Gross Law filed a lawsuit on behalf of Noble Investment Fund Limited (“Noble”) claiming millions of dollars in investment losses in Gerova Financial Group (“Gerova”) as a result of a “short and distort” or “reverse pump and dump” scheme that had the purpose and effect of artificially depressing the share price of Gerova.
The complaint alleges the defendants and their co-conspirators amassed huge short positions (including many illegal naked positions) in Gerova’s stock in late 2010 and early 2011, immediately before the company was to complete two major mergers. The defendants and their co-conspirators, then, launched a coordinated attack on the company’s reputation, enlisting the assistance (knowing or not) of forbes.com blogger and self-described “Investor Advocate,” Neil Weinberg in their scheme to spread false and misleading information concerning the company. When it was all over, Gerova had lost approximately $800 million in market capital in less than two months, and the actual investors in Gerova, including Noble, had suffered massive losses. Noble’s shares, in particular, for which it paid $5.75 million, as one of the company’s original investors, were worth approximately $17 million prior to initiation of the attack; they are now virtually worthless.
“Defendants and their co-conspirators like to portray themselves as on the side of investors,” said Stuart G. Gross, managing attorney at Gross Law, “but in reality these people make money by destroying the investments of others.” Gross continued, “The decision by Noble to step forward and pursue claims against those who perpetuated this attack upon Gerova and its investors is commendable and it sends a clear message: these schemes constitute securities fraud, and the schemes’ victims will not sit back and leave the perpetrators of such schemes in peace.”
The complaint describes a veritable rogues gallery of active participants in the scheme, including: Scott Hintz, a convicted felon (bank fraud); Daniel Ivandjiiski, who was barred for life from the securities industry for insider trading in 2008 and who now, using the pseudonym Tyler Durden, runs the website zerohedge.com, which is registered at his father’s PO Box in Ivandjiiski’s native Bulgaria; Keith Dalrymple, a former securities analyst, whose last FINRA registered broker-dealer employer shut its doors after it was found to have violated, during Dalrymple’s tenure there as director of research, rules “governing the content and disclosures required for equity research reports; and Victoria Dalrymple, another Bulgarian native and Keith Dalrymple’s wife, business partner and co-conspirator.
“The size and timing of the short positions take against the company, the timing of their settlement, and the timing of the release of false and misleading information concerning the company were all orchestrated too perfectly to be coincidental,” said Gross.
As the complaint alleges, the statements made by defendants and their co-conspirators concerning Gerova were demonstrably false and misleading. However, because of the savvy use by the defendants and their co-conspirators of the echo chamber-like quality of the financial blogosphere, which quickly lent their false and misleading statements increased reach and creditability, and that the effect on the company’s share price of the hugely increased short-selling by defendants and their co-conspirators, the release of the false and misleading information had precisely the effect that Defendants and their co-conspirators desired, collapse of Gerova’s share price. With it, came the collapse of the planned mergers and, in Noble’s case, losses of millions of dollars.
Recently, in a case with remarkable similarities to that here, U.S. v. Minkow, No. 11-20209 (S.D. Fla.), the defendant entered into a plea bargain under which he was sentenced to 5 years in prisons and ordered to pay over $500 million in restitution.
Gross Law is located in San Francisco and serves international and domestic clients in commercial, natural resource, environmental, antitrust and business practices litigation before courts and tribunals throughout the United States.
The lawsuit, known as Noble Investment Fund Limited v Keith Dalrymple, Victoria Dalrymple and Dalrymple Finance, No CGC-11-516822, was filed in The Superior Court of the State of California, county of San Francisco,. Noble is seeking compensatory and punitive damages, restitution, disgorgement, and injunctive relief.
Stuart G. Gross
(415) 671-4628, ext. 701