Internal Control Stock Exchanges

Pre-Market NASDAQ Movers (MITI, VRGY, HRBN, ZIP, LULU, BCRX, DCIX, LPHI, ERIC ...

Interim results from this phase 2 single-arm trial showed that 75% of patients (9 of 12) achieved a complete remission (CR) or CR with partial recovery of blood counts (CRh) following treatment with blinatumomab. All nine responding patients achieved a complete molecular response, or had no evidence of leukemic cells in their bone marrow, a key prognostic factor for patient survival. Notably, four patients with genetic abnormalities typically associated with poorer outcomes all achieved a CR or CRh. Current treatment for Philadelphia negative relapsed/refractory ALL consists of combinations of toxic chemotherapy drugs that in the majority of cases fail to drive the disease into remission. In more than 30 years, no new drug has been approved for use in this setting, leaving physicians with few options to improve long-term patient outcomes other than variations in the dose and schedule of old drugs with limited efficacy. With current approaches, complete remission rates range from 17 percent to 45 percent. Standard chemotherapy is associated with a mortality rate of up to 23 percent. The average five-year survival rate for adult ALL patients after first relapse is 7 percent.

Verigy, Ltd. (VRGY) stock climbed 10.75 percent to $14.94 in the pre-market trading. In a regulatory filing, the company said it entered into an Implementation Agreement on March 28 with Advantest Corp. pursuant to which Advantest proposes to acquire all outstanding Verigy ordinary shares (other than those held by Advantest and its subsidiaries) for $15 per share. The obligation of Advantest to consummate the transaction contemplated by the Implementation Agreement is conditioned on, among other things, expiration of the waiting period (and any extensions of such waiting period) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On June 9, Verigy received notification from the United States , Antitrust Division, of the termination of the waiting period under the HSR Act with respect to the Transaction.

Harbin Electric, Inc. (HRBN) stock advanced 8.91 percent to $16.86 in the pre-market trading. The company said its board has received a letter from its chief executive officer, Tianfu Yang, and Abax Global Capital reaffirming their proposal to acquire all of the outstanding shares of Common Stock of Harbin Electric not currently owned by Yang, Abax and their respective affiliates in a going private transaction for $24.00 per share in cash. Yang, Abax and their respective affiliates collectively own about 40.72 percent of Harbin Electric's Common Stock.

Comments about SEC v. Thor Industries: the allegations and the ...

Comments about SEC v. Thor Industries: the allegations and the remedies.

David Tate, Esq. (San Francisco), http://davidtate.us .

The SEC’s recent action against Thor Industries can be found at: http://www.sec.gov/litigation/litreleases/2011/lr21966.htm and http://www.sec.gov/litigation/complaints/2011/comp21966.pdf .

In pertinent part, pursuant to the allegations in the litigation release (which is copied and pasted below) and in the Complaint, Thor and its subsidiaries lacked reporting, recording keeping and internal controls, including the failure to segregate duties, which allegedly permitted an officer to perpetuate fraud.  At the time, Thor was also subject to a prior 1999 cease and desist order that prohibited violations of the book, records and internal control requirement.  In other words, in 1999 Thor represented that it would fix the internal control deficiencies and that they would not occur again.  The alleged improprieties in the current situation appear to have been material to Thor but qualitatively and quantitatively.

As stated in the litigation release, to settle the current action “the SEC and Thor agreed as follows:  “Without admitting or denying the allegations in the complaint, Thor has consented to the entry of a final judgment: (1) requiring it to comply with the 1999 cease-and-desist Order; (2) permanently enjoining it from violating Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder; (3) ordering it to pay a $1 million penalty pursuant to Exchange Act Section 21(d)(3) for violating the 1999 Order; and (4) ordering it to hire an independent consultant to review and evaluate certain of its internal controls and record-keeping policies and procedures.”

It needs to be acknowledged that the allegations against Thor are just that, allegations.  Nevertheless, the allegations in the SEC’s Complaint, as far as they go, are fairly detailed.  It appears that Thor and its various subsidiaries were significantly run as separate operations.  The subsidiaries lacked sufficient internal controls, as did Thor itself and to oversee the subsidiaries.

Thor’s stock is traded on the New York Stock Exchange.

As I view the action and the remedy, Thor paid a fairly hefty penalty to have the SEC agree for a second time that the company needs to get its internal controls and record keeping in order, which appears to be a pretty good outcome for Thor.  Not much different than after the 1999 Order.

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