On September 28, 2011, Imperial Holdings’ Board of Directors formed a special committee to conduct an independent investigation in connection with the U.S. Attorney’s Office for the District of New Hampshire.). The special committee is comprised of all of the Company’s independent directors. The special committee has retained the law firm of Dewey & LeBoeuf LLP to assist it in carrying out its investigation.
Lawsuit Filed Against Imperial Finance Parent and Underwriters Regarding IPO
October 6, 2011 By
A lawsuit was reportedly filed against Imperial Holdings (NYSE: IFT), parent company of Imperial Finance & Trading, in Florida state court. The Company reported in a Form 8-K filing on October 4, 201 that:
“Although the Company has not yet been served with any complaint, the Company has learned that on September 29, 2011, a putative securities class action complaint was filed in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida entitled Martin J. Fuller v. Imperial Holdings, Inc., et al., against the Company, its Chairman and Chief Executive Officer, President and Chief Operating Officer, its Chief Financial Officer and Chief Credit Officer, its Director of Finance and Accounting, the members of its Board of Directors who signed the Company’s registration statement, and the underwriters of the Company’s initial public offering alleging certain violations of the Securities Act of 1933, as amended.”
This securities act case ( No. 2011CA015075) is currently pending before Judge David French and names the Company, individuals and underwriters. See the docket sheet here.
Imperial Holdings, Inc. (NYSE:IFT) Shares Crash After Disclosure of Federal Investigation
September 28, 2011 By
Shares of Imperial Holdings, Inc. (NYSE:IFT) crashed today to close at $2.19 per share, down 65%. Yesterday, the company’s Boca Raton offices subsidiary Imperial Finance were raided by federal authorities. Also, it is being reported that two of the company’s underwriters from its IPO earlier this years suspended or downgraded their ratings.
Imperial Finance Issues a Statement Denying Knowledge of Wrongdoing
September 28, 2011 By
Imperial Holdings, Inc. (NYSE: IFT), the publicly-traded parent of Imperial Finance & Trading, issued a press release after the stock market closed announcing that the Company understood that the Company, its chairman and CEO, and its president and COO were “under investigation in the District of New Hampshire with respect to its life finance business.” The Company stated that it was “not aware of any wrongdoing” and noted that it retained attorneys at an outside law to help the company in responding to the investigation. The Company is headquartered in the Boca Raton, Florida.
Florida Offices of Imperial Finance & Trading Raided by Feds – Trading of NYSE:IFT Shares Halted
September 28, 2011 By
According to news reports, trading of Imperial Holdings, Inc. (NYSE:IFT) shares on the New York Stock Exchange were halted today after federal authorities raided the company’s subsidiary Imperial Finance & Trading at its Boca Raton, Florida offices.
Imperial Holdings, Inc. is a Florida corporation, and states that it is “a specialty finance company with a focus on providing premium financing for individual life insurance policies and purchasing life settlements and structured settlements.” According to its filings with the Securities & Exchange Commission, the “Company manages these operations through two business segments: life finance (formerly referred to as premium finance) and structured settlements. In the life finance business, the Company earns revenue/income from interest charged on loans, loan origination fees, agency fees from referring agents and unrealized changes in the fair value of life settlements the Company acquires. In the structured settlement business, the Company purchases structured settlements at a discounted rate and sells such assets to third parties”
On February 11, 2011, the Company completed the sale of 16,666,667 shares of common stock at an initial public offering price of $10.75 per share. On February 15, 2011, the Company sold an additional 935,947 shares of common stock in connection with the over-allotment option the Company granted to its underwriters in the Company’s initial public offering.
Shares of IFT securities are down substantially since its IPO. Shares of IFT last traded at $6.30 on September 27, 2011, before trading was halted.
SEC Sues Alleging Ponzi Scheme
September 15, 2011 By
Attorneys at the Securities and Exchange Commission have filed litigation against two Florida men alleging that they defrauded teachers and retirees in a $22 million Ponzi scheme by posing as a private equity fund. Read more about it here.
Senate Permanent Subcommittee on Investigations Meets With Governement Securities Attorney re Document Destruction
September 6, 2011 By
Dow Jones is reporting that the Senate Permanent Subcommittee on Investigations has met with a securities lawyer at the SEC who claims that the agency had destroyed “roughly 9,000 files since 1993 containing documents on inquiries into potential securities-law violations.” Allegedly the documents were destroyed routinely as a matter of the agency’s policy and violated federal rules.
Florida Securites Fraud Class Action Dismissed Against The St. Joe Company
September 5, 2011 By
Northern District of Florida Judge Richard Smoak dismissed a securities fraud class action complaint filed by class action attorneys representing shareholders of The St. Joe Company. The complaint concerned alleged misrepresentations of the value of properties the company owned in the Florida panhandle.
St. Joe is now one of the largest real estate development companies in Florida. The company operates its business in four segments: (1) residential real estate; (2) commercial real estate; (3) rural land sales; and (4) forestry. St. Joe allegedly failed to timely take an impairment charge which caused it to overstate the value of its assets when the real estate market crashed in recent years.
In dismissing the complaint, the court stated:
Plaintiff’s claims of misrepresentation are insufficient to meet the standard of pleading fraud with particularity because they fail to allege that Defendants acted with the requisite scienter and made statements that they knew were materially false at the time. Additionally, Plaintiff has failed to establish loss causation.
See the Order on Motion to Dismiss Class Action Securities Fraud Complaint.
Meyer v. The St. Joe Company, 11-cv-27 (N.D. Fla.) (Smoak, J.).
WHAT IS FINRA ARBITRATION?
September 4, 2011 By
Arbitration is a contractual process to resolve disputes between parties in a private forum. Typically, brokerage firms and customers will enter into a contractual agreement before the customer opens their brokerage account. Most agreements include a provision which compels the parties to resolve certain disputes through arbitration rather than a judicial proceeding such as a lawsuit in a state or federal court.
The arbitration process is not public and imposes significant restrictions on a parties’ ability to conduct discovery, such as document requests and depositions. Parties also lose the benefit of procedural and due process mechanisms such as appellate review.
In arbitration, a person or group of person is appointed to serve as the arbitration panel. The arbitrators hear the arguments and review the evidence of all sides and then decides how the matter should be resolved. Arbitrators are not required to be attorneys. Finally, arbitration awards issued by arbitration panels are subject to review by a court only on a very limited basis.
