In the referenced link I did a comparison of TPII and CSGI. At the time they were trading at 1.28 and 3.125 respectively. They are now trading at .40 and .75. respectively.
But the comparison doesn't end there. Both companies signed on to do deadly convertible preferreds which put extreme pressure on the stock price, and both companies chose entities that are no strangers to lawsuits, Thomas Kernaghan and Mark Valentine respectively.
In an interesting twist of fate, both parties were involved with funding Champion Financial. Both parties were sued for illegal short selling:
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Legal Proceedings
In March 1998, the Company, as assignee of a shareholder, filed a lawsuit in U.S. District Court in Arizona, alleging that a Canadian brokerage firm, among others, perpetrated a "scheme and conspiracy to defraud" by "manipulating the market in Champion common stock." The suit names Thomas Kernaghan & Co. Ltd.; Ronald G. Williams; Sheldon D. Taiger; London Select Enterprises Ltd.; Select Capital Advisors, Inc.; Mark Valentine; and Bronia GmbH as defendants. The complaint alleges that the defendants manipulated the market in and for Company's common stock and, more particularly artificially depressed the price at which the Company's common stock traded, resulting in damages, including to the business and reputation of the Company. Certain of the defendants have filed motions to stay and/or dismiss the lawsuit.
Additionally, Thomson Kernaghan & Co. LTD and Bronia GmbH have filed an arbitration proceeding against the Company with the American Arbitration Association in New York City, claiming that the Company "wrongfully refused to honor their request to convert" certain debentures into common stock of the Company. The relief sought against the Company is to convert certain debentures into common stock of the Company and for "liquidated and punitive damages."
sec.gov
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So, was Champion able to slay the evil Canadian short sellers? Nope.
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The Company also announced today that it has settled and resolved its disputes and misunderstandings with Thomson Kernaghan & Co., Ltd, Bronia GMBH and Mark Valentine (collectively, ''Thomson''). The Company has also agreed to the dismissal of the lawsuit filed against Thomson in Federal District Court in Arizona, and that Thomson has agreed to the dismissal of the arbitration proceeding commenced against the Company in New York. The Company's President and Chief Executive Officer Stephen J. Carder stated that ''we are extremely pleased that a business resolution has been reached with Thomson, and that the parties may turn their full attention to conducting their respective businesses.''
biz.yahoo.com
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The moral? When a company does a toxic convert: sell. Don't think for a moment the stock won't get (illegally) shorted, nor count on legal redress if it does. OK, maybe it's too late for some here who have stayed the course in TPII. But live and learn. I learned through ALYD not to hold through a Reg S so, believe me, I've been there and done that too.
- Jeff
P.S. Thanks to Tech on the Yahoo CSGI thread for the heads up on this. |
