|=DJ IN THE MONEY: Utah Co In Middle Of German Probe Of Stk Deals|
Monday, April 07, 2008 3:38 PM
By Carol S. Remond
A Dow Jones Newswires Column
A Utah company has inadvertently gotten itself involved in a probe by German securities regulators into how a bank in that country got stuck with millions of shares of stock it didn't want in several companies after a client reneged on an agreement to pay for the stock bought on its behalf.
Norddeutsche Landesbank Girozentrale, or NordLB, earlier this year said it set aside 82.5 million euros to cover potential losses resulting from an unnamed client refusing to take delivery of stock.
As reported by Dow Jones Newswires, German fund Vatas Holding GmbH has stuck NordLB with 13% of Curanum AG, 15% of Balda AG, 20% of Euromicron AG and 23% of RemoteMDX Inc. (RMDX), a Utah-based maker of ankle "bracelet" monitoring equipment used by law enforcement.
NordLB spokesman Jan-Peter Hinrichs told Dow Jones Newswires that the German Federal Financial Supervisory Authority, or BaFin, began its investigation Monday. Hinrichs said BaFin is looking into the circumstances surrounding the trades and trying to determined how it happened. Hinrichs said the bank would cooperate with the investigation.
A spokesman for BaFin declined to comment.
Following the affair, four individuals have left NordLB. A trader and his supervisor were let go by the bank last month. More recently, a general vice president in charge of capital markets as well as Juergen Koesters, a member of the bank's management board and head of securities trading operations, have also stepped down.
Hinrichs declined to comment on reports that the bank is looking to sue Credit Suisse Group (CS) over its role in the failed stock deals. Hinrichs also declined to comment on German news reports that NordLB has taken steps to freeze some of Vatas' other stock holdings, slapping a lien on the fund's 18.5% stake in Air Berlin PLC in an attempt to recoup losses from the incomplete stock deals.
A spokesman for Credit Suisse declined to comment.
Vatas also declined to comment through an email.
The fund is a large strategic investor in RemoteMDX and, in December, suggested in a regulatory filing it was considering taking control of the company.
NordLB said last month in filings with the Securities and Exchange Commission that it holds 31 million shares of RemoteMDX, which it purchased on behalf of a client that refused to settle the order. NordLB said it isn't looking to hold the stock and plans to sell it.
According to a Dec. 28 filing with the SEC, Vatas held almost 17 million shares, including common stock and securities issuable upon exercise of warrants, or about 13% of RemoteMDX.
NordLB said in an SEC filing that it spent $116.6 million to acquire the RemoteMDX stock at an average price of $3.76 a share. RemoteMDX stock was recently trading at $1.55 a share.
Trades listed in NordLB's filing show that it bought and sold a huge amount of RemoteMDX shares, purportedly on behalf of Vatas, between Nov. 1, 2007, and Feb. 25, 2008.
Part of the filing doesn't make a lot of sense. For example, the filing shows that the bank bought 14.75 million RemoteMDX shares at $3.736 on Feb. 25. But 3.2 million shares traded that day and the stock never came close to that price, closing at $1.62 a share.
RemoteMDX offers TrackerPal, an ankle bracelet combining cellular and global-positioning-system technologies that help law-enforcement personnel track those who were the product through the company's SecureAlert subsidiary.
(Carol S. Remond is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with "Exposing Small-Cap fraud," a series of articles that described how three small companies unscrupulously pumped up their stocks.)
-By Carol S. Remond, Dow Jones Newswires; 303-997-5783; firstname.lastname@example.org