Lonnie,
In one of your recent posts you stated:
“The only way that I would have any confidence in Firamada is if Arif returned the ILLEGALLY issued shares, and resign from the company never having anything else to do with it. THAT GOES FOR HIS DAUGHTER ALSO.”
As I read your comments, I would like to provide another view. I hear a lot of chatter about the legality of the actions of the CEO of Firamada. I fail to see how the shareholders have any case against either the CEO or the board of directors of the corporation. One could argue that what has occurred was unethical, but not illegal.
Here is how I see it:
The company's stock was trading about .10 per share in the January - February time frame.
The company had tremendous growth during the first have of the year, mostly through acquisitions, and the stock price went from about .10 to about .70 per share, which is about a 700% gain.
The board of directors met at their annual meeting. One of the responsibilities of the board of directors is to determine the compensation and bonus levels for the CEO. With a 700% gain in the price of the stock, a large stock bonus is in order and a proper reward for the CEO. As a matter of fact, it is the preferred compensation for the CEO, as it ties the future value of his bonus to the price of the stock. Since Arif already had over 50% of the stock, there was a majority of shareholders that voted in favor of the compensation plan, and the board of directors approved the award (you may claim that a board of directors comprised of only Arif and his daughter is an unfair make up for the board of directors, but I would be willing to bet that they were voted in by a majority of shareholders, and that they were legally appointed to the board of directors. I would also assume that Arif was not on the compensation committee, for if he was, that would be a conflict of interest). For the minority shareholders, you can claim foul, but from my prospective there was nothing illegal done here. Therefore, if I was Arif, I would see no reason why I would want to give back any shares, as this was his compensation for doing a good job.
The problem is that as long as Arif has over 50% of the stock, he controls the board of directors. There is nothing that the minority shareholders can do, except to complain at the next board of directors meeting and get there complaints recorded in the minutes, for what that is worth.
As I see it, Arif and his daughter has the power to continue to run the corporation, they have no reason to resign, they have broken no laws, and they have the support of a majority of shareholders (For them, it actually can't get much better than that).
Many on this thread has claimed that the company has lied in there news releases. This may or may not be the case. You will need to go back to see if there was a safe harbor statement added to the end of the news releases. If so, and I remember a number of them that had such a statement, then the company is legally covered. In addition, the company can claim that at the time the statements were made, they were not audited numbers, and subject to change. They could also say that Ira was too optimistic in his statements, and was speaking personally and not as a representative of the company, about the financial strength of the company, and that is the reason that they had to let him go. Again, I think that the company is covered here as well.
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