There is a rumor floating around on investorshub that NIR Group founder Corey Ribotsky has resigned from the company. I looked into this on Friday and did not find any evidence to support it. The corporate filings with New York Secretary of State for NIR Group Asset Management still list Ribotsky as the controlling person for the company. I haven’t talked to a single investor who was informed by NIR Group or the PwC Cayman Islands liquidators that Ribotsky is out. When I called the office Friday his receptionist stated he was working that day. Calls and emails to Ribotsky’s outside pr firm for comment about a resignation were not returned and PwC would not respond to a request for comment or clarification.
The email posted on investorshub that suggest Ribotsky is out might be doctored. I’ve received emails about hedge fund news updates from firstname.lastname@example.org for over a year now and did not receive this email. Ginvestor7 is associated with a new blog I believe was set up by Ribotsky or his pr firm Gotham Government Relations. Gotham’s office is located in Corey’s Long Island office building and I’ve been told he leases space to the pr firm. The blog aggregates stories on hedge funds and Wall Street fraud and on occasion has written a ‘pro-Ribotsky’ column-like post. I don’t believe the Ginvestor site is run by a professional journalist and as of Monday afternoon the email posted on investorshub has not shown up on the Ginvestor website. But I found it interesting that it was posted on investorshub only a few hours after I had called Ribotsky’s lawyer-slash-public relations guy, Brad Gerstman, to confirm or deny the rumor.
If Ribotsky does quit as collateral manager for any of the NIR Group funds you should see him or PwC send out a letter to investors or I’ll report it at DealFlow Media. Investors and PIPE borrowers say Ribotsky is a control freak so for him to resign by his own accord would be way out of character. For now my research shows someone is just teasing his allegedly defrauded investors.
There is some actual news on the SEC’s case against Ribotsky though. It looks like he ponied up the cash to pay Doug Hirsch of New York-based Sadis Goldberg to represent him and NIR Group who are both defendants. As of November 28th documents filed in the Eastern District of New York show Hirsch is taking over the case. This could signal Ribotsky is taking the SEC charges seriously and has realized he’s going to need a seasoned high powered attorney, like Hisrch, to represent him against the governement’s investor fraud suit. Hisrch has until December 5th to answer the SEC’s complaint or file another request for extension.
Hirsch doesn’t represent Ribotsky’s former right hand man Daryl Dworkin who is also named as a defendant in the SEC’s suit. Court documents show Dworkin had already agreed to a partial settlement with the SEC before they filed suit against Ribotsky on September 28th.
UPDATE 12-6-11: NIR’s attorney filed a motion to dismiss yesterday with a list of technical reasons the SEC’s case doesn’t hold water. The main theme of their response was most of the assets sit in offshore funds and are thus foreign securities, which Hirsch argues the SEC can’t charge for fraud. There is also an interesting note that Dodd Frank now requires the SEC to file a suit within 180 days of issuing a Wells Notice to a firm. A Wells Notice is a formal warning that the regulator is investigating you. The SEC took over a year to file suit after the Wells notice was issued to NIR so it will be interesting to see how the Federal judge interpets this rule. The next news event will be how many of the SEC’s claims the judge allows. A pre-trial conference is schedualed for January 20th, 2012.
UDPATE 12-8-11: I’ve learned the email from ginvestor7 about Ribotksy leaving NIR Group was not doctored but sent to Ribotsky’s wife (who recently filed for divorce) who then sent it to people following Ribotsky’s SEC case. I still have no confirmation that Ribotsky has offically left his control position at the firm and believe the ginvestor7 email address is used by Ribotsky and his PR firm.
Editors Note: As stated on my About page, I have no ecomonic interest in the funds or companies I write about and do not take payment from sources or investors in a fund.