Securities Law Blog

Former CEO, Daniel Laikin, of entertainment company National Lampoon Inc. has been sentenced to nearly four years in prison for his role in a stock price manipulation scheme. Laikin and several others were charged in December 2008 by the Securities and Exchange Commission (SEC) and the U.S. Attorney for the Eastern District of Pennsylvania.

According to the SEC’s complaint from March 2008 through June 2008 Laikin and his collaborators engaged in “fraudulent schemes to manipulate the market by generating purchases of company stock in exchange for the pre-arranged cash kickbacks.” A witness secretly cooperating with the government was paid at least $68,000 in cash for kickbacks for the purchase of National Lampoon stock to inflate the stock price.

The alleged goal was to create the false appearance of market interest in the National Lampoon stock, induce public purchases of stock and increase the stock’s trading price. Laikin purportedly sought to artificially push National Lampoon’s stock price from under $2 to at least $5 per share to keep the company’s stock price above the minimum listing requirements of the AMEX, and to increase the company’s ability to enter into possible “strategic partnerships” and acquisitions, stated the SEC complaint.

Federal prosecutors dropped a count of securities fraud against Laikin last fall after he agreed to plead guilty to conspiracy. On top of his almost four year sentence, Laikin has been ordered to pay $100,000 fine and has been barred from serving as an officer or director of a publicly traded company.

Unsuitable recommendations for conservative and retirement aged investors has landed Boulder, Colorado-base investment adviser Neal R. Greenberg in hot water with the Securities and Exchange Commission (SEC).

The SEC Division of Enforcement alleges that Greenberg falsely stated that the Agile hedge funds offered and managed by his two investment advisory firms were suitable for investors nearing retirement. According to the SEC, Greenberg was the CEO of his investment advisory firm Tactical Allocation Services LLC that made recommendations to clients, and the head portfolio manager for his other investment advisory firm Agile Group LLC, which managed the Agile hedge funds.

The Agile hedge funds purportedly used leverage and concentrated in a small number of investments. Greenberg allegedly told investors that the Agile hedge funds offered liquidity, immense diversification and minimal risk.

According to the SEC’s order instituting administrative cease-and-desist proceedings, the Agile hedge funds held approximately $174 million of capital from more than 100 investors when Greenberg suspended redemptions in September 2008 after the funds suffered substantial losses.

The SEC Division of Enforcement also claims that the Agile hedge funds improperly collected approximately $2 million in management and performance fees that were not adequately disclosed to investors. The SEC alleges that these fees paid by investors were performance and management fees when one Agile hedge fund invested in another Agile hedge fund.

The SEC’s order seeks to institute administrative and cease-and-desist proceedings against Greenberg.