SECURITIES CASES: YAHOO AGREES TO PAY $35M TO SETTLE CHARGES AND A BIOTECH START UP IS ACCUSED OF ISSUING MISLEADING INFORMATION

 

Altaba is Fined $35M For Not Disclosing World’s Largest Data Breach

Altaba, formerly Yahoo! Inc., will pay a $35M penalty in a data breach settlement to resolve US Securities and Exchange Commission charges accusing the entity of misleading investors because it did not disclose a major cyber-security data breach. Despite settling, Yahoo is not denying or admitting to the findings.

The data breach, one of the largest in the world to date, involved Russian hackers stealing personal information involving hundreds of millions of user accounts in 2014. The information that was taken included usernames, birth dates, email addresses, passwords that were encrypted, phone numbers, and both security questions and answers. Yahoo’s information security team found out about the breach soon after it happened.

However, contends the Commission, rather than properly investigate what led to the breach and notifying investors right away, Yahoo would wait until 2016 when it was about to be acquired by Verizon Communications Inc.  This included not reporting the breach in yearly and quarterly reports and failing to tell auditors or outside counsel about the breach, eventually leading them to have to pay millions for this data breach settlement. It was after Verizon acquired Yahoo last year that the latter was renamed to Altaba.

PixarBio and CEO Accused of Misleading Investors 

In another recent SEC case involving investors being kept in the dark about key information, the regulator has filed charges against PixarBio Corporation, its CEO/founder Frank Reynolds, and employee Kenneth Stromsland, accusing them of misleading investors through false claims about the biotech start-up’s progress regarding a method that was supposed to deliver non-opiate pain meds after operations. According to the regulator’s complaint, from 12/2015 to now, the defendants allegedly falsely told investors that the Food and Drug administration had eliminated some of the obstacles preventing PixarBio from getting regulatory approval of its non-opiate pain treatment.

The defendants are also accused of misleading investors about how much money the start-up had raised. They purportedly raised approximately $12.7M from more than 200 investors in an unregistered offering while misleading investors about this amount.

Meantime, Reynolds, Stromsland, and Reynold’s friend, M. Jay Herod, are accused of involvement in a scam to “acquire and merge PixarBio with a publicly traded company” while planning to manipulate the new entities’ shares when selling them.  Reynolds and Herod made about $400K and used another $500K to keep PixarBio in operation.  Stromsland and Reynolds are accused of selling securities despite lacking the proper broker or dealer registrations.

Now, the regulator wants a permanent injunction, restoration of ill-gotten gains with interest, industry and penny stock bars, and a penalty.

Securities Fraud

If you are an investor that sustained losses because of fraud or other misconduct, contact Shepherd Smith Edwards and Kantas LTD, LLP to schedule you free case consultation with an experienced, investor fraud lawyer. We represent retail investors, institutional investors, and high net worth individual investors in fighting to help them recover their money that they lost because of the negligence, carelessness, or misconduct of others. Whether there is a criminal or a civil case brought against the party that defrauded you, it is important that you file your own claim and you are represented by a securities fraud legal team that is committed to advocating on your behalf.

Read the SEC Order in the Altaba Case (PDF)

https://www.sec.gov/litigation/admin/2018/33-10485.pdf

Read the SEC Complaint in the PixarBio Case (PDF)

https://www.sec.gov/litigation/complaints/2018/comp24121.pdf

More Blog Posts from SSEK Law Firm:

Wedbush Securities Faces Failure to Supervise Charges Over Broker’s Pump-And-Dump Scam, Stockbroker Fraud Blog, March 28, 2018

Massachusetts Regulator Accuses ARO Equity of $5.8M Ponzi Scam that Bilked Seniors, Stockbroker Fraud Blog, March 26, 2018