

在MabVax加州对这家律师事务所的投诉中,生物技术公司表示,Honig和他的同事迫使MabVax雇佣Kesner作为2015年融资的一部分。诉状称,凯斯纳后来表示,他每年至少为霍尼格的投资集团做5笔交易。MabVax说,它已经找到了另外22家由Honig集团支持的公司,“西西恩齐亚和凯斯纳已被任命为律师。”

MabVax声称,它从Kesner那里得到的建议是秘密设计的,目的是为诸如Honig这样的客户服务。2015年,MabVax声称Kesner向Honig透露了一个潜在的法律问题,削弱了他对公司的控制权。Honig修复了他的头寸,然后强迫MabVax免费发行价值1000万美元的证券给Honig和他的投资伙伴,这些人秘密地包括了Kesner。

该公司还表示,凯斯纳律师事务所在Honig的交易中加入了法律语言,这样投资者就可以否认他们是一个控股集团。但对凯斯纳技术合法性的质疑,迫使MabVax放弃了此前四年提交的证交会文件,指控该公司,并导致其纳斯达克(Nasdaq)退市。

Sichenzia Ross在MabVax案件中的外部律师Anesh不愿就MabVax所称的任何细节发表评论。至于MabVax,该公司拒绝通过外部律师、Block&Leviton的乔尔·弗莱明(JoelFlming)置评。

在小盘金融领域,一个关键的参与者是一家公司的股票转让代理,它允许出售未注册的股份,并将认股权证或优先股转换为普通股。在SEC针对Honig及其同伙的诉讼中,该机构表示,该组织使用了“虚假的律师意见书”,以获得一名转让代理人,以取消对Honig股票的限制,从而使Honig能够出售未注册的股票。参与SEC案件的上市公司的转让代理-以及霍尼希资助的另外十几家-是股权转让。

美国证券交易委员会2011年的首次注册表明,该公司是由凯斯纳的一家有限责任公司提供资金,由艾维特·弗特-肖山管理,后者是一名合伙人,刚刚离开西西恩齐亚·罗斯,也是MabVax案的被告之一。SEC的其他文件称,该机构的“控制人员”包括Kesner、他的妻子Renee和Kesner律师事务所的一名雇员MohitBhansali。

在2018年3月向美国证交会(SEC)注册的时候,该转让机构表示,它仍欠凯斯纳(Kesner)的钱,其所有权由Bhansali和一名为迈克尔·比格利(Michael Beeghley)的亚特兰大管理顾问分担。bhansali和beeghley都曾担任过Honig支持的公司的董事,其中包括Riot BlockChain和PolarityTE,一家盐湖城生物技术初创公司,其18美元的股票对这家无利可图的公司的估值约为4亿美元。

“股票转让代理是证券的守护者,”Bhansali在网上视频采访中说。“有价证券,我们就是这么做的!”股权转让、Bhansali和Beeghley都没有回答Barron关于转让机构的问题。

RiodBlockChain的临时首席执行长克里斯·恩西(ChrisEnsey)表示,他的公司不再使用凯斯纳(Kesner)作为其证券律师,也不再使用股权转让(PolarityTE仍然使用转让代理,但在2018年春天停止了使用Kesner和Sihenzia Ross律师事务所。与MabVax不同,PolarityTE的管理人员表示,他们对Kesner的法律建议感到满意。PolarityTE首席运营官爱德华·斯旺森(Edward Swanson)表示:“我们从未被迫使用凯斯纳。”

电邮:william.alpert@barrons.com



(完)道琼斯通讯社

October 04, 2018 13:50 ET (17:50 GMT)

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