Bartko's Firm Advises Former Kentucky Lt. Governor on Tender Offer
Bartko’s client is PSQ LLC of Louisville, Ky., a special-purpose company formed by Steve Pence, a former lieutenant governor of Kentucky. Pence is also a former U.S. Attorney for the Western District of Kentucky. Bartko is a sole practitioner.
PSQ’s target is General Employment Enterprises Inc. of Oakbrook Terrace, Ill. General Employment has been exploring its strategic options for months, according to regulatory filings. The company’s board and executives hired an investment bank, Prairie Capital Advisors Inc. They have fielded questions from numerous suitors. They have interviewed prospective buyers. They have agreed to allow third parties to introduce them to potential acquirers.
On March 30, General Employment decided that its best option was to sell the company to Bartko’s client, PSQ. Under the terms of its offer, PSQ would acquire more than 7 million new shares of General Employment’s common stock for $1.9 million. Then, PSQ would launch a cash tender offer to buy up to 2.5 million shares from General Employment’s existing shareholders. In total, General Employment would sell a controlling interest in itself for about $3.4 million.
Federal Court in New York Establishes SEC's Discovery Obligations
A Federal Court in the Southern District of New York recently issued an important decision defining the SEC's obligations in responding to legitimate discovery requests in SEC civil enforcment actions. In a case brought by the SEC against Collins & Aikman Corp. alleging that the CEO of the compamy, David Stockman, was engaged in securities fraud arising from a number of accounting irregularities in the company's financial statements, the Court wrote a 42-page opinion that in short, instructed the SEC that it has to abide by the same discovery procedures as private litigants. The opinion addresses the technique often followed in private litigation cases known as the "document dump" where a party producing documents responsive to requests made by an opposing party simply provides a mountain of documents interlaced with important, relevant materials that are most likely not as readily noticeable due to the sheer volume of the production.
Such was the case in SEC v. Collins & Aikman Corp., where the SEC dumped 10 million pages of documents on counsel representing the defendants. Of equal importance is how the Federal Court addressed the SEC's obligation to search and produce email communications responsive to the defendants' requests. No longer should the SEC be allowed to avoid the rigours of electronic discovery search protocols just because the agency is large, has millions of archived emails and it takes time and staff to respond to such requests by litigants that have been sued by the SEC.
For any practitioner that regularly defends civil litigants sued by the SEC, this recent decision is worth reading and should assist in establishing the "standard" when it comes to obtaining discoverable materials and information from the SEC in civil litigation.
The Law Office of Gregory Bartko, LLC has a team of experienced securities lawyers (transactional and litigation) that concentrate a portion of their law practice to the representation of “Middle Market” sized companies and their management, officers or directors—in all phases and aspects of securities regulatory inquiries, investigations or civil enforcement proceedings that may be brought by the SEC Division of Enforcement or other self-regulatory organizations like FINRA (formerly the NASD). The Firm is well aware of the staggering impact and costs associated with defending securities-related inquiries and litigation, so the Firm has brought together a team of securities lawyers that know how to resolve and defend these regulatory matters, without the need to expend enormous amounts of legal fees which large, full service law firms often do. The Bartko Team believes that in today’s difficult economic times, when the SEC and other securities regulators are becoming more—not less active in enforcement proceedings, “highly competent, boutique legal counsel” is the prudent course.
Federal Court in Atlanta Concludes that Reports and Fee Petitions by SEC Receiver Were Unnecessarily and Unfairly Disparaging of SEC Defendants
The Law Firm of Gregory Bartko, LLC announced today that hearings conducted by the United States District Court, Northern District of Georgia on February 12, 2009 in a civil enforcement action filed in October, 2008 by the U.S. Securities and Exchange Commission, resulted in an rare, but long overdue rebuke of practices routinely conducted by the SEC and its receivers in civil enforcement actions.
Atlanta, Georgia (PRWeb) February 13, 2009 -- The Law Firm of Gregory Bartko, LLC announced today that hearings conducted by the United States District Court, Northern District of Georgia on February 12, 2009 in a civil enforcement action filed in October, 2008 by the U.S. Securities and Exchange Commission, resulted in an rare, but long overdue rebuke of practices routinely conducted by the SEC and its receivers in civil enforcement actions.
U.S. District Judge Beverly Martin spent three hours of the Court’s schedule hearing oral arguments on 11 pending motions in the case of Securities Exchange Commission v. Mikula, et al., Case No. 1:08-CV-03097-BBM. In this case, the SEC has alleged, but not established, that one of the defendants, Nations Warranty Group, Inc. unlawfully raised investment capital through the unregistered issuance of over 100 short-term promissory notes; and that the notes were sold on the basis of fraud. The SEC’s allegations were particularly troublesome to the 25 note purchasers who attended the hearing and who traveled to Atlanta from all parts of the U.S. to do so. Judge Martin, allowing some of the note purchasers to address the Court was advised that each and every note purchaser attending the hearing did so to support Nations Warranty Group, Inc. and its management. Many were angry that the SEC Receiver has since shut down the Nations Warranty business.
Although Gregory Bartko, Esq., securities counsel for two of the defendants in the case, said that it is not very common in SEC enforcement proceedings for the SEC and a receiver nominated by the SEC to come under such criticism, in this particular case, Mr. Bartko said it was long overdue and in his opinion, warranted. Of the 11 motions addressed by Judge Martin, the defendants were granted relief modifying the Court’s preliminary injunction to allow Mr. Mikula to carry on one of his other, unrelated businesses and to secure the return of funds initially frozen at the request of the SEC. Perhaps most enlightening during the hearing was the Court’s ruling on a request brought by one of the defendants, John Craddock, that the Receiver’s Interim Report and Interim Fee Petition should have several negative, conclusory remarks and other pejorative statements about the defendants stricken from the Receiver’s papers.
Judge Martin made no ruling on the Receiver’s request for approximately $80,000 in compensation for less than one month’s work at the time of his appointment, preferring instead to review the papers more carefully and issue a written opinion at a later date. Mr. Bartko had filed objections to those fees on behalf of his clients.
The Law Office of Gregory Bartko, LLC has a team of experienced securities lawyers (transactional and litigation) that concentrate a portion of their law practice to the representation of “Middle Market” sized companies and their management, officers or directors—in all phases and aspects of securities regulatory inquiries, investigations or civil enforcement proceedings that may be brought by the SEC Division of Enforcement or other self-regulatory organizations like FINRA (formerly the NASD). The Firm is well aware of the staggering impact and costs associated with defending securities-related inquiries and litigation, so the Firm has brought together a team of securities lawyers that know how to resolve and defend these regulatory matters, without the need to expend enormous amounts of legal fees which large, full service law firms often do. The Bartko Team believes that in today’s difficult economic times, when the SEC and other securities regulators are becoming more—not less active in enforcement proceedings, “highly competent, boutique legal counsel” is the prudent course.
