MINNEAPOLIS, MN—Henson Efron business litigation attorneys Court J. Anderson and Benjamin J. Hamborg recently represented two minority shareholders in a shareholder dispute that culminated in December 2020 in a multimillion-dollar whistleblower award from the SEC.
The case involved allegations that the controlling shareholders of a publicly traded company illegally manipulated the company’s stock price in order to trigger escalator clauses in certain promissory notes held by the majority shareholders, which put the company in potentially catastrophic debt.
Representing two of the company’s minority shareholders, Anderson explored his clients’ options, ultimately determining that the best course of action was to submit the minority shareholders’ evidence to the SEC’s Office of the Whistleblower. Over the course of more than two years, attorney Anderson continued to communicate with the SEC, providing additional information and evidence in response to the SEC’s requests. This information eventually led to two SEC enforcement actions and a civil action against the controlling shareholders and to the criminal prosecution and conviction of one of the majority shareholders. Collectively, these actions resulted in monetary sanctions of over $20 million, with one shareholder sentenced to serve approximately ten years in jail.