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→‎Criticism: Rm sentence: this is only a passing mention in the source and it does not criticise Roth.
→‎Reverse mergers: Rm para. The cited ref even quotes Heckmann saying "... Roth ... did their own due diligence ..." and that "He absolves Roth Capital ..."
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=== Reverse mergers ===
=== Reverse mergers ===
in December 2010, The Street reported that prominent US investor Richard Heckman less than a year after acquiring China Water and Drinks Corporation for more than half a billion dollars, stated that he had been "swindled", that China Water was "mostly a fiction", that its founder "Xu Hong Bin" was an alias used to conceal a criminal record and that Byron Roth had arranged the transaction between Heckman and Xu Hong Bin.<ref>{{Cite news|url=https://www.thestreet.com/story/10953579/1/dealmakers-long-trip-through-china-rto.html|title=Deal Wizard Meets His Match in China|last=Eden|first=Scott|date=2010-12-22|work=TheStreet|access-date=2018-08-31|language=en-US}}</ref>

In September 2013 ''[[The Washington Post]]'' reported that Roth had arranged a reverse merger for China Electric Motor Company (NASDAQ: CELM). After the IPO, Roth issued five "buy" ratings on the stock. About a year later, the company delayed its regulatory filings, trading in the stock was halted and the company's auditor resigned. In October 2011, the Nasdaq delisted CELM.<ref>{{Cite web|url=https://www.washingtonpost.com/business/china-electric-motors-reverse-takeover-leads-to-major-losses-numerous-lawsuits-in-us/2013/09/20/7bb975d8-1eec-11e3-8459-657e0c72fec8_story.html|title=China Electric Motor's reverse takeover leads to major losses, numerous lawsuits in U.S.|website=Washington Post|language=en|access-date=2018-09-04}}</ref>
In September 2013 ''[[The Washington Post]]'' reported that Roth had arranged a reverse merger for China Electric Motor Company (NASDAQ: CELM). After the IPO, Roth issued five "buy" ratings on the stock. About a year later, the company delayed its regulatory filings, trading in the stock was halted and the company's auditor resigned. In October 2011, the Nasdaq delisted CELM.<ref>{{Cite web|url=https://www.washingtonpost.com/business/china-electric-motors-reverse-takeover-leads-to-major-losses-numerous-lawsuits-in-us/2013/09/20/7bb975d8-1eec-11e3-8459-657e0c72fec8_story.html|title=China Electric Motor's reverse takeover leads to major losses, numerous lawsuits in U.S.|website=Washington Post|language=en|access-date=2018-09-04}}</ref>


Revision as of 11:33, 28 September 2018

Roth Capital Partners, LLC
Company typePrivate
IndustryFinance and insurance
Founded1984; 40 years ago (1984)
HeadquartersCalifornia, USA
Key people
Byron Roth (Chairman and CEO)
ProductsInvestment banking
Financial services
RevenueIncrease US $ 55 million (2007)
Number of employees
135 (2007)
Websitewww.roth.com

Roth Capital Partners, LLC is a small privately-held investment banking company[1] headquartered in Newport Beach, California.[2] Since inception in 1984, ROTH has been a small and microcap stock underwriter.[2]

The company has been criticized for its underwriting practices and some of the deals it has promoted.[3][4]

History

In 1977 Walter Cruttenden III founded Capital Data Bank, a system that matched private companies with private investors by computer.[5][6] Under Cruttenden's chairmanship that company grew into Cruttenden & Co. which Byron Roth joined in 1992. Roth bought a 15% share of the company and became president in 1994, upon which it was renamed Cruttenden Roth.[7]

Byron Roth became CEO in 1997 and retained that post when he became chairman on Cruttenden's resignation in November 1998. Initially described as an amicable departure, in July 1999 Roth sued Cruttenden for stealing the company's clients and employees.[3][8] In February 2000 the firm changed its name to Roth Capital Partners, Inc.[9]

Between 2003 and 2010 about 350 Chinese companies gained listings in US stock markets through reverse mergers and in August 2010, Barron's reported that Roth's promotional materials claimed that it had pioneered the practice of PIPE financing and had helped raise over $2.8 billion for 67 Chinese companies listed on the U.S. markets.[10]

Conferences

The company has organized annual conferences since 1988. Held in Orange County, California their purpose is to facilitate small public companies make pitches to institutional investors. The conferences feature lavish evening entertainments which have featured exotic sets, scantily-clad dancers, and performers such as Snoop Dogg and The Pussycat Dolls,[11] and have sometimes been criticised for this, being compared to the lavish parties of Drexel Burnham Lambert's of the mid-1980s.[2]

In 2006, Byron Roth reported that although an event costs the company around $2.5 million to stage, they usually pay for themselves.[11] Since 2011 the conferences have also financially supported the Challenged Athletes Foundation.[12] The 2018 conference was attended by 1,000 invited investors and 500 companies, with entertainment from Migos and Pat Benatar.[12]

The New York Post reported in February 2007 that Roth had hosted clients at an event where the primary feature was "several dozen" topless Asian models with the ticker symbols of the companies Roth underwrote body-painted on.[2]

In August 2011, Reuters reported that just hours after the Public Company Accounting Oversight Board issued a warning regarding Chinese reverse mergers, Roth – which was a leading underwriter of Chinese reverse mergers – threw a party in which guests were surrounded by rhinestone-encrusted sculptures while hostesses wearing bikinis served cotton candy and rapper Pitbull put on a concert.[13]

Criticism

In 1998 the Los Angeles Times reported that Roth had been criticized for its underwriting practices, citing the company's role in the initial public offering of Aviation Distributors Inc., which later faced multiple shareholder lawsuits alleging the company had manipulated its revenues in order to boost the company's stock price. The company initially went public at $5 per share and later traded as high at $12.88 per share before falling to just 97 cents per share following the announcement of the lawsuits.[3]

In 2010 Barron's cited questions that had been raised by investors about Orient Paper, China Natural Gas and China Green Agriculture, firms underwritten by Roth, and which were later investigated for fraud by the SEC.[10][14][15]

The company was featured in the 2017 financial documentary The China Hustle for its underwriting relationships with dubious Chinese companies that led to losses for American stockholders while making windfall profits for the firm.[16][17]

Reverse mergers

In September 2013 The Washington Post reported that Roth had arranged a reverse merger for China Electric Motor Company (NASDAQ: CELM). After the IPO, Roth issued five "buy" ratings on the stock. About a year later, the company delayed its regulatory filings, trading in the stock was halted and the company's auditor resigned. In October 2011, the Nasdaq delisted CELM.[18]

Digital Domain IPO and Bankruptcy

In 2012, The Palm Beach Post reported that three federal class-action lawsuits had been filed that alleged Digital Domain had lied about its financial condition at the time of its initial public offering, and named Roth, who as the company's lead underwriter was responsible for ensuring the truthfulness and accuracy of the statements, as a defendant. Digital Domain filed for Chapter 11 bankruptcy less than 10 months after its initial public offering.[19][20]

In 2014 the state of Florida filed a lawsuit, naming Roth as a defendant, alleging conspiracy to commit fraud, that Roth had concealed a liquidity crisis at Digital Domain, which it called a "de facto Ponzi scheme"[21] and had duped Florida governor Charlie Crist as well as other Florida politicians out of more than $80 million in grants as it descended into bankruptcy.[22][23]

See also

References

  1. ^ Swann, Christopher (18 June 2014). "Elon Musk's Halo Effect". The New York Times. Retrieved 29 March 2015.
  2. ^ a b c d "Roth Capital's $leaze to Please". New York Post. 2007-02-05. Retrieved 2018-05-19.
  3. ^ a b c O'Dell, John (1998-11-12). "Founder Leaves, Passing Reins at Cruttenden Roth". Los Angeles Times. ISSN 0458-3035. Retrieved 2018-07-25.
  4. ^ Chu, Kathy (2012-11-12). "Reversing Course on China". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-07-29.
  5. ^ "Roth Capital Partners". Cruttenden Partners. Retrieved 23 September 2018.
  6. ^ "Capital Data Bank Incorporated". bizstanding. Retrieved 23 September 2018.
  7. ^ Kerber, Ross (1995-02-14). "Investors, Technology Firms Seek Their Match..." Los Angeles Times. ISSN 0458-3035. Retrieved 2018-09-23.
  8. ^ Sanders, Edmund (1999-07-24). "Cruttenden-Roth Split Becomes Acrimonious". Los Angeles Times. ISSN 0458-3035. Retrieved 2018-09-20.
  9. ^ Jones, Dow (2000-02-19). "Banker Cruttenden Roth Says It Will Change Name". Los Angeles Times. ISSN 0458-3035. Retrieved 2018-08-12.
  10. ^ a b "Beware This Chinese Export". Barrons. 28 August 2010. Retrieved 28 September 2018. {{cite web}}: Unknown parameter |authors= ignored (help)
  11. ^ a b Wells, Jane (23 February 2006). "Conferences mix business with hip-hop, pop". NBC News. Retrieved 23 September 2018.
  12. ^ a b Francis, Kedric. "ROTH Conference in Laguna Niguel brings out big musical acts, raises funds". Orange County Register. Retrieved 23 September 2018.
  13. ^ Editorial, Reuters. "Special Report: China's shortcut to Wall Street". U.S. Retrieved 2018-09-04. {{cite news}}: |first= has generic name (help)
  14. ^ Eden, Scott (2011-01-12). "SEC Probing China Green Ag". TheStreet. Retrieved 2018-07-29.
  15. ^ "The Rosen Law Firm Files Class Action on Behalf of Orient Paper, Inc. Shareholders – ONP". Retrieved 2018-08-12.
  16. ^ Goldstein, Gary. "Financial documentary 'The China Hustle' details alleged U.S.-China collusion". latimes.com. Retrieved 2018-05-19.
  17. ^ "Jed Rothstein's The China Hustle pulls back the curtain on a new ticking time bomb in the financial markets". Retrieved 2018-06-13.
  18. ^ "China Electric Motor's reverse takeover leads to major losses, numerous lawsuits in U.S." Washington Post. Retrieved 2018-09-04.
  19. ^ "3 lawsuits accuse Digital Domain of lying about financial status". palmbeachpost. Retrieved 2018-08-17.
  20. ^ Agrawal, Tanya. "Titanic effects creator Digital Domain bankrupt, sale agreed | Reuters". U.S. Retrieved 2018-08-17.
  21. ^ "Florida lawsuit calls Digital Domain "de facto Ponzi scheme"". www.bizjournals.com. Retrieved 2018-08-17. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
  22. ^ "Florida Claims Filmmakers Defrauded It". 2014-08-15. Retrieved 2018-08-17.
  23. ^ Gleason, Stephanie (2014-07-23). "Florida Sues Former Digital Domain Executives". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-08-17.
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