2014-08-18 07:16:44 - In an article published by an analyst at Seeking Alpha, investors are learning most small cap companies succumb to toxic financing as a way to stay alive, which can include below-market pricing, warrants and adverse 'ratcheting' provisions.
Michael Morhamus, who made a name for himself by exposing heavy stock pumping and possible fraud by various publicly traded companies after becoming a regular contributor at the popular investment news portal, this time dives in the institutional investing group known as Ironridge Global IV, Ltd.
That Wall Street fund has entered into more than 50 equity financing transactions in the last three years, but most of those deals may have come at the expense of the small retail investors who were left “holding the bag,” despite best efforts by management teams of to keep their emerging small-cap companies funded and alive.
Morhamus focuses on numerous historic deals listed between Ironridge and various healthcare companies like Genetic Technologies (NASDAQ:GENE), Rosetta Genomics
(NASDAQ:ROSG), MEI Pharma Inc(NASDAQ:MEIP), Advaxis, Inc.(NASDAQ:ADXS), Amarantus Bioscience (OTCMKTS:AMBS), Pressure Biosciences (OTCMKTS:PBIO), Uluru Inc. (OTCMKTS:ULUR), PositiveID Corporation (OTCMKTS:PSID), Cord Blood America Inc.(OTCMKTS:CBAI) and IntelliCell BioSciences, Inc. (OTCMKTS:SVFC).
Morhamus points out that here are at many other institutional investment firms which are in the business of "coming to the rescue" of desperate small cap companies who have little choice but to take money however they can, under whatever predatory terms they agree to. He writes that while those firms and their terms may not be fair they are also not illegal.
In recent days, the U.S. Securities and Exchange Commission is rumored to be closing in on some of the more egregious offenders who may be manipulating prices in order to force more debt.
Morhamus’ complete article is available now at: tinyurl.com/seekingalpa
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