the CEO of the company reached out on June 28 to Cuban with an email entitled “Call me pls” that asked Cuban to call ASAP.
Mr. Cuban called four minutes later from the American Airlines Center in Dallas where the Mavericks play and the two spoke for eight minutes and thirty-five seconds. The CEO told Cuban that he had something to tell him in confidentiality, which the CEO says Cuban agreed to. The CEO then explained that the company was raising money through a PIPE and wanted to invite Cuban, as the single largest shareholder, to take part. According to the complaint, Cuban got angry and said that he didn’t like PIPEs because they were dilutive to existing shareholders’ stakes. “At the end of the call, Cuban told the CEO ‘Well, now I’m screwed. I can’t sell,’” the complaint alleges.
Then the company did a PIPE financing. Im not going to discuss the good or bad of PIPE financing other than to say that to me its a huge red flag and I dont want to own stock in companies that use this method of financing . Why? Because I dont like the idea of selling in a private placement, stock for less than the market price, and then to make matters worse, pushing the price lower with the issuance of warrants.So I sold the stock.
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