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The securities attorneys at Peiffer Wolf Carr Kane & Conway represent investors in their claims against brokerage firms (broker-dealers), such as National Securities Corp, and their individual brokers. Peiffer Wolf Carr Kane & Conway represent investors who have suffered financial losses as a result of insider trading, investment fraud, inappropriate investment strategies, Ponzi schemes, broker misconduct, unsuitable investment recommendations, failure to supervise, and abusive practices by financial institutions.

Based on our experience and recent allegations, we believe there are investors who have suffered losses as a result of National Securities Corp’s alleged practices. If you held or currently hold accounts with National Securities Corp, you should contact Peiffer Wolf Carr Kane & Conway immediately for a FREE Consultation.

Peiffer Wolf Carr Kane & Conway has helped thousands of investors who have suffered substantial losses. Contact Us today by calling 585-310-5140 or by filling out an online Contact Form.

Whistleblower Complaint – Insider Trading Allegations – TG Therapeutics

According to a recently-filed whistleblower complaint, Michael Mullen of National Securities Corporation allegedly engaged in insider trading of stocks of TG Therapeutics, Inc. TG Therapeutics is a subsidiary of National Securities Corporation’s parent company Fortress Biotech, Inc. The complaint goes on to allege that Mullen was purchasing options, effectively betting against the company (betting that the company’s stock will go down in value), on TG Therapeutics on September 12, 2018, roughly two weeks before the stock dropped by about 44%.  On September 25, 2018, immediately after the 44% drop, Mullen sold his options, realizing a profit of more than 200% in just two weeks.

According to the complaint filed on behalf of the former National Securities Corp compliance officer:

In September 2018, [CEO and Chairman of National Holdings Corporation Michael Mullen] engaged in insider trading of Fortress subsidiary TG Therapeutics Inc. (“TG Therapeutics’)–managed and directed by Defendants Michael Weiss, Daniel Hume, and Neil Herskowitz, among others–before it announced disappointing clinical results. When TG Therapeutics announced those results on September 25, 2018, its stock dropped 44%. But on a day that TG Therapeutics lost nearly half its value, Defendant Mullen sold put options he had purchased twelve days earlier–and more than doubled his money. Several of National’s directors and officers facilitated and attempted to cover up Mullen’s insider trading.

To make matters worse, National Securities Corp allegedly continued to sell its investors shares of TG Therapeutics (TGTX) in the weeks leading up to the announcement that the clinical trial for U2 – a potential treatment for chronic lymphocyte leukemia – was not moving forward.

The complaint further states:

[U]pon information and belief, at Fortress’s direction, National had aggressively marketed and sold TGTX to NSC’s own customers.” Mullen was the managing director of Opus National Private Client Group (“Opus Private”) … Between September 13 and 24, Opus Private accounts sold another 152,545 shares of TGTX, including 100,000 shares from a single account on September 17.

Prior to the internal investigation into Michael Mullen’s alleged insider trading, he considered Kay Johnson – a chief compliance officer – to be invaluable to National Holdings Corp. Months earlier, Mullen’s performed Kay Johnson’s performance review. Notably, he stated “I told Kay I have a two-year plan. She needs to train her heir apparent to replace her as CCO and I will move her upstairs … I envision Kay as president, chief operating roles and even beyond.”

According to InvestmentNews, “The goodwill between National Holdings and Ms. Johnson likely started to unravel in September 2018, when a clearing firm alerted Ms. Johnson to suspicious trading activity related to TG Therapeutics, a company whose CEO is on the board of Fortress Biotech, which owned National Holdings until February of this year.”

According to a Reuters,  “Owning National [Securities] gives Fortress an in-house underwriter and a private sales force of about 700 brokers – nearly a third of whom have been flagged by regulators – to help it raise money for its stable of nine ventures that are developing new drugs or treatments.”

The article goes on to provide examples of specific instances where Natioanal Securities Corp was recommending stocks from biotech companies owned by their parent company, Fortress. National Securities Corp has recommended stocks from companies like Mustang Bio, Inc (MBIO.O), Avenue Therapeutics, Inc (ATXLO), and Checkpoint Therapeutics Inc (CKPT.O). Unfortunately for their clients, these stocks ended up underperforming, sometimes significantly.

For outside investors, Fortress’s ventures not only carry the typical risks of a long-shot biotech bet; they also come with unique conditions that can put outsiders at a disadvantage relative to the parent company.

National Securities Corporation – By the Numbers:

• CRD# 7569
• SEC# 8-164
• 79 Disclosures:
  • 62 Regulatory Events
  • 2 Civil Events
  • 15 Arbitrations