General News

Microsoft (Nasdaq: MSFT) will add Qualcomm (Nasdaq: QCOM) as a supplier for it Surface RT tablet, reported Bloomberg, citing sources. The new version of the Surface will feature Snapdragon processors. NVIDIA Corporation's (Nasdaq: NVDA) Tegra chip will run some versions, said one person.

The SEC alleges that David F. Bahr of Rancho Santa Fe, Calif., artificially increased the trading price and volume of iTrackr Systems stock when he conspired with a purported businessman with access to a network of corrupt brokers. What Bahr didn't know was that the purported businessman was actually an undercover FBI agent. During a test run of their arrangement, Bahr paid a $3,000 kickback in exchange for the initial purchase of $14,000 worth of iTrackr shares.

In a parallel action, the U.S. Attorney's Office for the Southern District of California today filed criminal charges against Bahr.

"Bahr tried to artificially inflate the price and volume of iTrackr shares to the detriment of retail investors who wouldn't have known the real story behind the flurry of market activity," said Michele Wein Layne, Director of the SEC's Los Angeles Office. "Working with criminal authorities, we were able to stop Bahr’s misconduct before he could seriously impact the markets and harm investors."

The SEC also has issued an order to suspend trading in iTrackr securities.

According to the SEC's complaint filed in federal court in San Diego, Bahr set out to give the markets a false impression of supply and demand in iTrackr stock where none actually existed. He coordinated the purchase of iTrackr shares so the stock price could remain high enough for him to effectively promote it at a later date and artificially inflate the price even higher. Bahr arranged for the dissemination of promotional material that overstated the likelihood of iTrackr's success and future profits.

According to the SEC's complaint, Bahr connected with the undercover agent in November 2012 and was told that that he represented a group of registered representatives who had trading discretion over certain client accounts. In exchange for a 30 percent kickback, the brokers could arrange to purchase iTrackr stock through their customers' accounts and hold the shares for up to a year in order to avoid sales that might decrease iTrackr's stock price. Bahr agreed to pay the kickback and sought the purchase of 10 million iTrackr shares at an average of 25 cents per share for a total of $2.5 million. Bahr agreed not to disclose the kickback to any iTrackr investors.

According to the SEC's complaint, Bahr agreed to a test run involving the purchase of modest amounts of iTrackr stock on the open market, and Bahr would then pay a small commission. During the first week of December 2012, a total of 135,000 iTrackr shares were purchased, which represented approximately 32 percent of iTrackr’s trading volume during that time.

Bahr was then informed that the test purchases totaled approximately $14,000, and he owed a $4,000 commission. Bahr paid $3,000 through a wire transfer, and he asked another person to pay the remaining $1,000.

The SEC’s complaint alleges that Bahr violated Section 17(a)(1) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks financial penalties, a penny stock bar, and a permanent injunction against Bahr.

The SEC's investigation, which is continuing, has been conducted by Marc Blau and Sara Kalin of the Los Angeles Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).

Brocade Communications (Nasdaq: BRCD) confirmed in an email statement to Bloomberg that its vice president of Americas sales is leaving the company to pursue other opportunities. In the view of Wells Fargo analyst Jess Lubert, the departure is a negative development.

"We view Mr. Ellery's departure as a negative development for Brocade, as we believe he was well respected in the Ethernet sales organization and his resignation may lead to additional turnover in the business. We also view his departure as a sign that changes are taking place at Brocade, with the company recently hiring Jeff Lindholm as the new SVP of Worldwide sales, announcing plans to eliminate $100MM in cost from the business, and refocusing the Ethernet sales effort on high margin areas where the company believes it can win," said Lubert.

"While these changes may position Brocade to deliver improved growth and profitability over time, we see the potential for near-term disruptions (as illustrated by Mr. Ellery's departure), which could negatively impact results and make it difficult for the stock to work over the next several quarters," added the analyst.

Wells Fargo has a Market Perform rating on Brocade.

For an analyst ratings summary and ratings history on Brocade (NASDAQ: BRCD)click here. For more ratings news on Brocade click here.

Shares of Brocade closed at $5.78 yesterday, with a 52 week range of $4.44-$6.44.

The U.S. Supreme Court ruled that regulators can challenge so-called pay-to-delay deals between branded drug companies and generic drug makers. In a 5-3 vote, the court said the Federal Trade Commission can challenge deals.

In his opinion for the majority, Justice Stephen Breyer wrote, "Settlement on the terms said by the FTC to be at issue here - payment in return for staying out of the market - simply keeps prices at patentee-set levels, potentially reducing the full patent-related $500 million monopoly return while dividing that return between the challenged patentee and the patent challenger," Breyer wrote. "The patentee and the challenger gain; and the consumer loses."

Commenting, BMO analyst David Maris said the ruling in favor of the FTC was a "significant negative for the generic drug industry." In his view, it halt deals, puts into question existing deals, and open up reverse payment deals to FTC scrutiny and anti-trust suites.

In a positive development for drug companies, the court rejected the FTC's proposal for a quick look approach.

Stocks effected by the U.S. Supreme Court ruling include generic drug companies Teva Pharmaceutical Industries Limited (NYSE: TEVA), Mylan, Inc. (Nasdaq: MYL), and Actavis, Inc. (NYSE: ACT). Shares of Pfizer Inc. (NYSE: PFE), Merck & Co. Inc. (NYSE: MRK), Bristol-Myers Squibb Company (NYSE: BMY), and other drug makers are also on watch.

Shares of Medivation (Nasdaq: MDVN) declined on Monday. The fall is tied to news Johnson & Johnson (NYSE: JNJ) signed a definitive agreement to acquire Aragon Pharmaceuticals, Inc., a privately-held, pharmaceutical discovery and development company focused on drugs to treat hormonally-driven cancers.

The acquisition includes Aragon's androgen receptor antagonist program. Aragon's lead product candidate is a second generation androgen receptor signaling inhibitor, ARN-509, in Phase 2 development for castration resistant prostate cancer (CRPC).

Investors could see increased competition for Medivation's prostate cancer drug, Xtandi.