Mar 8, 2018 | Securities Class Action Archive
Internal Control Deficiencies & Material Weakness Identified- BioScrip May Delay Form 10-K Filing
On March 8, 2018, BioScrip, Inc. (NASDAQ: BIOS), “the largest independent national provider of infusion home care management solutions,” announced its “Fourth Quarter and Full Year 2017 Financial Results.” In relevant part, BioScrip’s announcement revealed that
[a]s a result of the detailed review of [BioScrip’s] financial statements performed by the [BioScrip’s] CFO and interim-CAO during the preparation of [BioScrip’s] financial statements for the full year 2017, [BIOS] identified internal control deficiencies in connection with account reconciliations for certain asset and liability accounts. The potential financial statement errors discovered to date resulting from these internal control deficiencies do not appear to be material, but the review is ongoing. [BIOS], along with its external auditors, continues to review the possible errors and, if required, will reflect any necessary revisions and may report one or more internal control material weaknesses in its upcoming Form 10-K filing. Depending on the timing of the completion of this review, [BioScrip] may need to delay the filing of the Form 10-K.
Separately, [BioScrip] has identified and will report a material weakness related to certain spreadsheets used to calculate periodic adjustments to accounts that do not impact Adjusted EBITDA, including amortization of intangible assets, equity-linked liabilities and the amortization of discounts and deferred issuance costs of debt. The material weakness did not have any effect on the Company’s 2017 financial statements.
On this news, shares of BioScrip dropped during intraday trading on March 8, 2018 to close at $2.60, down 15.47% from the previous day’s closing price.
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BioScrip, Inc. Shareholders & Investors
Kehoe Law Firm, P.C. is investigating claims on behalf of investors of BioScrip, Inc. to determine whether BioScrip, Inc. and certain of its officers or directors engaged in securities fraud or other unlawful business practices. If you purchased, or otherwise acquired, BIOS shares and have questions or concerns about the securities investigation or your potential legal rights, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Mar 8, 2018 | Shareholder & Investor Protection
Merrill Lynch Settles Charges with SEC for Merrill’s Failure to Perform Required Gatekeeping Functions in the Unregistered Sales of Securities on behalf of Longtop Financial
The SEC announced on March 8, 2018 that it settled charges against Merrill Lynch, Pierce, Fenner & Smith Inc. for its failure to perform required gatekeeping functions in the unregistered sales of securities on behalf of a China-based issuer and its affiliates.
Merrill Lynch Sold Almost Three Million Shares of Longtop Financial Technological Limited’s Securities Despite “Red Flags” Indicating Sales Could be Part of an Unlawful Unregistered Distribution
The SEC’s Order found that Merrill Lynch sold almost three million shares of Longtop Financial Technological Limited’s (“Longtop”) securities into the market despite red flags indicating that the sales could be part of an unlawful unregistered distribution. The distribution, ultimately, generated almost $38 million in proceeds for the overseas issuer and its affiliates.
SEC’s Order Finds Merrill Lynch Violated Sections 5(a) and 5(c) of Securities Act of 1933
The SEC’s Order found that Merrill Lynch violated Sections 5(a) and 5(c) of the Securities Act of 1933. In settlement, without admitting or denying the SEC’s findings, the firm agreed to be censured and consented to the order requiring it to cease and desist from committing or causing any future violations of the registration provisions of the Securities Act. The Order also requires Merrill Lynch to pay a penalty of $1.25 million and more than $154,000 in disgorgement and prejudgment interest from commissions and fees earned on the improper sales.
Summary of the SEC’s Order Against Merrill Lynch
According to the SEC’s Order:
From January 24, 2011 to August 18, 2011 Merrill violated the registration provisions of the federal securities laws by effecting unregistered sales of almost 3 million shares of Longtop . . . securities for a customer. Longtop’s securities were trading in the United States as American Depositary Shares (“ADSs”). Longtop’s Chairman had obtained the 3 million unregistered shares from Longtop as one of its founders. In the summer of 2010, the Chairman purported to gift Longtop ordinary shares through a trust to existing and ex-employees of Longtop, who were the purported beneficiaries of that trust. The related ADSs were then sold in about 68 transactions through an account at Merrill’s Singapore branch office held in the name of the trust’s nominee (“Nominee”).
Section 5 of the Securities Act generally requires registration of securities offerings, or an available exemption from registration, including for resales such as the sales through the Nominee account at Merrill. Although brokers frequently rely on an exemption under Section 4(a)(4) of the Securities Act, known as the brokers’ transaction exemption, this exemption was not available to Merrill for any of the Longtop ADS sales through the Nominee account. For this exemption to be available, Merrill was required, before selling securities on its customers’ behalf, to engage in a reasonable inquiry into the facts surrounding the customers’ proposed sales to determine if the customers were engaging in an unlawful distribution of securities. The amount of inquiry a broker must conduct as part of this reasonable inquiry varies with the facts and circumstances of each transaction. The requirement that a broker conduct a reasonable inquiry is not limited to penny stock transactions.
Here, the Merrill team evaluating the proposed sales engaged in some inquiry before the first sales that revealed red flags that Longtop, its management, and the Chairman maintained control of the securities, thus indicating the purported gifts were not bona fide and the sales could be part of an unlawful unregistered distribution by Longtop and its affiliates. Nevertheless, Merrill did not properly investigate, failed to inquire about the identities of the purported sellers and whether they were affiliates of Longtop, and instead allowed the sales to go forward.
In January 2011, Merrill cleared a block of almost 1 million Longtop ADSs for future sales through the Nominee account by unknown sellers. Merrill did not conduct any subsequent reviews when these ADSs were sold between January 24, 2011 and May 4, 2011. During this time, Merrill was presented with additional red flags that should have prompted the firm to conduct further inquiry and consider whether an exemption from securities offering registration was available. For instance, Merrill failed to perform any inquiry after an April 2011 online report accused Longtop of financial fraud and questioned the legitimacy of the Chairman’s gift of shares.
Likewise, in early May 2011, when nearly 2 million more Longtop unregistered securities were deposited into the Nominee account, Merrill failed to conduct any inquiry before effecting additional sales of the Longtop ADSs. Even after learning of more red flags, including that Longtop’s auditor resigned in late May 2011, citing the Chairman’s admissions of fraud, and Longtop’s securities were delisted by the NYSE in August 2011, Merrill still made no inquiry to determine whether the ADSs could be sold without registration.
Accordingly, Merrill did not perform a reasonable inquiry and was not entitled to rely on the brokers’ transaction exemption. Merrill engaged in an unregistered distribution through the Nominee account, generating approximately $38 million in proceeds for the benefit of Longtop and its affiliates. Merrill wired the proceeds from the Nominee account to a Hong Kong bank account in the name of a different entity. This entity also was controlled by Longtop management. Merrill received over $127,000 in commissions and fees during the relevant period. By virtue of its conduct, Merrill willfully violated Sections 5(a) and 5(c) of the Securities Act.[]
SEC Has Revoked the Registration of Longtop’s Securities
The SEC has revoked the registration of Longtop’s securities, and for additional information, please see the SEC’s Order Making Findings and Revoking Registration by Default.
Source: SEC.gov
Mar 8, 2018 | Consumer Protection, Employment & Technology Archive
Navient Corporation, Navient Solutions, LLC and Pioneer Credit Recovery, Inc. – Class Action Seeks Statutory Damages and Injunctive Relief to Stop Debt Collection Calls in Alleged Violation of the Telephone Consumer Protection Act
On March 7, 2018, a class action lawsuit was filed in United States District Court for the Northern District of Illinois, Eastern Division, by Plaintiff Bria Adkins, individually and on behalf of all others similarly situated, against Navient Corporation, Navient Solutions, LLC, and Pioneer Credit Recovery, Inc. The lawsuit seeks injunctive relief and statutory damages for the alleged Telephone Consumer Protection Act (“TCPA”) violations committed by the Navient and Pioneer Credit Recovery defendants.
The TCPA, according to the complaint, regulates and restricts the use of automatic telephone equipment; protects consumers from unwanted calls that are made with autodialers and/or prerecorded messages; and prohibits any person from calling a cellular telephone number using an automatic telephone dialing system or prerecorded message without the recipient’s prior express consent.
Further, the complaint states that Navient Solutions was the servicer of an educational loan for the Plaintiff’s mother. The Plaintiff’s mother’s loan was placed with Pioneer Credit Recovery for collection, after the Plaintiff’s mother defaulted on the loan. Pioneer Credit Recovery, allegedly, used the Internet to identify third-party acquaintances, friends, and relatives of the Plaintiff’s mother, and in April 2017, Pioneer Credit Recovery started a telephone campaign to collect the Plaintiff’s mother’s debt. The Plaintiff was one of the third-parties Pioneer Credit Recovery identified and contacted Plaintiff’s cell phone on at least two occasions via an automated telephone dialing system.
The class action lawsuit against Navient and Pioneer Credit Recovery seeks statutory damages of $500 for every call, including SMS messages, placed or transmitted, as well as treble, or triple, damages of $1,500 for every call, including SMS messages, placed knowingly and/or willfully in violation of the TCPA.
Have You Received Unsolicited, Unwanted or Harassing Telemarketing Calls or Autodial, Automated or Prerecorded “Robocalls” or Text Messages to Your Cellular Telephone from Telemarketers, Banks or Credit Card, Mortgage, Student Loan or Other Companies Without Your Prior Express Consent?
Have You Received Debt Collection Robocalls On Your Cellular Telephone Where You Requested Not to Receive, or Opted-Out from Receiving, Automated Debt Collection Calls?
Have You Received “Junk Fax” Advertisements That You Did Not Consent to Receive?
If so, you may have grounds to bring a private right of action, or lawsuit, under the Telephone Consumer Protection Act to try and recover statutory damages of between $500 and $1,500 for each TCPA violation. If you would like to speak privately with an attorney at no cost or obligation to you about your potential legal rights or claims, please contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], complete the form above on the right or send an e-mail to [email protected].
Mar 7, 2018 | Consumer Protection, Employment & Technology Archive
Upwards of 243,000 Harmed Consumers Who Were Assessed Transaction Fees Exceeding What Bancorp Bank Disclosed to Receive Approximately $1.3 million in Restitution
On March 7, 2018, the Federal Deposit Insurance Corporation (“FDIC”) announced a settlement with The Bancorp Bank, Wilmington, Delaware, relating to unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act (Section 5). Further, the FDIC found that the bank violated the Electronic Funds Transfer Act, the Truth in Savings Act, and the Electronic Signatures in Global and National Commerce Act.
As part of the settlement, The Bancorp Bank stipulated to the issuance of an Order for Restitution and Order to Pay Civil Money Penalty. The Order for Restitution requires the bank to prepare a comprehensive restitution plan, and to pay restitution of nearly $1.3 million to approximately 243,000 harmed consumers who were assessed transaction fees exceeding what the bank disclosed. The Order for Restitution also requires The Bancorp Bank, its institution-affiliated parties, and its successors and assigns to fully comply with Section 5. The Order to Pay requires the bank to pay a civil money penalty of $2.0 million. According to the FDIC, consumers who are eligible for relief under the settlement are not required to take any action to receive compensation.
The Bancorp Bank Overcharged Transaction Fees for Certain Point-of-Sale, Signature-Based Transactions on Certain Stored-Value Cards, Including the Bank’s Excella Visa Prepaid Debit Card
The Bancorp Bank issues prepaid cards on behalf of numerous non-bank entities. The FDIC determined that the bank violated Section 5 by overcharging transaction fees for certain point-of-sale, signature-based transactions (i.e., transactions not requiring a personal identification number or PIN) on certain stored-value cards, including the bank’s Excella Visa Prepaid Debit Card. As the issuing bank for these various prepaid cards, The Bancorp Bank was responsible for ensuring that these programs were operating in compliance with all applicable laws.
The Bancorp Bank Restitution Plan
According to the Order for Restitution’s “Restitution Plan”:
Within thirty (30) days from the effective date of [the] ORDER, the Bank shall prepare a comprehensive restitution plan . . . for all past and present holders of Excella Cards (“Excella Consumers”) and Non-Excella Cards (“Non-Excella Consumers”) who from December 3, 2010 through November 8, 2014 were assessed transaction fees for PINless transactions that exceeded the amount of the fee the Bank disclosed to Excella Consumers and Non-Excella Consumers for such transaction (“Excess Transaction Fees”) and who are therefore entitled to reimbursement (“Eligible Consumers”). The Bank shall submit the Restitution Plan to the Regional Director of the FDIC’s New York Regional Office (“FDIC Regional Director”) for his review, comment, and non-objection prior to implementation of any actions still to be performed under the Restitution Plan.
The Restitution Plan shall distinguish between Eligible Consumers to whom reimbursement has already been made (“Previously Reimbursed Eligible Consumers”) and those who are entitled to reimbursement, including consumers who were mailed reimbursement checks that have not been cashed, (“Unreimbursed Eligible Consumers”) and shall: (a) identify all Eligible Consumers; (b) specify the methodology for calculating the amount of restitution for each Eligible Consumer; (c) describe the process for providing restitution to all of the Eligible Consumers for Excess Transaction Fees assessed by the Bank, including the manner in which restitution was or will be paid and the time frames for such payments; (d) describe, for cash restitution made by United States Postal Service first class mail to Previously Reimbursed Eligible Consumers, (i) the Bank’s processes for prior and future attempts to locate those Eligible Consumers whose payments were or may be returned to the Bank as undeliverable, which shall be consistent with the standards set forth in Paragraph 7 of this ORDER; and (ii) the Bank’s processes for prior and future attempts to contact Eligible Consumers whose reimbursement checks remain uncashed thirty (30) days after the reimbursement checks were mailed shall be consistent with the standards set forth in Paragraph 7 of this ORDER; and (e) provide for payment of restitution to all Unreimbursed Eligible Consumers within ninety (90) days of receipt of non-objection to the plan from the FDIC Regional Director as required in Paragraph 3 of this ORDER.
. . .
The Bank shall fully implement the Restitution Plan, including making payments or providing credits to all of the Eligible Consumers, within ninety (90) days of receipt of nonobjection from the FDIC Regional Director. Any required restitution shall be made by credits to the Excella Card Accounts and Non-Excella Card Accounts of Eligible Consumers. If, as of the date that restitution is made, an Eligible Consumer’s Excella Card Account and/or Non-Excella Card Account has been closed, charged off, sold, or otherwise transferred, the amount of restitution to which the Eligible Consumer is entitled shall be made by bank or certified check (“Restitution Check”) mailed to the holder of the Account as provided below. Restitution provided by the Bank under this ORDER shall not limit consumers’ rights in any way.
Source: FDIC.gov
Mar 7, 2018 | Shareholder & Investor Protection
Preliminary Injunction Order Issued Against Patrick K. McDonnell and His Company, CabbageTech, Corp., d/b/a Coin Drop Markets, in Connection with Fraudulent Virtual Currency Scheme
On March 6, 2018, the Commodity Futures Trading Commission (“CFTC”) announced that a federal judge entered a Preliminary Injunction Order against Defendants Patrick K. McDonnell (“McDonnell”) and CabbageTech, Corp. d/b/a Coin Drop Markets (“Coin Drop Markets”). The decision stems from the CFTC’s January 18, 2018 complaint charging Defendants McDonnell and Coin Drop Markets with fraud and misappropriation in connection with purchases and trading of the virtual currencies Bitcoin and Litecoin.
U.S. District Court Judge Finds CFTC Showed Reasonable Likelihood that Defendants McDonnell and Coin Drop Markets Will Continue to Violate the Commodity Exchange Act
Following a hearing on March 6, 2018, the federal judge found that the CFTC had shown a reasonable likelihood that the Defendants will continue to violate the Commodity Exchange Act. The Order of the United States District Court for the Eastern District of New York prohibits the Defendants from engaging in fraud in violation the Commodity Exchange Act, requires the Defendants to preserve books and records, and requires the Defendants to provide expedited discovery.
In its continuing litigation, the CFTC seeks, among other relief, a permanent injunction against future violations of federal commodities laws, restitution to defrauded customers, disgorgement of benefits from violations of the Commodity Exchange Act and CFTC Regulations, civil monetary penalties, and trading bans, as charged.
CFTC Charges McDonnell and His Company, CabbageTech, Corp., d/b/a Coin Drop Markets, with Engaging in Fraudulent Virtual Currency Scheme
On January 19, 2018, the CFTC announced that on January 18, 2018, a federal civil enforcement action was filed by the CFTC in United States District Court for the Eastern District of New York against Defendants McDonnell and Coin Drop Markets, charging them with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.
An Alleged Deceptive, Fraudulent Virtual Currency Scheme
The CFTC’s January 18, 2018 complaint alleges that from approximately January 2017 to the present, McDonnell and Coin Drop Markets engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies to Coin Drop Markets, purportedly in exchange for real-time virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under McDonnell’s direction. In fact, as charged in the CFTC complaint, the supposedly expert, real-time virtual currency advice was never provided, and customers who provided funds to McDonnell and Coin Drop Markets to purchase or trade on their behalf never saw those funds again. In short, McDonnell and Coin Drop Markets used their fraudulent solicitations to obtain and then simply misappropriate customer funds.
The CFTC complaint alleges that to conceal their scheme, soon after obtaining customer funds, Defendants McDonnell and Coin Drop Markets removed the website and social media materials from the Internet and ceased communicating with Coin Drop Markets customers who lost most, if not all, of their invested funds due to the Defendants’ fraud and misappropriation. Further, the CFTC complaint alleges that neither Defendant has ever been registered with the CFTC.
Source: CFTC.gov
