HAMILTON, Bermuda, January 18, 2011 /PRNewswire/ --
Gerova Financial Group, Ltd. ("Gerova") (NYSE: GFC), a diversified financial services company, said today that it has retained the services of Kroll, the leading global intelligence and risk analysis firm, to investigate possible market manipulation and collusion aimed at driving down the price of Gerova's stock. Gerova intends to make public the findings of the investigation.
At issue is a Jan. 10 document circulated by Dalrymple Financial LLC, which purports to be an "independent" and "impartial" investment advisory firm, but is merely a vehicle for a disinformation campaign orchestrated by Keith Dalrymple, a sometime securities analyst with a questionable regulatory background, according to Gerova. Other than the Gerova document, no other "reports" are available on the Dalrymple website.
The Dalrymple Document, printed and laid out to resemble a report by a reputable securities firm but offering no address or phone number and published on a website in Bulgaria with an anonymous owner, is replete with materially false information and reaches a series of speculative and unsupported conclusions aimed at damaging Gerova in the marketplace by driving down its stock price. Dalrymple's claims that the company has acquired overvalued assets are not true. On page 18 of the 19-page document, the author finally reveals his motive, disclosing that the firm has a short position in Gerova stock -- meaning it profits if the shares fall in value. The short interest in Gerova stock more than doubled during the first half of December.
Short selling is legal and can be a useful check on stock market excess, but if undertaken in tandem with the coordinated dissemination of false information it crosses the line into market manipulation. One of Kroll's tasks in its investigation will be to discover whether Dalrymple acted in concert with others to concoct or spread the falsehoods contained in the document. Gerova is already in possession of documentation regarding the participation of other parties in the dissemination of false and misleading information, including at least one convicted felon currently on federal supervised release stemming from a conviction for multi-million dollar bank fraud.
Dalrymple Finance LLC is managed by husband and wife team, Keith and Victoria Dalrymple. According to biographical information on the Dalrymple website, which is hosted in Eastern Europe, Keith Dalrymple was previously Director of Research at New York Global Securities, Inc. For two years in 2005 to 2007, coinciding with Dalrymple's employment, securities regulators at FINRA investigated New York Global Securities finding the brokerage firm responsible for various securities violations, including violations in connection with equity research published by New York Global Securities. FINRA regulators brought charges that, "[the] research reports violated NASD conduct rule 2711 governing the content and disclosures required for equity research reports, and NASD conduct rule 2210(D) governing content standard for communicating with the public. The firm failed to disclose its actual, material conflicts of interest as required by NASD Rule 2711(H)(1)(C) and the reports also violated other sections of NASD's research report rules." FINRA imposed a fine of $45,000 and ordered a six month suspension of the company in the publication of any further research. Keith Dalrymple no longer holds any securities licenses.
Gerova is committed to full transparency in its financial reporting and takes seriously its obligations to provide accurate and timely information to the public and its shareholders. Gerova is current in its reporting obligations, including those of the New York Stock Exchange and the Securities and Exchange Commission (SEC). Gerova's next financial report, due in June for the 12-month period ending December 31, 2010, is in the process of being prepared. The annual report will be Gerova's first full-year results after having converted from a non-operating cash shell to an operating company in January 2010. Gerova intends to file this report in a timely manner and anticipates disclosures will be comprehensive. Furthermore, Gerova intends to file financial reports quarterly subsequent to its proposed acquisition of the two institutional investment banking firms previously disclosed.
About Gerova Financial Group, Ltd.
Gerova Financial Group is a diversified financial services company that aggregates permanent equity capital through the acquisition of private equity portfolios in exchange for its shares, and then redeploys the acquired assets to provide additional capital for income-producing financial services companies. Gerova went public as a Special Purpose Acquisition Company (SPAC), then in January 2010 successfully became an operating company as a result of acquiring nine private equity portfolios and operating insurance companies in exchange for its public shares. In December, Gerova announced the proposed all-share acquisitions of investment banks Seymour Pierce and Ticonderoga Securities. Gerova was admitted to trade on the NYSE in September 2010 and is listed in the Russell 2000(R) index published by Russell Investments, a ranking of the top US-listed public companies.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company, its acquired assets and the Company's business after completion of the transactions consummated in January 2010. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, which are based upon the current beliefs and expectations of the management of the Company, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the Forward-Looking Statements: (i) potential material reductions in the value of a substantial portion of the Company's assets acquired in connection with the business combinations consummated in January 2010; (ii) officers and directors allocating their time to other businesses or potentially having conflicts of interest with the Company's businesses; (iii) success in retaining or recruiting, or changes required in, the Company's officers, key employees or directors; (iv) the potential liquidity and trading of the Company's public securities; (v) the Company's revenues and operating performance; (vi) changes in overall economic conditions; (vii) anticipated business development activities of the Company following consummation of the transactions described above; (viii) risks and costs associated with regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act of 2002); and (ix) other relevant risks detailed in the Company's filings with the SEC. The information set forth herein should be read in light of such risks. Neither the Company nor any target companies or funds we intend to acquire assumes any obligation to update the information contained in this release.
Contact: For Gerova Financial Group, Ltd.: Jeff Lloyd Thomas Mulligan Sitrick and Company +1-212-573-6100
SOURCE Gerova Financial Group, Ltd.