and to pay off debt to collapse the very company from which they raise money in the st place kalani reap millions in profits by immediately selling all the shares at a profit because it it was unable to get the shares at a significant discount and this death spiral scheme but that was all clear and they were allowed to do that right while the transactions themselves were disclosed what wasn't  it may dilute the shares if one issues but in this case the company wasn't using the money in the best interests of the company the company's all that money to siphon it off to piss delist companies and what's telling here is in two thousand and sixteen the year before this scheme began the company had a not operating loss of four hundred thousand dollars at the end of the scheme this short time period now i'm an adjusted basis there were one hundred and seventy million shares outstanding at the end of the class period the defendant's c e o only owned twenty six shares it's unheard of and he retained complete control over the company now if you look at the the knowledge that supports this plan of the defendants it's not school what wasn't disclosed was the certainty that the kalani and the defendants had agreed to quickly saw the shares and decimate the stock if you look at the registration statement the statement says that this agreement will span over two years and it may continue to issue shares under the under the agreement they knew right away they were going to take two years traverses for saying that they knew right away and you know you don't have any source that says this was the plan and the facts allege canon for knowledge and let me just point to the fact that the scheme served no legitimate purpose st of all it's very unusual for a company to enter into a common stock purchase agreement without any limit at all on the shares which to avoid decimation of the only if if there was that chance and water one of the allegations i suspect to the existence of that and yes well i think that the court ignored it many facts that you can infer knowledge and again if you look at the proximity of the sales for instance the the the registration statement was made effective february st the scheme went into place february manipulated because they didn't disclose the fact that there was what is the basis for saying that this was the plan and again i think it's the facts where you can infer knowledge i'm not saying that there was price began to inch toward the floor for kalani not to be able to profit pistol is through up through one of his family owned company was granted for only one thousand dollars super voting rights of one hundred million dollars when the company only had thirty five million dollars sorry one hundred million dollars shares the company only had thirty five million shares outstanding why would they grant him voting rights of one hundred dollars shares if they were continue to do the reverse stock splits they knew that there was going to continue to be a lot more shares outstanding and they he needed this to retain his voting rights also the court annoyed the fact that had engaged in this practice with two other companies that are also currently under s c c investigation for the same exact practice and that the scheme served absolutely no legitimate purpose it ships they use the capital to pay off to steal this bonuses compensation and that's evident by the fact that the company and current net operating loss of thirteen and a half one million dollars after raising a one hundred million dollars when the year before when it had no money and no ships it only had an operating loss of four hundred thousand these these are all facts which were completely ignored by the district court three minutes from bottles here from have signed thank you e plaintiff raised and her argument this morning i'll start with where she finished the capital could be used for any purpose it was used to buy ships that's in the public documents there's no dispute about that  there were no ships in the beginning of the period the company didn't have only a market cap of twenty million dollars it needed capital to continue and to try to survive and it and it and it did just that and it's still around today troubling well i think the allegation is that the money was used to purchase ships for implicity all its related entities and they somehow turned that into one hundred percent profit you know these ships are pretty rare thing there aren't a one million tanker ships floating around in the ocean ready to be bought by anybody and anything this is an extremely specialized industry so  ships raised capital you know on terms that were not great obviously because they were losing money and they had almost no market cap and if you look at you know obviously answer a question you want to but if you look at the a case that's a company that had a market cap of about a one billion dollars at the beginning and went to zero and into bankruptcy and this court noted you know there are times when a company can't raise money on favorable terms so they have to raise money on terms that aren't gr or suggested by its question so be it that is not a securities fraud case that is as this court well knows and shareholder derivative lawsuit there was an independent committee that approve these transactions and if the shareholders didn't like it record before us today what is the value of the ship so i don't think that that is established but again that is that is an issue that went before independent committee of the board and it was approved it was a related party transaction it was all disclosed this is supposed to be a disclosure case or an emissions case or manipulation case and it's none of those things it's masquerading as such but what it really is is a shareholder derivative suit or a holder claim or something like that and when the plaintiff was asked the questions today what is it that wasn't disclosed the answer you heard was the certainty rather than the possibility of just amending the price of the stock actually what the complaint says and what the argument was before the court in the briefs was the certainty rather than the possibility that all of these stock issuances would be carried out and that everybody knew that on day one that isn't even what happened never mind that it was certain that it would happen let's remember that even though the answers today were about february of two thousand and seventeen and agreements with kalani actually the class period was supposed to start in november of two thousand and sixteen with a deal with an entity called new york for three million dollars worth of stock of which only two million was sold so even that transaction didn't consummate far argument is that what was not disclosed is the intent to quickly turn around you know they bought these shares at a discount e price went down and then they were doing this reverse stock split and that all along the intent was to engage in these transactions to siphon off money to the defendants and so i think the allegation is what wasn't disclosed was their plan to engage in this scheme so how do you respond so i think the wilson vs merrill lynch case which is again from this circuit answers that question pretty definitively because we have a disclosure of the material objective facts which is what wilson v maryland says that was an auction rate securities case but it's quite relevant here of course what they're saying is when your honor is quite right as to what they say in the breach that's not what they said today but that is what they said in the briefs rather that it was the intent to consummate all these transactions that wasn't disclose the class period starts with the disclosure that the company may issue up to two hundred and six dollars or two hundred and three million dollars worth of stock they didn't come anywhere close to that but that was disclosed day one of the class period so what is it that wasn't disclosed that may mean this will or maybe means we really really want to do this and we're going to do it as best we can that's  securities fraud case that's not nearly sufficient enough and i think judge kogan got it exactly right and all he was doing was following wilson v merrill lynch which disposes very clearly that may doesn't mean maybe may means we can we are permitted to know we're not sure whether or not we're going to do it it can't be read that way and oh by the way every time we did this it wasn't like we said this the last time we're going to do it whenever we did it we said and we may do it again right in the disclosure so there's nothing that's not disclosed there's no material objective fact it's not the schools and thought is the standard that this based on the public filings it's based on information that top ships put forward to the public in the allegation in the complaint to me as to colombians and the is that they did exactly what they said they were going to do they bought shares from the company and they sold them exactly in the manner in which they were entitled to do under the the agreements that were disclosed to the market there's no allegation that kalani years and they did otherwise than that there is no misrepresentation that the pla s claim was made and without that course there can be no claim for securities fraud there's no allegation of course that klein years and he had anything to do with the internal corporate actions of top ships or the related party transactions that they mention or the decisions about reverse splits there's no allegation of that but that wouldn't matter because the fact of the matter is everything that they have here is based on the public filings the other thing that's really unusual about this case is as counsel noted the class period begins the day that top ships announces that it plans to try to inject another two hundred million dollars of capital into the company by issuing new shares of stock so from day one the market is on notice that that is their intention ultimately they did far short of that but that's their intention so every plaintiff is somebody who bought with knowledge that this is a company that plans to engage in an inherently diluted transaction i mean obviously a market cap of twenty million you're looking at least ninety percent dilution assuming the stock price they say is the same of course in any market an infusion of a lot more sales is going to depress stock prices well so every plaintiff bought knowing that there was a deluded transaction that was coming and that there was that was going to have a diminishing effect on the stock price and all of that was disclosed in the initial documents that it was going to be dilutive necessarily and that it was very likely going to drive the stock price down the the fact of the matter is that there really is nothing that plaintiffs complain about here that was not disclosed before before the the transactions that they engaged in occurred and there cannot be market manipulation without  misrepresentation made to the public the fact of the matter is that the conduct in there is no there is no well played allegation that there was knowledge of how this was always going to proceed at the beginning there isn't because there couldn't have been the fact of the matter is what actually happened was much more consistent with a party who didn't know how this whole thing was going to go there were small transactions that grew over time and ultimately didn't get to the two hundred million dollars barrier pretty get past with all due respect it's misleading to get up here and say that money was used to purchase vessels the complaint is replete with allegations that  his deal is related companies received bonuses and compensation which was the bulk of what their bonus was what their monies used for central mer the company that he own received a one and a half one million dollars bonus goes to the manipulative acts that they were never using this money in the st place for corporate business purposes that they weren't using it to keep the company afloat and by purchase vessels they were using it to pay off to steal less in bonuses and compensation shown by the fact that they went into even more debt at the end of the class period and also i want to say that the defendants argument belies the case law there are loads of cases and i can just list them they're all they're all cited in the brief that basically say that even legitimate transactions that are disclosed up held where the transactions were disclosed because they didn't reveal the full parameters of the only case and how to get around wilson wilson was a different situation because and wilson the may and i think in wilson the disclosure was that you know merrill lynch may routinely do us a certain something and as i recall the plaintive said well gosh they didn't even in reality it wasn't that they were thinking about doing it periodically is that they were going to definitely do it and i thought this court said may routinely those words are can perfectly consistent with an intent to do it every single time so i guess i don't understand how that's different from your allegation that they said well we might do it and you're saying well they were going to definitely do it well that's exactly what this court said was fine for merrill lynch in wilson isn't it so how is that different well and wilson the court also held as a theory on appeal didn't coincide with the allegations in the complaint and that manipulative conduct had been known in the market because it was the subject of an s e c order so they disclosure in that case came after this f c c order stating what the defendants were doing wrong but in this case if you look at the case law cited even in one  with the purpose to drive down the price of the stack that's manipulable x and that's so so wilson the only case defendants cite is countered by ten or fifteen cases where the nd circuit finds that when you allege manipulative acts with an intent to drive down the price of the stock that's sufficient and that's based on these factual inferences in this case that the court disclosed here is because the court said the shareholder holders voted for the reverse actions and they can't now be made to complain about what they voted for the shareholders didn't vote for these transactions pis pushed through these transactions with with his control of the vote even though he only had twenty six dollars shares at the end of the class period thank you reserve decision thank you