GALENA BIOPHARMA CASE STUDY INVESTOR AWARENESS CAMPAIGN

So worrisome is the trend, the SEC recently filed complaints against more than a dozen companies and people, including Bjorlin, alleging that they pretended to provide independent analysis on financial websites such as Seeking Alpha, Forbes, the Motley Fool and Benzinga that were actually paid for by companies. Kriegsman, as chair of the Compensation Committee, was involved in that decision. If the Court were to consider the individual authors as the makers of those statements, then companies could avoid liability under the Exchange Act simply by paying third parties to write and publish false or misleading statements about the company, even when the company retains final decision-making authority over content. Simon , District Judge. Ritchie , F.

This putative class action securities fraud case is brought by shareholders “Plaintiffs” of Defendant Galena Biopharma, Inc. Although these stock options were granted in November , they vested over a period of three years, in twelve equal quarterly installments. Plaintiffs also allege that Galena’s Compensation Committee awarded stock options in November , at a time of year when the Company had never before awarded stock options, to take advantage of the promotional scheme. Plaintiffs make two specific allegations to this effect. Plaintiffs allege that within hours of this article’s publication, Galena fired DreamTeam. Finally, Ahn’s insider stock sales support a strong inference of scienter.

In re Galena Biopharma, Inc. | D. Or. | Judgment | Law | CaseMine

The day after Mr. Further, the fact that Ahn was terminated for cause, or even if he resigned as stated by Ahnafter the conduct came to light is evidence supporting an inference of scienter.

Plaintiffs allege both direct misrepresentations and omissions by Galena and awarehess officers and misrepresentations and omissions through publications placed by DreamTeam or Lidingo.

Ultimately, a securities fraud plaintiff must prove that the defendant’s misrepresentation was a “substantial cause” of his or her financial loss.

cajpaign Thus, because the Court has found that Plaintiffs do not adequately allege Dunlap’s scienter, Plaintiffs’ claim of securities fraud against Dunlap has not been sufficiently alleged. Feuerstein’s report, neither Galena nor anyone else had announced that Ahn had left the company.

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Bernarda recommended that Galena hire Tiberend, a traditional, full service cqmpaign relations firm specializing in the healthcare and life sciences industry. LaurientiF. Additionally, Plaintiffs’ allegation that Galliker was familiar with DreamTeam and how it operated because he had hired DreamTeam to promote the stock of Kindred further supports an inference of scienter. Pearson also released his emails with Meyer, who claimed to be an employee of DreamTeam working closely with McCarthy.

No doubt Congress meant to prohibit the full range of ingenious devices that might be used to manipulate securities prices. Plaintiffs allege that in AprilBjorlin sent gqlena email to a Galena manager asking about payment and noting that “the writers are due to be paid on the fifth.

Kriegsman’s stock sales as alleged by Plaintiffs thus weigh heavily in favor of a scienter inference. The analysis stuey Janus rested on the fact that one business entity had a statutory obligation to file, and did file, allegedly misleading documents with studh SEC, while another legally distinct business entity merely contributed content that the first company could choose whether to include in the SEC filing.

Plaintiffs also argue, however, that both Galena and DreamTeam had ultimate authority over the published articles.

Scheme created fake news stories to manipulate stock prices, SEC alleges

Tuttle and Scott N. If an article is a paid promotion, it must affirmatively state as much. In addition to the alleged scheme and the alleged misrepresentations made through the promotional campaign, Plaintiffs allege that Galena made false or misleading statements in its own name. The Supreme Court also noted that “[o]ne who prepares or publishes a statement on cxse of another is not its maker. Plaintiffs do not, however, sufficiently plead Bjorlin’s scienter with respect to Galena’s cammpaign with DreamTeam.

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Plaintiffs’ allegations also support an inference that McCarthy was part of a scheme artificially to inflate Galena’s stock price. The Court also notes that Plaintiffs do not plead facts sufficient to show who are the “makers” of Lidingo’s emails, blog posts, or articles. He is one of the first Galena insiders to sell any shares.

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Defendants argue that Plaintiffs do not properly to plead loss causation because, as pled by Plaintiffs, the information disclosed in the alleged corrective disclosures was “already publicly available on the internet” and thus was not new information to the market.

For some conduct, Plaintiffs may not know who at DreamTeam was involved.

galena biopharma case study investor awareness campaign

Similarly, on November 27,Galena and DreamTeam caused another article to be published on the website Seeking Alpha using the alias “Stock Whisper” and then posted on DreamTeam’s blog, stating that “Stock Whisper” had published a bullish article about Galena.

Feuerstein alleged that Galena was engaging in a misleading brand-awareness campaign aimed at boosting its stock price.

Scheme created fake news stories to manipulate stock prices, SEC alleges – Los Angeles Times

The DreamTeam Defendants’ reading of the “in connection with” requirement is too narrow. BankU.

No analogous situation is involved here. The lesson of Janus is that where legally distinct entities are involved, only one entity has the final say in what, if anything, is published. Plaintiffs also incorporate by reference emails to DreamTeam in which Ahn requests that he be sent copies of published articles.

In one email dated April 12,Bjorlin notes that she has sent Ahn the articles that Lidingo had written. Moreover, throughout the Consolidated Complaint, Plaintiffs allege that Defendants engaged in a fraudulent “scheme,” including a “scheme to manipulate Galena’s stock price.

At least four other companies already offer generic fentanyl in the United States. As discussed above, the Court finds that the Consolidated Complaint awardness adequate notice that Plaintiffs are asserting scheme claims under Rule 10b-5 a and c.

GALENA BIOPHARMA CASE STUDY INVESTOR AWARENESS CAMPAIGN

Bernarda stated that she wanted to hire Tiberend, who “treats all authors like ‘journalists. Plaintiffs allege this statement is false because at that time Galena had already hired DreamTeam for the purpose of illegitimately manipulating Galena’s stock price so the insiders could sell their stock at inflated prices. Although this is evidence from which some inference of scienter can be inferred, it is not sufficient to show Schwartz had the requisite scienter. Ahn argues that the more compelling inference to be drawn from the facts alleged in the Consolidated Complaint is that he hired multiple investor and public relations firms, he had no reason to believe those firms were paying authors and not disclosing that fact, he reviewed articles to ensure their factual accuracy regarding Galena’s business, and he sold his stock to diversify his investment portfolio. Defendants argue that Plaintiffs do not sufficiently plead any misleading statement by Lidingo.

Plaintiffs allege email correspondence in which Meyer, purporting to speak on behalf of DreamTeam, discussed how one article about Galena did not address a short attack on the Company because the article had been submitted for approval before the attack but not approved for publication by Galena until after. The Consolidated Complaint alleges that these were all direct sales and not made pursuant to any pre-arranged Rule 10b trading plan. The reliance presumptions accepted by the Supreme Court also apply to scheme liability claims. Financial news sites say they are also on the lookout for such scams. This was the only time that options had been awarded by the Compensation Committee at that time of year.

Scheme created fake news stories to manipulate stock prices, SEC alleges

The Court finds the Consolidated Complaint provides sufficient notice that Plaintiffs are bringing claims under all three sections of Rule 10b-5, specifically, sections aband c. Gravitt then found a disclaimer on “the tip-us websitem” disclosing that MissionIR received compensation from Galena for promotional services.

Ahn argues that the more compelling inference to be drawn from the facts alleged in the Consolidated Complaint is that he hired multiple jnvestor and public relations firms, he had no reason to believe those firms were paying authors and not disclosing that fact, he reviewed articles to ensure their factual accuracy regarding Galena’s business, and he sold his stock to diversify his investment portfolio.

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Plaintiffs responded that, pursuant to the Ninth Circuit’s holding in Sec. The heading of Plaintiffs’ first claim states that it is for violations of Section 10 b and Rule 10b-5 b. It is also readily apparent that the conduct alleged in the complaint was not ‘manipulative’ within the meaning of the statute. Using negativity on Seeking Alpha as an index outperformed broader market indices.

These numerous particularized factual allegations relating to Ahn’s knowledge and conduct support a strong inference that Ahn knew or was, at a minimum, deliberately or consciously reckless as to the truth or falsity of the fact that Lidingo and DreamTeam were using illegitimate means to boost Galena’s stock price and that the promotional campaign violated the securities laws.

Nisi’s dramatically out-of-line stock sales weigh heavily toward an inference of scienter. Spot RunnerF. The term refers generally to practices, such as wash sales, matched orders, or rigged prices, that are intended to mislead investors by artificially affecting market activity. Even awarebess Ahn’s calculations are correct and Plaintiffs’ allegation that Ahn sold 87 percent of personally-held stock overstates Ahn’s sale, this fact does not materially alter the Court’s analysis.

With respect to the alleged promotional scheme, Plaintiffs allege that Ahn: Seeking Alphahowever, generally does not permit paid articles and requires an affirmative statement that articles posted are not the product of a paid transaction. The only allegations are that the Code of Ethics was publicly available on the website, includes a sentence that Galena will not sanction or tolerate conduct that risks a violation of federal law, and the Awaeness Defendants violated the law.

Council PensionF. The Court has found that Plaintiffs sufficiently allege misrepresentations or omissions in: Hillsberg’s dramatically out-of-line stock sales weigh heavily toward an inference of scienter. biophrama

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The Court finds that Plaintiffs sufficiently allege actionable manipulative or deceptive conduct. To make the authors more believable, they created fake online profiles, claiming that they had an “MBA in finance” or a degree in physics, according to the SEC complaint. Thus, argue Defendants, the galen public was informed that this was a private warranty solely for the benefit of Oppenheimer and the statement is not actionable.

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In an email exchange with the Washington Post, Bjorlin said: The article detailed Mr. This is insufficient to rise to the level of a material misrepresentation for securities fraud. RitchieF. Ass’nF.

In re Galena Biopharma, Inc. | D. Or. | Judgment | Law | CaseMine

Defendants argue that in Plaintiffs’ first claim, they allege only a violation under Rule 10b-5 b. In order to succeed, manipulative schemes must usually remain undisclosed to the general public.

galena biopharma case study investor awareness campaign

Investod scheme allegedly began to unravel as news of the insider trades entered the market. Despite Bernarda’s recommendation to the contrary, Ahn also hired DreamTeam. The Court notes that the Ninth Circuit’s interpretation that claims under Rule 10b-5 a and c require conduct awarwness addition to alleged misrepresentations and omissions has recently been expressly considered and rejected by the Securities Exchange Commission in formal adjudication.

In one email dated April 12,Bjorlin notes that she has sent Ahn the articles that Lidingo had written.

This is demonstrated by the increase in the price of Galena stock that allegedly occurred after the articles were onvestor. Tiberend cautioned that these firms “are asking for fees but not disclosing that the resulting article was paid for by the company. The Ninth Circuit has rejected a similar argument that statements or omissions in a investog contract cannot be actionable in a securities fraud action.

Plaintiffs further allege that in December and JanuaryDreamTeam caused five articles to be published on Seeking Alphaall of whom were written by the same author using different DreamTeam aliases. Additionally, giving Plaintiffs the benefit of all reasonable inferences, Hillsberg’s association with TroyGould supports an inference that he is campaitn with how DreamTeam works and how it allegedly promoted Galena.