tryz Wow Im no SEC Attorney but I think Ironridge
Post# of 7769
Posted On: 06/23/2015 6:45:10 PM
tryz Wow Im no SEC Attorney but I think Ironridge had some bad news today and maybe just maybe could be good news for Scripsamerica ans alot of other companies! Go SCRC! Tut
see link http://www.sec.gov/litigation/admin/2015/34-75272.pdf
Ironridge Global Partners, LLC and Ironridge Global IV, Ltd.
.
06/23/2015 02:30 PM EDT
The Securities and Exchange Commission (“Commission”) deems it appropriate
and in the public interest that public administrative and cease-and-desist proceedings be,
and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange
Act of 1934 (“Exchange Act”) against Ironridge Global Partners, LLC (“Ironridge”) and
Ironridge Global IV, Ltd. (“Global IV”) (collectively referred to as “Respondents”).
II.
After an investigation, the Division of Enforcement alleges that:
Summary
1. This matter involves violations of the broker-dealer registration
provisions by Ironridge Global IV, Ltd. (“Global IV”), a British Virgin Islands business
company, and its formerly San Francisco, California-based parent company, Ironridge
Global Partners, LLC (“Ironridge”). Between April 2011 through March 2014, Ironridge
willfully violated Sections 15(a) and 20(b) of the Securities Exchange Act of 1934
(“Exchange Act”), and Global IV willfully violated Section 15(a) of the Exchange Act
through Global IV’s operation as an unregistered dealer by engaging in serial
underwriting activity, providing related investment advice, and receiving and selling 2
billions of shares in connection with self-described financing services for domestic
microcap stock companies (“microcap issuers”) explicitly designed to utilize the
registration exemption contained in Section 3(a)(10) of the Securities Act of 1933
(“Securities Act”). In relevant part, Section 3(a)(10) of the Securities Act exempts from
registration securities issued in court-approved exchanges for “bona fide outstanding
claims.” As part of its business model, Ironridge designed and openly promoted a
“liabilities for equity” or “LIFE” financing program, through which Ironridge arranged to
have Global IV purchase outstanding claims from microcap issuers’ creditors and then
settle those claims through Section 3(a)(10) exchanges. Under the resulting settlements,
Global IV received steeply discounted shares, which Global IV subsequently sold at the
direction of Ironridge’s principals. Between April 2011 and March 26, 2014, at the
direction of Ironridge, Global IV engaged in 33 separate Section 3(a)(10) exchanges with
28 microcap issuers. During this period, Global IV received and sold approximately 5.5
billion shares of the issuers’ common stock, thereby realizing proceeds of approximately
$56 million and net profits of approximately $22 million. Since March 2014, Ironridge
has continued to promote its LIFE program, and Global IV has continued to receive and
sell shares pursuant to Section 3(a)(10) exchanges.
Respondents
2. Ironridge Global Partners, LLC (“Ironridge”) is a Delaware limited
liability company. Prior to July 2014, Ironridge’s principal place of business was in San
Francisco, California. Ironridge has four principals (“Ironridge principals” or “Ironridge’s
principals”), all of whom are natural persons who reside in the United States and are United
States citizens. Until January 2015, Ironridge was the sole shareholder in Ironridge Global
IV, Ltd. Ironridge is not registered with the Commission in any capacity.
3. Ironridge Global IV, Ltd. (“Global IV”) is a British Virgin Islands
business company with its principal place of business in the British Virgin Islands. Global
IV was a wholly owned subsidiary of Ironridge prior to January 2015, and is not registered
with the Commission in any capacity.
4. Prior to November 30, 2012, three of the five directors of Global IV
were Ironridge principals.
5. Although the three Ironridge principals resigned as Global IV
directors in November 2012, under Global IV’s “Amended & Restated Articles of
Association,” Ironridge, as the former sole shareholder of Global IV, had the power to
remove the directors of Global IV with or without cause, and without notice.
6. On behalf of Ironridge, Ironridge’s principals thus exercised control
of Global IV. 3
Ironridge Develops a Finance Model Based on the Registration Exemption
Contained in Section 3(a)(10) of the Securities Act
7. In relevant part, Section 3(a)(10) of the Securities Act provides an
exemption from registration for securities issued in exchange for bona fide outstanding
claims approved by any court or other authorized body after a fairness hearing is
conducted.
8. Since its formation, Ironridge has marketed itself as a source of
innovative financing solutions for microcap issuers.
9. In particular, one of Ironridge’s principals designed a finance model
whereby Global IV would purchase outstanding claims against microcap issuers and then
settle those claims through Section 3(a)(10) exchanges.
10. Ironridge named this finance model the “Liability for Equity (LIFE)
program,”(the “LIFE program”) and touted it as an “innovative financing structure” on its
website and in certain business and finance publications.
Ironridge’s Solicitation of, and Negotiations with Microcap Issuers and Their
Creditors
11. From approximately April 2011 through March 2014 (“the relevant
period”), Ironridge identified and contacted certain microcap issuers as potential candidates
for financing through Section 3(a)(10) exchanges on behalf of Global IV.
12. In some instances, with Ironridge’s authorization, Global IV paid
registered broker-dealers and other persons commissions for related referral services.
13. Ironridge’s principals advised the microcap issuers as to the
structure and purported benefits of the contemplated Section 3(a)(10) exchanges on behalf
of Global IV.
14. Ironridge negotiated the terms of the transaction with the microcap
issuers and drafted the term sheet executed by the microcap issuers on behalf of Global IV.
15. Additionally, certain of Ironridge’s principals advised and assisted
microcap issuers in identifying various creditor claims (e.g., inventory suppliers and law
firm bills) for a possible purchase by Global IV.
16. After identifying creditor claims to be included in a contemplated
Section 3(a)(10) exchange, and with the consent of the microcap issuers, certain of
Ironridge’s principals then negotiated directly with the creditors for the purchase of the
claims by Global IV. 4
17. Global IV purchased the claims of certain creditors of microcap
issuers participating in its LIFE program through a Receivable Purchase Agreement
(“RPA”) executed separately with each such creditor.
18. Pursuant to the terms of the RPA, Global IV typically agreed to pay
each creditor for the entire amount of the debt owed by the microcap issuer, typically on a
payment schedule that calls for several monthly payments in exchange for an immediate
assignment of the rights, title, and interest in the underlying claim.
19. Certain of Ironridge’s principals contacted the issuer’s creditors,
directly negotiated the terms of the associated RPAs on behalf of Global IV with these
creditors , and directed Global IV to execute the RPAs.
Issuance of Unrestricted Stock to Global IV
Through Section 3(a)(10) Exchanges
20. During the relevant period, after Global IV was assigned claims
against a particular microcap issuer, it filed suit (styled as a collection action for breach of
contract) against the microcap issuer in California state court.
21. Through related “fairness hearings,” the court approved the terms of
related settlement agreements through which Global IV would be issued unrestricted stock
in exchange for extinguishing its claims against the microcap stock companies participating
in the LIFE program.
22. The court-approved settlement agreements provided Global IV with
an initial issuance of shares subject to adjustment based on the operation of a price
protection formula.
23. Pursuant to the price protection formulas contained in the settlement
agreements, Global IV was entitled to receive additional shares at a discount if the
microcap issuers’ share prices declined during specified periods following court approval
of the exchanges.
Global IV’s Sale of Shares Issued in Section 3(a)(10) Exchanges
24. During the relevant period, Global IV engaged in 33 separate
Section 3(a)(10) exchanges with 28 microcap issuers. In connection with underlying
claims totaling approximately $35 million, Global IV sold approximately 5.5 billion
shares of the issuers’ stock for total proceeds of approximately $56 million, thereby
realizing a profit of approximately $22 million.
25. As a result of Global IV’s Section 3(a)(10) transactions during the
relevant period, the public float of shares for many of the issuers increased significantly.
For 14 of the issuers, the Section 3(a)(10) transactions increased the shares outstanding5
by 25% or more. For nine of these issuers, the transactions increased the shares
outstanding by at least 50%.
26. On average, Global IV began selling the initial shares that it
received from the 33 Section 3(a)(10) exchanges at issue within four trading days of the
shares being cleared for trading.
27. Global IV continued to sell the microcap issuers’ shares through the
applicable Calculation Period.
28. Global IV’s sales frequently represented a significant percentage of
the total daily trading volume for the issuer’s shares.
29. In six of the 33 Section 3(a)(10) transactions at issue, Global IV’s
sale of shares on certain days represented 100% of the total daily trading volume for that
security.
30. For 15 of the 33 Section 3(a)(10) transactions at issue, Global IV’s
sales represented 90% or more of the total daily trading volume for that security on certain
days.
Mechanics of Global IV’s Stock Sales
31. Global IV deposited the stock issued through the Section 3(a)(10)
exchanges in various domestic and foreign brokerage accounts held by Global IV.
32. Certain of Ironridge’s principals had trading authority over Global
IV’s brokerage accounts and thus controlled or directed the deposit of stock into those
accounts.
33. Thereafter, Global IV sold stock obtained through Section 3(a)(10)
exchanges in the open market.
34. Certain of Ironridge’s principals had trading authority over Global
IV’s brokerage accounts and thus controlled or directed Global IV’s sale of shares from
those accounts.
35. Global IV’s sale of the shares that it received from the microcap
issuers through Section 3(a)(10) exchanges typically drove down the share price and
increased the number of shares that Global IV received under the applicable price
protection formulas.
36. At times, Ironridge directed microcap issuers participating in the
LIFE program to issue additional shares to Global IV pursuant to the price protection
formulas contained in their respective settleme
see link http://www.sec.gov/litigation/admin/2015/34-75272.pdf
Ironridge Global Partners, LLC and Ironridge Global IV, Ltd.
.
06/23/2015 02:30 PM EDT
The Securities and Exchange Commission (“Commission”) deems it appropriate
and in the public interest that public administrative and cease-and-desist proceedings be,
and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange
Act of 1934 (“Exchange Act”) against Ironridge Global Partners, LLC (“Ironridge”) and
Ironridge Global IV, Ltd. (“Global IV”) (collectively referred to as “Respondents”).
II.
After an investigation, the Division of Enforcement alleges that:
Summary
1. This matter involves violations of the broker-dealer registration
provisions by Ironridge Global IV, Ltd. (“Global IV”), a British Virgin Islands business
company, and its formerly San Francisco, California-based parent company, Ironridge
Global Partners, LLC (“Ironridge”). Between April 2011 through March 2014, Ironridge
willfully violated Sections 15(a) and 20(b) of the Securities Exchange Act of 1934
(“Exchange Act”), and Global IV willfully violated Section 15(a) of the Exchange Act
through Global IV’s operation as an unregistered dealer by engaging in serial
underwriting activity, providing related investment advice, and receiving and selling 2
billions of shares in connection with self-described financing services for domestic
microcap stock companies (“microcap issuers”) explicitly designed to utilize the
registration exemption contained in Section 3(a)(10) of the Securities Act of 1933
(“Securities Act”). In relevant part, Section 3(a)(10) of the Securities Act exempts from
registration securities issued in court-approved exchanges for “bona fide outstanding
claims.” As part of its business model, Ironridge designed and openly promoted a
“liabilities for equity” or “LIFE” financing program, through which Ironridge arranged to
have Global IV purchase outstanding claims from microcap issuers’ creditors and then
settle those claims through Section 3(a)(10) exchanges. Under the resulting settlements,
Global IV received steeply discounted shares, which Global IV subsequently sold at the
direction of Ironridge’s principals. Between April 2011 and March 26, 2014, at the
direction of Ironridge, Global IV engaged in 33 separate Section 3(a)(10) exchanges with
28 microcap issuers. During this period, Global IV received and sold approximately 5.5
billion shares of the issuers’ common stock, thereby realizing proceeds of approximately
$56 million and net profits of approximately $22 million. Since March 2014, Ironridge
has continued to promote its LIFE program, and Global IV has continued to receive and
sell shares pursuant to Section 3(a)(10) exchanges.
Respondents
2. Ironridge Global Partners, LLC (“Ironridge”) is a Delaware limited
liability company. Prior to July 2014, Ironridge’s principal place of business was in San
Francisco, California. Ironridge has four principals (“Ironridge principals” or “Ironridge’s
principals”), all of whom are natural persons who reside in the United States and are United
States citizens. Until January 2015, Ironridge was the sole shareholder in Ironridge Global
IV, Ltd. Ironridge is not registered with the Commission in any capacity.
3. Ironridge Global IV, Ltd. (“Global IV”) is a British Virgin Islands
business company with its principal place of business in the British Virgin Islands. Global
IV was a wholly owned subsidiary of Ironridge prior to January 2015, and is not registered
with the Commission in any capacity.
4. Prior to November 30, 2012, three of the five directors of Global IV
were Ironridge principals.
5. Although the three Ironridge principals resigned as Global IV
directors in November 2012, under Global IV’s “Amended & Restated Articles of
Association,” Ironridge, as the former sole shareholder of Global IV, had the power to
remove the directors of Global IV with or without cause, and without notice.
6. On behalf of Ironridge, Ironridge’s principals thus exercised control
of Global IV. 3
Ironridge Develops a Finance Model Based on the Registration Exemption
Contained in Section 3(a)(10) of the Securities Act
7. In relevant part, Section 3(a)(10) of the Securities Act provides an
exemption from registration for securities issued in exchange for bona fide outstanding
claims approved by any court or other authorized body after a fairness hearing is
conducted.
8. Since its formation, Ironridge has marketed itself as a source of
innovative financing solutions for microcap issuers.
9. In particular, one of Ironridge’s principals designed a finance model
whereby Global IV would purchase outstanding claims against microcap issuers and then
settle those claims through Section 3(a)(10) exchanges.
10. Ironridge named this finance model the “Liability for Equity (LIFE)
program,”(the “LIFE program”) and touted it as an “innovative financing structure” on its
website and in certain business and finance publications.
Ironridge’s Solicitation of, and Negotiations with Microcap Issuers and Their
Creditors
11. From approximately April 2011 through March 2014 (“the relevant
period”), Ironridge identified and contacted certain microcap issuers as potential candidates
for financing through Section 3(a)(10) exchanges on behalf of Global IV.
12. In some instances, with Ironridge’s authorization, Global IV paid
registered broker-dealers and other persons commissions for related referral services.
13. Ironridge’s principals advised the microcap issuers as to the
structure and purported benefits of the contemplated Section 3(a)(10) exchanges on behalf
of Global IV.
14. Ironridge negotiated the terms of the transaction with the microcap
issuers and drafted the term sheet executed by the microcap issuers on behalf of Global IV.
15. Additionally, certain of Ironridge’s principals advised and assisted
microcap issuers in identifying various creditor claims (e.g., inventory suppliers and law
firm bills) for a possible purchase by Global IV.
16. After identifying creditor claims to be included in a contemplated
Section 3(a)(10) exchange, and with the consent of the microcap issuers, certain of
Ironridge’s principals then negotiated directly with the creditors for the purchase of the
claims by Global IV. 4
17. Global IV purchased the claims of certain creditors of microcap
issuers participating in its LIFE program through a Receivable Purchase Agreement
(“RPA”) executed separately with each such creditor.
18. Pursuant to the terms of the RPA, Global IV typically agreed to pay
each creditor for the entire amount of the debt owed by the microcap issuer, typically on a
payment schedule that calls for several monthly payments in exchange for an immediate
assignment of the rights, title, and interest in the underlying claim.
19. Certain of Ironridge’s principals contacted the issuer’s creditors,
directly negotiated the terms of the associated RPAs on behalf of Global IV with these
creditors , and directed Global IV to execute the RPAs.
Issuance of Unrestricted Stock to Global IV
Through Section 3(a)(10) Exchanges
20. During the relevant period, after Global IV was assigned claims
against a particular microcap issuer, it filed suit (styled as a collection action for breach of
contract) against the microcap issuer in California state court.
21. Through related “fairness hearings,” the court approved the terms of
related settlement agreements through which Global IV would be issued unrestricted stock
in exchange for extinguishing its claims against the microcap stock companies participating
in the LIFE program.
22. The court-approved settlement agreements provided Global IV with
an initial issuance of shares subject to adjustment based on the operation of a price
protection formula.
23. Pursuant to the price protection formulas contained in the settlement
agreements, Global IV was entitled to receive additional shares at a discount if the
microcap issuers’ share prices declined during specified periods following court approval
of the exchanges.
Global IV’s Sale of Shares Issued in Section 3(a)(10) Exchanges
24. During the relevant period, Global IV engaged in 33 separate
Section 3(a)(10) exchanges with 28 microcap issuers. In connection with underlying
claims totaling approximately $35 million, Global IV sold approximately 5.5 billion
shares of the issuers’ stock for total proceeds of approximately $56 million, thereby
realizing a profit of approximately $22 million.
25. As a result of Global IV’s Section 3(a)(10) transactions during the
relevant period, the public float of shares for many of the issuers increased significantly.
For 14 of the issuers, the Section 3(a)(10) transactions increased the shares outstanding5
by 25% or more. For nine of these issuers, the transactions increased the shares
outstanding by at least 50%.
26. On average, Global IV began selling the initial shares that it
received from the 33 Section 3(a)(10) exchanges at issue within four trading days of the
shares being cleared for trading.
27. Global IV continued to sell the microcap issuers’ shares through the
applicable Calculation Period.
28. Global IV’s sales frequently represented a significant percentage of
the total daily trading volume for the issuer’s shares.
29. In six of the 33 Section 3(a)(10) transactions at issue, Global IV’s
sale of shares on certain days represented 100% of the total daily trading volume for that
security.
30. For 15 of the 33 Section 3(a)(10) transactions at issue, Global IV’s
sales represented 90% or more of the total daily trading volume for that security on certain
days.
Mechanics of Global IV’s Stock Sales
31. Global IV deposited the stock issued through the Section 3(a)(10)
exchanges in various domestic and foreign brokerage accounts held by Global IV.
32. Certain of Ironridge’s principals had trading authority over Global
IV’s brokerage accounts and thus controlled or directed the deposit of stock into those
accounts.
33. Thereafter, Global IV sold stock obtained through Section 3(a)(10)
exchanges in the open market.
34. Certain of Ironridge’s principals had trading authority over Global
IV’s brokerage accounts and thus controlled or directed Global IV’s sale of shares from
those accounts.
35. Global IV’s sale of the shares that it received from the microcap
issuers through Section 3(a)(10) exchanges typically drove down the share price and
increased the number of shares that Global IV received under the applicable price
protection formulas.
36. At times, Ironridge directed microcap issuers participating in the
LIFE program to issue additional shares to Global IV pursuant to the price protection
formulas contained in their respective settleme
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