Feb 25, 2018 | Shareholder & Investor Protection
Be Aware Of and Avoid Pump-and-Dump Schemes That Can Occur in Thinly-Traded or New Virtual Currencies, Digital Coins or Tokens
Do Not Purchase Virtual Currencies, Digital Coins or Tokens Based on Social Media Tips or Sudden Price Spikes – Thoroughly Research Virtual Currencies, Digital Coins, Tokens, and their Related Companies or Entities
On February 15, 2018, the Commodities Futures Trading Commission announced the issuance of its first Customer Protection Advisory warning customers to beware of, and avoid, pump-and-dump schemes than can occur in thinly traded or new “alternative” virtual currencies, digital coins or tokens.
According to the CFTC’s announcement and Customer Protection Advisory, pump-and-dump schemes are mostly anonymous and are organized in public chat rooms or via mobile messaging apps. The pump-and-dump schemes are coordinated efforts to create phony demand (the “pump”) before quickly selling (the “dump”) to profit by taking advantage of traders who are unaware of the scheme. This type of market manipulation occurs in the largely unregulated cash market for virtual currencies and digital tokens, and, typically, on platforms that offer a wide array of coin pairings for traders to buy and sell.
While pump-and-dump scams are not new, the number of new virtual currency and digital coin traders has grown substantially, increasing the number of potential victims or unwitting perpetrators.
Customers should avoid purchasing virtual currency or tokens based on tips shared over social media. The organizers of the scheme will commonly spread rumors and urge immediate buying. Victims will commonly react to the currency’s or token’s rising prices, and not verify the rumors. The dump then begins, the price falls, and victims are left with currency or tokens that are worth much less than what they expected in a scam which can be over in a few minutes.
“As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets,” said CFTC Director of Public Affairs Erica Elliott Richardson. “Pump-and-dump schemes long pre-date the invention of virtual currencies, and typically conjure the image of penny stock boiler rooms, but customers should know that these frauds have evolved and are prevalent online. Even experienced investors can become targets of professional fraudsters who are experts at deploying seemingly credible information in an attempt to deceive. The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don’t fully understand.”
The best protection for customers, according to the CFTC, is to only purchase alternative virtual currencies, digital coins, or tokens that have been thoroughly researched. Further, it is important to remember:
Not to purchase digital coins or tokens because of a single tip, especially if it comes over social media.
Not to believe ads or websites that promise quick wealth by investing in certain digital coins or tokens.
Not to participate in pump-and-dump trades; market manipulation is against the law and many participants end up losing money.
NOTE: There is no such thing as a guaranteed investment or trading strategy. If someone tells you there is no risk of losing money, do not invest.
Source: CFTC.gov
Feb 24, 2018 | Consumer Protection, Employment & Technology Archive
Fortegra Financial Corporation Allegedly Engaged Ensurety Ventures, LLC, doing business as Omega Auto Care, To Establish an Automated Calling Operation to Place Unsolicited Telemarketing Calls to the Cellular Phones of Thousands of Consumers Across the U.S.
On February 20, 2018, a class action complaint was filed in United States District Court, Middle District of Florida, Jacksonville Division, against Fortegra Financial Corporation and Ensurety Ventures, LLC, d/b/a Omega Auto Care, for statutory damages and other relief, as a result of allegedly contacting the Plaintiff and other class members on their cellular phones without prior express consent through the use of an automatic telephone dialing system and/or via an artificial or prerecorded voice in violation of the Telephone Consumer Protection Act (“TCPA”).
Fortegra Financial, according to the complaint, is a subsidiary of Tiptree Financial, Inc. that provides automotive warranty underwriting services across the United States. Ensurety Ventures, d/b/a Omega Auto Care, is an automotive warranty administrator which sells and services automotive warranty policies and “partners” with Fortegra Financial regarding such warranty policies.
The complaint alleges that in an effort to increase sales of automotive warranty products, Fortegra and Omega partnered to establish an automated calling operation operated by third parties to solicit potential customers through the daily use of an automated telephone dialing system to make unsolicited phone calls to the cell phones of thousands of potential customers.
The TCPA class action complaint states that in May 2017, the Plaintiff received an automated robocall to his cellular telephone from telephone number (614) 335-4282. It is believed the call to the Plaintiff’s cell phone was made using predictive or automated dialing technology, as evidenced by the substantial pause at the beginning of the call and multiple times the Plaintiff said “Hello?,” before a real person came on the line and identified himself as having made the call on behalf of Omega Auto Care. The Plaintiff, allegedly, remained on the phone with the Omega representative for 16 minutes and obtained a quote for an extended auto warranty.
Among other relief, the class action seeks $500 in statutory damages for each violation of the TCPA and treble, or triple, damages of $1500 for each willful or knowing TCPA violation.
Have You Received Unsolicited, Unwanted or Harassing Autodial, Automated or Prerecorded “Robocalls” or Text Messages to Your Cellular Telephone from Telemarketers, Banks or Credit Card, Mortgage, Student Loan or Other Companies on Your Cell Phone 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].
Feb 23, 2018 | Securities Class Action Archive
Seven Stars Cloud Group Cuts Guidance and Dismisses Its Independent Registered Public Accounting Firm
Kehoe Law Firm, P.C. announces that it is investigating whether Seven Stars Cloud Group, Inc. and certain of its officers or directors violated federal securities laws.
On February 22, 2018, post-market, Seven Stars Cloud Group announced that on February 16, 2018, the Audit Committee of the Board of Directors of Seven Stars Cloud Group, Inc., formerly known as Wecast Network, Inc., approved the dismissal of China-member firm of Grant Thornton International, Grant Thornton (“GT”), as Seven Stars Cloud Group’s (NASDAQ: SSC) independent registered public accounting firm.
According to SSC’s announcement:
[SSC’s] Audit Committee engaged GT in April 2017 as its independent registered public accounting firm. [SSC’s] prior independent registered public accounting firm that issued audit reports on [SSC’s] financial statements as of and for the fiscal years ended 2016 and 2015 did not include an adverse opinion or a disclaimer of opinion in those reports, and those reports were not qualified or modified as to uncertainty, audit scope, or accounting principles.
Since the commencement of GT’s engagement in April 2017 through February 16, 2018, there were no: (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with GT on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events requiring disclosures (as described in Item 304(a)(1)(v) of Regulation S-K), except that GT advised [SSC] of a material weakness in [SSC’s] internal control of financial reporting related to the design, documentation and implementation of effective internal controls over the review of the cash flow forecasts used in assessing the recoverability of licensed content. [Sevn Stars Cloud Group] has authorized GT to respond fully to inquiries of the successor accountant. (Emphasis added)
A letter from SSC’s former certifying accountant, GT, can be viewed by clicking GT letter.
Seven Stars Cloud Group announced on February 23, 2018 that “SSC now foresees full-year 2017 revenue to be in the range of $125 million – $144 million upon the anticipated timely completion of its 2017 audit by BF Borgers CPA PC . . ..” SSC stated that this revenue range “was short of the Company’s earlier and recent guidance,” as well as that “[u]nanticipated personnel issues that led to internal communication and internal administrative oversights that materialized during the Company’s 2017 fiscal year, resulted in what is anticipated to be 2017 revenue that is below prior and recent guidance expectations.” (Emphasis added)
On this news, shares of SSC were down more than 40% during intraday trading on February 23, 2018.
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Seven Stars Cloud Group, Inc. Shareholders and Investors
If you purchased, or otherwise acquired, SSC stock shares and have questions or concerns about the securities investigation or your potential legal rights, please contact John A. Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Feb 23, 2018 | Shareholder & Investor Protection
SEC Issues Trading Suspension Orders Against Cherubim Interests Inc., PDX Partners Inc., and Victura Construction Group Inc.
On February 16, 2018, the Securities and Exchange Commission announced that it suspended trading in Cherubim Interests Inc. (CHIT), PDX Partners Inc. (PDXP), and Victura Construction Group Inc. (VICT) over questions surrounding similar statements they made about the acquisition of cryptocurrency and blockchain technology-related assets.
The SEC’s trading suspension orders state that recent press releases issued by CHIT, PDXP, and VICT claimed that the three companies acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology among other things. According to the SEC order regarding CHIT, it also announced the execution of a financing commitment to launch an initial coin offering.
The SEC’s trading suspension orders (Trading Suspension Order – CHIT; Trading Suspension Order – PDXP; Trading Suspension Order – VICT) state that there are questions regarding the nature of the business operations of CHIT, PDXP, and VICT and the value of their assets, including in press releases issued beginning in early January 2018. The SEC also suspended trading in the securities of CHIT because of its delinquency in filing annual and quarterly reports.
CHIT is a Nevada corporation with its principal place of business listed as Bedford, Texas with a class of securities registered with the SEC pursuant to Section 12(g) of the Securities Exchange Act of 1934. The stock of CHIT is quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. under the ticker symbol CHIT.
PDXP is a Wyoming corporation with its principal place of business listed as Portland, Oregon, with stock quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. under the ticker symbol PDXP.
VICT is a Wyoming corporation with its principal place of business listed as Bedford, Texas, with stock quoted on OTC Link (previously “Pink Sheets”) operated by OTC Markets Group, Inc. under the ticker symbol VICT.
Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.
Source: SEC.gov
Feb 23, 2018 | Securities Class Action Archive
Individuals Who Purchased, or Otherwise Acquired, Obalon Securities Pursuant and/or Traceable to Obalon’s Registration Statement and Prospectus, Issued in Connection with Obalon’s Initial Public Offering On or About October 5, 2016, and/or On the Open Market Between October 5, 2016 and January 23, 2018, Both Dates Inclusive
Kehoe Law Firm, P.C. continues its investigation of Obalon Therapeutics and advises investors of Obalon Therapeutics (NASDAQ: OBLN) that on February 22, 2018, a class action lawsuit was filed against Obalon Therapeutics, Inc. and certain executives on behalf of a class consisting of all persons, other than the Obalon defendants, who purchased, or otherwise acquired, Obalon securities pursuant and/or traceable to Obalon’s alleged false and misleading Registration Statement and Prospectus issued in connection with the Obalon’s initial public offering on or about October 5, 2016 and/or on the open market between October 5, 2016 and January 23, 2018, both dates inclusive (the “Class Period”).
The class action lawsuit, filed in United States District Court, Southern District of California, seeks to recover damages caused by the Obalon defendants’ alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.
According to the class action complaint, throughout the Class Period, the Obalon defendants made materially false and misleading statements regarding Obalon’s business, operational, and compliance policies. Specifically, the Obalon defendants made false and/or misleading statements and/or failed to disclose that Obalon recognized revenue in violation of Generally Accepted Accounting principles (“GAAP”); Obalon lacked adequate internal controls over accounting and financial reporting; and, consequently, Obalon’s public statements were materially false and misleading at all relevant times.
On January 23, 2018, Obalon Therapeutics, Inc., “a San Diego-based company focused on developing and commercializing novel technologies for weight loss,” issued a press release
. . . announc[ing] the termination of the underwriting agreement and cancellation of its previously announced public offering . . . of 5,454,545 shares of its common stock at a public offering price of $5.50 per share.
UBS Investment Bank, Canaccord Genuity and Stifel were acting as joint book-running managers for the offering. BTIG was acting as a co-manager. The offering was being made pursuant to a shelf registration statement . . . previously filed with and declared effective by the U.S. Securities and Exchange Commission.
[Obalon’s] [o]ffering was scheduled to close on January 23, 2018. However, a purported whistleblower contacted KPMG LLP, [Obalon’s] independent auditors, to make certain allegations relating to allegedly improper revenue recognition during [Obalon Therapeutics’] fourth fiscal quarter of 2017 (“Q4 2017”).
These allegations were reported to Obalon late in the day on January 22, 2018, making it infeasible for the [Obalon] to complete an investigation of the allegations prior to the intended closing of the public offering.
Obalon’s Audit Committee will oversee an internal investigation of these allegations . . .. [Obalon Therapeutics] is currently unable to predict the timing or outcome of the [i]nvestigation. Based on information known at this time, [Obalon’s] management does not currently believe material adjustments to the preliminary, unaudited revenue for Q4 2017 and full year 2017 previously reported by [Obalon] will be required as a result of these allegations. [Obalon Therapeutics] intends to make a further announcement regarding the outcome of the Investigation as soon as practicable.
[Emphasis added]
On this news, Obalon’s share price fell $1.73, or 33.33%, to close at $3.46 on January 23, 2018, on unusually heavy volume, representing a total decline of $11.54, or nearly 77%, from the IPO price of $15.00 per share.
Obalon Therapeutics, Inc.
Obalon Therapeutics, Inc. describes itself as
. . . an engineering-driven medical technology company with a singular focus on innovative, high-quality gastric balloon technology. Located in San Diego, California, the technical team at Obalon has a long history of working closely with leading clinicians to develop innovative medical products that revolutionize treatment of chronic disease. As a company, [Obalon] believe[s] in the fundamental value of imagination and invention, combined with rigorous testing and analysis, to ensure the highest levels of safety and performance. The result is a user-focused approach that deploys the power of advanced technological thinking to support clinical treatment objectives.
Obalon Therapeutics Investors and Stock Holders
If you own, or otherwise acquired, Obalon securities and have questions or concerns about the class action investigation, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
