SEC and the Company

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With Qwest, the company presented all sorts of false accounts and paid fines of $250M. The CEO, Nacchio went to jail for 6 years.

With Imclone, Sam was busted for insider trading and evidently did funny things with forging other officers signatures. Sam paid fines, went to jail. But, the company skated.

What will happen here? Without doubt, Gold goes down for making false statement to pump and dump his stock. But, those false statements are quite like the false accounts of Qwest. There were many complicit in the company and the board.

But, it's not clear to me if the SEC will just nail individuals or if the company will get hit.

Whaddayathink? anyone got better comps than qwest and imclone?
 






As I said in another post, Qwest is the best comparison and there was jail for Nacchio and huge fines and settlements with Qwest with hundreds of millions in the SEC settlement and even more in the class actions.

I see no way that ex-CEO here doesn't get years of prison. Bye Bye.
 






Anonymous said:
As I said in another post, Qwest is the best comparison and there was jail for Nacchio and huge fines and settlements with Qwest with hundreds of millions in the SEC settlement and even more in the class actions.

I see no way that ex-CEO here doesn't get years of prison. Bye Bye.
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I agree the Gold/Nacchio comparison is a good one.

But, at Qwest, they were releasing formal accountings that were signed by lots of officers. That's what the *company* got hammered for.

Here, they were doing something noxious but different. So, I wonder if there is a better comparison.
 






Anonymous said:
I agree the Gold/Nacchio comparison is a good one.

But, at Qwest, they were releasing formal accountings that were signed by lots of officers. That's what the *company* got hammered for.

Here, they were doing something noxious but different. So, I wonder if there is a better comparison.
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Not much different. Criminal guidance was in SEC filings. Even little things like Gold telling the investment world about Rob Rosens phony background about Herceptin launch. It was up to DNDN HR to vet that guy properly. Rosen lied but Gold told those lies to the investment world. If Gold doesnt get a similar sentence to Nacchio, then Nacchios lawyers will be made aware of the unfairness.
 






Anonymous said:
Not much different. Criminal guidance was in SEC filings. Even little things like Gold telling the investment world about Rob Rosens phony background about Herceptin launch. It was up to DNDN HR to vet that guy properly. Rosen lied but Gold told those lies to the investment world. If Gold doesnt get a similar sentence to Nacchio, then Nacchios lawyers will be made aware of the unfairness.
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Agreed, Gold was scum and is going down.

But, I'm not the sure company has the same culpability as Qwest where multiple people signed reports they knew to be false.

Gold no longer has much stock, it's a wonder he isn't completely pushed out along with any others who were culpable. That's what boards do!
 






Anonymous said:
Agreed, Gold was scum and is going down.

But, I'm not the sure company has the same culpability as Qwest where multiple people signed reports they knew to be false.

Gold no longer has much stock, it's a wonder he isn't completely pushed out along with any others who were culpable. That's what boards do!
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There were multiple people at Dendreon who were complicit. These were the highest positions in the company. The entire board of directors is culpable as well for letting Gold be a rogue criminal CEO with little to no oversight. You also have HB, RR, GS and so many others on executive council. I believe legal actions will be taken against individuals AND the company because the CEO, Board and Executive council ARE the company.

As for why the biggest cancer is still on the BOD, it is beyond reason. It must be something to the effect of firing a board member while he or she is being investigated by multiple federal agencies may be against protocol. Only thing I can think of.
 






Anonymous said:
As for why the biggest cancer is still on the BOD, it is beyond reason. It must be something to the effect of firing a board member while he or she is being investigated by multiple federal agencies may be against protocol. Only thing I can think of.
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Normally, they are pushed out quickly. The exception was Jobs. But, he was incredibly important to the company and while they backdated his options, they were clear that they were doing it in an open meeting with minutes. So, the SEC didn't have a case. If he treated them improperly, the IRS might, but the SEC was off base.

But, if you look at Qwest, Imclone, McAfee, .... their business declined as long as the criminals were around and the purpose of the company was distorted by protecting them.

That's so clear, it's probably in first year MBA programs now...
 












Anonymous said:
But, if you look at Qwest, Imclone, McAfee, .... their business declined as long as the criminals were around and the purpose of the company was distorted by protecting them.

That's so clear, it's probably in first year MBA programs now...
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Agree with all your points but there must have been a reason why these people did stay around at Qwest, Imclone and McAfee. Even though business declines and there is nothing of importance that Gold can do anymore here it even illustrates more that a company is probably not supposed to fire executives who are in serious federal criminal investigations. Maybe a firing during a criminal investigation is the company openly acknowledging the crimes? They will have to acknowledge these crimes at the appropriate time but during the investigation is probably not the time.

As for MBA programs, DNDN is going to be a serious case study for MBA programs in the very near future. It will teach students exactly what not to do.
 






Anonymous said:
Agree with all your points but there must have been a reason why these people did stay around at Qwest, Imclone and McAfee. Even though business declines and there is nothing of importance that Gold can do anymore here it even illustrates more that a company is probably not supposed to fire executives who are in serious federal criminal investigations. Maybe a firing during a criminal investigation is the company openly acknowledging the crimes? They will have to acknowledge these crimes at the appropriate time but during the investigation is probably not the time.

As for MBA programs, DNDN is going to be a serious case study for MBA programs in the very near future. It will teach students exactly what not to do.
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Things went down quickly at Imclone, Waksal did the insider trading in 2001. He left the company when he was charged in 2002.

Naccio was forced out immediately on discovery in 2002. The crimes were 1999 and 2001. He wasn't charged until a bit later.

At McAfee, it was a bit more complicated. They were fiercely acquisitive of up and coming competitors. They were doing it too fast to make the pieces work and mistated earnings in 1999-2000 to cover this up. They were charged for this in 2006. While this was still going on, they were then charged in an options backdating scheme. This caused the company to curl into a ball and they no longer with the aggressive competitors they've been. The top execs who *weren't* charged left the company.

I'm sure that if the SEC is coming after you, you have to feel your best bet is to make everything look normal and as though you have the trust and confidence of those around you. But, Gold's only got 630k shares left and he's cheated everyone. Hard to see WHY THEY let him stay around. He surely didn't leave either position voluntarily, I don't understand why they haven't put him completely at arm's length.
 






You seem to have a good grasp of these cases. Are you an attorney or just have interest in these cases? Do you have a prediction of how this is going to play out?

Gold is so conniving and so manipulative that I believe he is strategizing to make everything seem as normal as possible. A few months ago he became Chairman of the Board of a private company. I believe at a very minimum he sees himself banned from public companies so he did this months ago so it wont seem like a scheme when he is banished which I see as inevitable. I also think he may step down from DNDN on June 30 when his Chairman of Board position ends and turns into a director. Again he probably wants to save himself the shame of being forcefully removed if and when he is indicted and/or basnished from a public company. The other side of the coin is that he is such a money grubber and so driven by money that he probably prefers DNDN paying for his defense while is is on the board.

What is your take? I enjoy your posts.
 






Anonymous said:
You seem to have a good grasp of these cases. Are you an attorney or just have interest in these cases? Do you have a prediction of how this is going to play out?

What is your take? I enjoy your posts.
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No, not an attorney, but had close friends close to the action at McAfee (none of whom were complicit). They told me how their case was different from others.

Gold will get 5-10 years without a doubt (I'll bet "6"). He'll have to give up all the gains. His attorneys will tell him otherwise and take lots of his money. He'd be better off cooperating, pleading and getting out while he's still young and can go to his kids' graduations and weddings. He can take something of a high ground and come off as Martha Stewart rather than Nacchio. If he doesn't do this, the last of his money will pay the attorneys and he'll be lucky if his wife stays with him and gets a secretarial job to support them.

Or, he could join Mike Maestro.

What's less clear to me is the company. Board members and top officials will go down with him. But, there weren't any official signed company releases, so I think the company fines will be modest, e.g. <$100M. Thats' a gut feeling and guts are normally overly optimistic (read "Thinking Fast, Thinking Slow"). Insurance will pay <10%. But, it's all very uncertain, so it can't be easily factored into a buyout price. Although, I'd be shocked if the company paid less than $75M or more than $250M.

With that, the company could still be worth something, esp to a Pharma already selling into that space. For example, if you were JNJ, you look at the company and see the cost of producing Provenge (even at the current scale) is less than half of the revenue. The company's losses owe to the high cost of sales, general and admin. You shit can those people and it doesn't cost that much more to sell it with Zytiga than Zytiga alone. You're JNJ, so you know how to sell stuff and you can get approval for Provenge to be first line rather than so far downstream. JNJ would make money on the current level of sales, but have Provenge revenues of $1.5-2B within 24 months of a takeover. The current clowns will be lucky to reach $500M and still be losing money.

Latest rumors are Celgene, I don't know enough about Revlimid to know whether that rumor makes sense. Certainly not with Provenge, maybe with other drugs using similar techniques. So, I don't see why Celgene would be bold about the SEC uncertainties.
 






I think DNDN will be on the hook for a lot because there were company wide crimes and illegal ommissions. This was not just the rogue CEO. Most were complicit. The board let them be without a Chief Compliance Officer for 4 months as MG and Rob Rosen had free reign to do whatever they wanted to make as much revenues as possible before year end 2011. Ex Counsel Hamm who was supposed to be a "gatekeeper" did anything but act as a "gatekeeper". IMO he either had no idea about securities law or let Mitch do what he wanted out of loyalty for cashing out 15 million after approval. He then suddenly bolted the company 2 months before the crash after having been an employee since 2004. He also cashed out over another 2 million before he bolted.

I also believe there wont be a merger until the SEC is done . The criminal stuff with prison and such is DOJ stuff and that has to do with individuals. The company can be sold before the DOJ gets done and also before the class actions are settled. The new company will have to assume the class action liability but that will be discounted into the sales price. These rumors of $14 or so IMO simply cant be possible. There is the class action liabliity and the 600 million owed back on bonds. The more DNDN burns cash the more underwater those bonds will be. A merger has to happen fast and IMO has to happen after SEC stuff is figured out but can be before DOJ actions against individuals and before the class actions.
 






Anonymous said:
I think DNDN will be on the hook for a lot because there were company wide crimes and illegal ommissions. This was not just the rogue CEO. Most were complicit. The board let them be without a Chief Compliance Officer for 4 months as MG and Rob Rosen had free reign to do whatever they wanted to make as much revenues as possible before year end 2011. Ex Counsel Hamm who was supposed to be a "gatekeeper" did anything but act as a "gatekeeper". IMO he either had no idea about securities law or let Mitch do what he wanted out of loyalty for cashing out 15 million after approval. He then suddenly bolted the company 2 months before the crash after having been an employee since 2004. He also cashed out over another 2 million before he bolted.

I also believe there wont be a merger until the SEC is done . The criminal stuff with prison and such is DOJ stuff and that has to do with individuals. The company can be sold before the DOJ gets done and also before the class actions are settled. The new company will have to assume the class action liability but that will be discounted into the sales price. These rumors of $14 or so IMO simply cant be possible. There is the class action liabliity and the 600 million owed back on bonds. The more DNDN burns cash the more underwater those bonds will be. A merger has to happen fast and IMO has to happen after SEC stuff is figured out but can be before DOJ actions against individuals and before the class actions.
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I hear you, as bad as all those crimes are, Qwest was worse.. The "end" that I desribe is basically what Qwest and their criminals got.
 






If a crime is judged by how badly people were victimized were DNDN employees and shareholders and bondholders lesser victims than Qwest employees and shareholders and bondholders? There were billions lost on August 3, 2011 due to lies and false hype. These criminal lies and false hype is what deceived the current bondholders into buying bonds that are junk a mere 1.5 years later selling for 65 cents on the dollar. These lies allowed them to kick the can down the road and kept the price falsely inflated for almost a year. These crimes are pretty egregious. The crimes here are are some of the worst white collar crimes in the history of capitalism in the US. Easily in the top 10. If Gold doesn't get close to Nacchios sentence then Nacchios lawyers will need to be made aware of unfairness in the system.
 






Anonymous said:
If a crime is judged by how badly people were victimized were DNDN employees and shareholders and bondholders lesser victims than Qwest employees and shareholders and bondholders? There were billions lost on August 3, 2011 due to lies and false hype. These criminal lies and false hype is what deceived the current bondholders into buying bonds that are junk a mere 1.5 years later selling for 65 cents on the dollar. These lies allowed them to kick the can down the road and kept the price falsely inflated for almost a year. These crimes are pretty egregious. The crimes here are are some of the worst white collar crimes in the history of capitalism in the US. Easily in the top 10. If Gold doesn't get close to Nacchios sentence then Nacchios lawyers will need to be made aware of unfairness in the system.
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I have been agreeing that Gold's crime is definitely the equal of Nacchios.

However, I'm not sure the *company's* action was as bad as Qwest's. Qwest released fraudulent document after fraudulent document.
 






Anonymous said:
I also believe there wont be a merger until the SEC is done . The criminal stuff with prison and such is DOJ stuff and that has to do with individuals. The company can be sold before the DOJ gets done and also before the class actions are settled. The new company will have to assume the class action liability but that will be discounted into the sales price. These rumors of $14 or so IMO simply cant be possible. There is the class action liabliity and the 600 million owed back on bonds. The more DNDN burns cash the more underwater those bonds will be. A merger has to happen fast and IMO has to happen after SEC stuff is figured out but can be before DOJ actions against individuals and before the class actions.
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There is a bargain to be had here. Any good pharma would make money at the current sales rate AND yet would sell 2-3x as much of the stuff. The production costs aren't high, it's the Fat admin (ok, that's too literal...) that's preventing profit.
 






The margins will always be thin because it is a bit of a complex therapy and not a pill.

Anyone buying DNDN has COGS to consider but also the potential costs of the class action and also the approximate $300 million underwater of the bond offering. Even if the company is deemed to be worth $2 billion without those factors I think it is fair to say you can chop off another billion when you incluse those factors. Keep in mind, Nortel paid billions in their settlements.
 












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