DURHAM — Facing federal charges for participating in a fraudulent scheme that generated over $27 million in unlawful stock sales, the chief executive officer of a Durham-based Bitcoin mining company is “taking a leave of absence.”
A press release from the Securities and Exchange commission listed Robert Ladd, CEO of MGT Capital Investments Inc., as one of 10 individuals alleged to have manipulated the stock price of three companies “in classic pump-and-dump schemes.”
The SEC said the scheme was orchestrated by South Florida investor Barry Honig. It also charged 10 associated business entities, though MGT was not one of the entities listed.
The regulatory agency stated that the alleged fraudsters acquired large amounts of the three companies’ stock at steep discounts. They then engaged in illegal promotional activity and manipulative trading to artificially boost each stock price.
Robert Ladd
According to the SEC’s complaint, “Honig and his associates then dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors.”
The three companies whose shares were manipulated in the scheme were not named. A press releasefrom MGT called them “certain microcap stocks,” or smaller companies with a market capitalization between approximately $50 million and $300 million.
“As alleged, Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets,” said Sanjay Wadhwa, senior associate director in the SEC’s Division of Enforcement.
Though it wasn’t one of the companies’ charged by the SEC, the MGT press release stated that it was subpoenaed by the commission during the investigation in September 2016 and December 2017.
MGT stated in a press release Monday that Ladd is leaving his CEO role to address the allegations. H. Robert Holmes, chairman of the company’s board, will step in as interim CEO.
“Notwithstanding the board’s contention that the SEC claims are without merit, and that Rob will be vindicated, we are faced with the unfortunate immediate situation of perception overwhelming reality,” Holmes said.
MGT’s stock was trading at 40 cents per share midday Monday, down 32 percent since the day charges were filed against Ladd.
Ladd is the managing member of Laddcap Value Advisors LLC, which serves as the investment manager for various private partnerships, including Laddcap Value Partners LP.
Prior to forming his investment partnership in 2003, he was a managing director at Neuberger Berman, a large international money management firm catering to individuals and institutions.
From 1992 through November 2002, Ladd was a portfolio manager for various high net worth clients of Neuberger Berman. He was also a securities analyst at Neuberger from 1988 through 1992
The Bitcoin mining company trades “over-the-counter,” a decentralized market where two parties trade directly without the transparency of trading on an exchange market.
This story is from the North Carolina Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism
