Securities Sleuth

Recourse Loan Create Difficulties for Technical Olympic, Inc. (NYSE: TOA) Investors

Does it make a difference if a company represents that a loan is non-recourse and later the market discovers that company is liable for repayment of the loan?  Absolutely.  Just ask the investors in Technical Olympic USA, Inc. (NYSE: TOA), a Florida-based builder of single-family residences, town homes, and condominiums.

It is alleged that Technical Olympic represented that it had completed the acquisition of the homebuilding assets and operations of Transeastern Properties, Inc. and the joint venture was funded with non-recourse debt. 

However, on November 6, 2006, the Company disclosed in a SEC filing that the Company faced exposure for the full repayment of the loans of the Transeastern Joint Venture in the event the Joint Venture voluntarily filed for bankruptcy protection. More bad news would follow.  On November 7, 2006, the Company disclosed that one of the lenders to the joint venture had made a demand on the Company in connection with the debt of the joint venture.  Not surprising, Technical Olympic stock dropped both days as the true facts about the Company was revealed.

AtriCure (NASDAQ: ATRC) IPO Inaccuracies Lead to Litigation

AtriCure (NASDAQ: ATRC), a medical device company, allegedly may not have been totally forthcoming in SEC documents associated with its IPO.  Specifically, the Company neglected to mention that the Cleveland Clinic, where a significant portion of procedures that used the Company's products were being performed, was an investor in the Company.  Nor did the Company mention that some doctors at the Cleveland Clinic had been paid consultants.

On February 16, 2006, AtriCure disclosed that the Company was experiencing a "negative impact" on its business due to the revelations concerning the Cleveland Clinic. Not surprisingly, the stock plummeted and it is understandable that investors who purchased AtriCure before that date are upset.  They weren't provided with the true facts about the Company's operations.

Significant Problem for Certain Monster (NASDAQ: MNST) Shareholders

Last week Monster Worldwide Inc. (NASDAQ: MNST) took steps to get its backdated stock option problems behind it.  The Company indicated that it recognized $339.6 million in charges after an internal investigation uncovered improper stock-option awards to employees between 1997 and 2003.

October and November weren’t a good month for some of Monster’s executives.  Its, CEO Andrew McKelvey, quit his job as chief executive in early October.  In November the Company’s General Counsel, Myron Olesnyckyj, was fired for his role in the options backdating fiasco.

Now that management changes have been made, it appears the Company is addressing the problem.  However, this isn’t much help to many investors who purchased Monster between November 2005 and June of this year.  They paid too much for their shares because MNST dropped after revelations of the Company’s improper backdating of options.

Power Integrations (POWI) May Be Delisted

Power Integrations (POWI) shares have dropped sharply today after Friday’s announcement that the Company will not make its deadline for filing its delayed quarterly and annual reports and, as a result will likely be delisted.  Ouch.

This is the latest in a series of problems for Power Integrations shareholders.  One has to ask how long does it to address a problem and sort our your financials.  This situation has been going on since March of this year when the Company indicated it would delay its financial results while it reviewed the circumstances regarding its stock option grants.

How long should this take?  Don’t shareholders deserve more.

Backdated Options Woes for Apollo Group (NASDAQ: APOL) Investors

Another company with backdated option difficulties and as usual, it is the investors who get clobbered.  Phoenix-based Apollo Group (NASDAQ: APOL) provides higher education to working adults.  On June 19, 2006, the Company indicated that it had received a subpoena from the U.S. Attorney forthe Sourthern District of New York related to its stock option grants.  Subseqeuntly in July, the Company disclosed that it had received a letter from the SEC about an informal investigation into its stok option grants.  On October 18, 2006, the Company indicated that tis internal review indicated "various deficiencies in the process of granting and documenting stock options have been identified to date."

The market reaction was swift.  In heavy trading, Apollo shares fell $6.78 to $41.90 on October 18, 2006.  It appears that investors who purchased stock between March 29, 2002 and October 17, 2006, are affected.

Good News For Recent Power Integrations (POWI) Investors

Currently the stock of San Jose-based Power Integrations Inc. (NASDAQ: POWI) trades for over $26 per share. This is good news for recent POWI investors. But investors who purchased Power Integrations earlier this year went so lucky.  Many of those investors paid too much for their stock because the price of POWI plummeted after the Company disclosed its backdated options woes.  They purchased their shares at an artificially inflated price, but once their options problems were revealed, POWI shares dropped.

Let’s review what happened.  On March 13, 2006, Power Integrations announced a delay in the filing of its Form 10-K for fiscal year 2005 to allow for the completion of an ongoing internal investigation of company practices related to stock-option grants to officers and directors. The Company's shares declined from $24.19 per share to $23.93 per share.  On April 25, 2006, Power Integrations Inc. said it was spending several million dollars on an internal investigation regarding stock-option grants to officers and directors. On April 25, 2006, shares declined from $24.08 per share to $21.00 per share, a decline of approximately 13%.  Federal prosecutors have issued a grand jury subpoena to the Company for documents relating to its granting of stock options from 1995 to the present and the U.S. Securities and Exchange Commission is investigating its stock options practices.