34. In the summer of July 2002, Novatel had approached a placement agent to assist in a private placement offering. During the month of July 2002, the placement agent was already making presentations to various potential investors.
35. On July 31, 2002, Stonestreet begins to short sell Novatel shares and continues to do so throughout the months of August, September and October 2002, with the knowledge of the financing.
36. Similarly, between August 28 and October 11, 2002, four of the Finkelstein Clients, Triton West, Alpha Capital, Excalibur Ltd. Partnership and Bristol Investment Fund Ltd., also executed short sells in Novatel shares with the knowledge of the financing.
37. Both Stonestreet and Triton West were direct subscribers to Novatel’s 2002 financing deal, executing a purchase agreement with the issuer on September 12, 2002.
37. As at September 18, 2002, Stonestreet and the four Finkelstein Clients referred to above had sold short approximately nine million shares of Novatel. This represented approximately 10% of the existing market float.
38. The financing was not disseminated to the general public until October 21, 2002 whenNovatel issued a press release announcing that it had raised net proceeds of approximately US$2,750,000 through the private placement offering of 14,800,000 shares of common stock together with warrants to acquire common stock. Novatel also filed an 8-K statement with the SEC.
39. The trading activity conducted by Stonestreet, Triton West, Alpha Capital, Excalibur Ltd. Partnership and Bristol Investment Fund Ltd, between July 31 and October 11, 2002 constitutes insider trading contrary to American securities law.
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