Updated 09:07 PM EDT, Oct-8-2001
Sedona’s PIPE financings face more questions
by Stacy Mosher
Posted 06:35 PM EDT, Oct-8-2001
Customer relationship management software company Sedona Corp.'s last week suspended payment on its convertible debentures pending its request for an investigation into the trading of its stock. This move has raised questions about the company's PIPEs — for private investment in public entities — financing.
Sedona, which asked the U.S. Securities and Exchange Commission and National Association of Securities Dealers for an investigation, is now in talks with the two agencies. The King of Prussia, Pa.-based company received its PIPE financings from trust companies of a Liechtenstein law firm, Dr. Dr. Batliner & Partner, and of Amro International SA, an offshore investment fund managed by New York's Rhino Advisors.
Further investigations by The Daily Deal reveal that a big trader in Sedona stock was Westminster Securities Corp., a brokerage that has participated as an investor with Amro in several transactions. In particular, New York-based Westiminster racked up the highest volume of trades in Sedona stock in the second quarter of 2001, with 22% of the total volume traded during that period.
In comparison, Knight Securities, also of New York, was responsible for only 16% of Sedona's trades during that time, even though it is a market maker for Sedona while Westminster is not.
Westminster and its president, John P. O'Shea, have participated as investors in at least 14 companies alongside Amro International. Seven of these companies are among the 60 identified in a report submitted to U.S. congressional committees and regulatory authorities on PIPEs funding of 60 companies via trust companies of Dr. Dr. Batliner & Partners and Amro international. A copy of the report has been obtained by The Daily Deal.
Further inquiries by this newspaper using monthly share volume reports for the past year provided by Nasdaq and the OTC Bulletin Board show that Westminster has traded heavily in at least 18 of the 60 companies examined in the report.
Westminster has repeatedly declined to comment.
The clearinghouse used for three of Sedona's PIPE transactions was Pershing Corp. In August 2000 and at the end of 2000 Sedona signed on through Rhino Advisors for two equity lines with Cambois and Roseworth Group Ltd. — both Batliner trust companies — and a convertible debenture with Amro International. The account number used for all three agreements is identical.
Pershing, a unit of Credit Suisse First Boston, has been involved with another of the 60 companies in the market professional's report. Viragen Inc., a Plantation, Fla., biotechnology company, filed a lawsuit against Pershing last August, claiming that Pershing, as a broker of Viragen stock, wrongly told customers that Viragen had proposed a reverse stock split.
This allegedly caused the share price to plummet. Viragen withdrew the lawsuit against Pershing in July; Pershing in turn agreed to respond to requests for documents in any further legal or regulatory action. Viragen has since filed complaints with the SEC against third parties on allegations of stock manipulation.
The Daily Deal reported Friday that 60 companies had been identified as recipients of PIPE financings from trust companies of Dr. Dr. Batliner & Partner, an offshore law firms suspected of money laundering, and Amro International. Separately, Liechtenstein authorities submitted to a Federal court in Florida a request regarding Herbert Batliner, who is under investigation in Germany and Liechtenstein on allegations of money laundering and tax evasion.
Pershing's London branch, Pershing Securities Ltd., is named as being used for alleged laundering of narcotics funds in a second request for judicial assistance from the Liechtenstein authorities. This second request involves the alleged laundering of funds by another Liechtenstein lawyer, Eugen von Hoffen, on behalf of suspected Colombian drug money launderer Juan Carlos Saavedra.
Mark Rubino, an assistant U.S. Attorney for the Southern District of Florida who is handling the Liechtenstein request relating to Batliner, said he saw no connection between the Batliner and Von Hoffen investigations.
A press officer for Pershing, Barbara Gallo, said the company took such allegations very seriously. "If contacted by regulators it's our policy to cooperate to the fullest extent, and if appropriate we will conduct our own investigation," Gallo said. |
