YORKVILLE ADVISORS SUED in 5 Count Complaint from article date November 2009: From April 2007 to July 2007, Cobalis Corp.’s share price went from approximately $1.20 per share to 10 cents per share, significantly impacting the ability of Cobalis to launch PreHistin to worldwide markets as a nutraceutical allergy relief alternative to antihistamines or to secure funding for another Phase III FDA clinical trial. The resulting drop in Cobalis share price amounted to a loss of approximately $60 million in shareholder equity.
On Aug. 1, 2007, less than seven months after execution of the PIPE transaction, YAGI involuntarily filed to convert Cobalis to Chapter 7 liquidation. It has been alleged that this was done ahead of the allowable cure periods for the alleged default to prevent Cobalis from honoring its obligations pursuant to the PIPE transaction.
In the lawsuit, Cobalis asserts claims for two counts of breach of contract and allegations of “equitable fraud,” breach of contract and accumulating greater than 4.99 percent of Cobalis shares at one time, securities fraud for violation of SEC Rule 10-b-5 relating to short selling without proper representation and equitable fraud and breach of fiduciary obligations by YAGI in collecting $415,000 in fees paid by Cobalis for execution of this PIPE transaction.
The CEO and founder of Yorkville Advisors sees fit to allegedly mistreat and violate laws in relation to a company it has a fiduciary obligation to. Safe bet YA is also violating rules and regulations in its role as debt holder in NeoMedia. YA may get insider info regarding PRs and therefore knows when it is safe to short NEOM. YA may have held and may be holding more than the 4.99% limit of NEOM voting stock. And YA may use its position as debt holder to strategically dump shares to ensure its short position pays off. Cobalis will be shown not to be an anomaly but the normal course of business at Yorkville Advisors--breaking securities laws and violating other laws and regulations in the course of its business.
NeoMedia's management early on should have sought financing arrangements with another entity or entities or at least challenge the legality of Yorkville Advisor's prohibition against NeoMedia seeking alternative debt financing. NeoMedia's management has said that it was forced to rewrite debentures to lower conversion rates as an inducement to YA's continued financial support. Under what laws (and if they exist they should be challenged) is Yorkville Advisors permitted to treat public companies as indentured servants tying their hands when it comes to obtaining alternate financing?????
May Cobalis put Yorkville Advisors out of business. No company should be lawfully able to offer $100's of millions (YA has over $1 billion) in SEDA's with absolutely nothing to guarantee payment thereunder while extracting huge upfront fees.
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