New York-listed Top Ships remains the object of a US Securities and Exchange Commission (SEC) investigation over shares sales to Kalani Investments two years after receiving an initial subpoena.
Top included an update on the matter in a prospectus filed this week in connection with its attempt to raise $10m in proceeds from a sale of shares underwritten by Maxim Group.
The SEC inquiry was listed in the “risk factors” section of the prospectus.
“We are cooperating in an investigation by the United States Securities and Exchange Commission, the results of which may have a material adverse effect on our financial condition and business,” Top told investors.
Evangelos Pistiolis-led Top said it furnished “certain documents and information” in response to the original SEC subpoena on 1 August 2017 and two subsequent subpoenas on 26 September and 5 October of 2018.
SEC investigation
“We provided the requested information to the SEC in response to these subpoenas,” Top indicated.
“The SEC investigation is ongoing and we continue to cooperate with the SEC in its investigation. We are unable to predict what action, if any, might be taken by the SEC or its staff as a result of this investigation or what impact, if any, the cost of responding to the SEC’s investigation or its ultimate outcome might have on our financial position, results of operations or liquidity, or the price of our common shares.”
Top and Kalani, an investor controlled by Toronto-based hedge fund manager Marc Bistricer, in August scored an important court victory when a US federal judge in New York tossed out a shareholder lawsuit alleging securities fraud in connection with dealings between the two companies.
Investors claimed Top and Kalani had hatched a “scheme” to defraud investors and enrich themselves through a series of dilutive shares sale and reverse stock splits. But Judge Brian Cogan found that all dealings had been fully disclosed and that there was no evidence of securities fraud.
What effect that ruling might have on the SEC matter is unclear, as there could be different elements under scrutiny and the relevant legal standards might also be different.
Similar shareholder lawsuits remain pending in New York federal courts against fellow Greek owners DryShips and the former Diana Containerships, now Performance Shipping. DryShips also has publicly disclosed that it is being investigated by the SEC.
DryShips principal George Economou is in the process of taking the company private.
