Elite Pharmaceuticals Inc (ELTP)

[jour_trader]

I’ve been meaning to reply for weeks and keep forgetting. Related party transactions are not the norm, but are not uncommon. They are getting harder to find in financials and I think they reek of self-dealing. Here are a handful of leaders that leverage the company they lead for a related party action that includes themselves, some on a smaller scale and some much larger:

- Chesapeake Energy: Aubrey McClendon, previous and now passed-away CEO was notorious for many crazy non-arm’s length deals with Cheseapeake. Ownership % of certain gas wells, buying maps, photographs and reselling to company, sponsorships to Oklahoma City Thunder where McClendon was part owner, catering deals where McClendon was owner, etc.

- WeWork: Company leases buildings (& other real estate benefits) from CEO/Founder Adam Neumann, borrowed funds from company several times (not unheard of) and those IPO underwriters. Related party transaction details took up 10 pages in their initial S-1 filing.

- Recro Pharma: Specialty pharma CEO for Recro was doing business with company (MCG) that her husband was CEO of and had significant ownership. Had business relationship for several years and was weeded out over time and eventually eliminated.

- Koru Medical: Leased aircraft from a CEO (now previous) for 26 years.

- ADMA Biologics: Leases building from company (Areth) owned by CEO.

- Adepto Medical: Leases building from company owned by EVP.

- Array Phototonics: CEO has been in news headlines over past year for self-dealing transactions. Company to be defunct soon.