Securities and Exchange Commission v. Bivona et al

Filing 247

ORDER Requiring Parties to Submit Additional Information and Requiring Joshua Cilano to Respond by September 27, 2017 at 10 a.m. PDT. Signed by Judge Edward M. Chen on September 22, 2017. (emclc1, COURT STAFF) (Filed on 9/22/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 SECURITIES AND EXCHANGE 8 COMMISSION, Plaintiff, 9 v. 10 JOHN V. BIVONA, et al., 12 For the Northern District of California 11 United States District Court Case No. 16-cv-01386-EMC ORDER REQUIRING PARTIES TO SUBMIT ADDITIONAL INFORMATION AND REQUIRING JOSHUA CILANO TO RESPOND Docket No. 196, 197 Defendants. 13 14 15 The Court requires additional information prior to the September 28, 2017 hearing concerning the competing proposed distribution plans. Mr. Joshua Cilano/Investor Rights LLC is ordered to respond to the SEC and Receiver’s 16 response to his proposed role as a manager by 10a.m. PDT on Wednesday, September 27, 2017. 17 By the same time, Mr. Cilano should also submit a declaration stating whether members of the 18 SRA Fund Investor Group have been given notice of the information in the SEC and Receiver’s 19 reply briefs (e.g., Mr. Cilano’s role in Defendants’ business and the outstanding tax liens). Mr. 20 Cilano should also clarify the nature of the “written commitments” for $5 million in new capital. 21 In addition, the SEC, Receiver, SRA Fund Investor Group, and any other objectors or 22 interested parties shall file, to the extent currently available to them, the following information no 23 later than 10 a.m. PDT on September 27, 2017: 24 1. The projected value of the SRA Funds investment portfolio if it matures as 25 originally intended versus the liquidation value under the Receiver and SEC’s proposed plan. The 26 Court appreciates that such projections cannot be made with guarantees or exactness, but the 27 parties should advise the Court to the extent they have information or reasoned expectations. If 28 available, such information may be shared on a company-by-company basis. 2. 1 Which three companies in the SRA Fund portfolio have folded and thus no longer 2 have stock value? How many investors had an interest in those companies and what was the 3 magnitude of each such interest? 3. 4 5 Is the nature of every investor’s claim currently known (i.e., is there a list of the number of shares claimed by each investor and in which companies)? 4. 6 Is a notice and claims process necessary to determine whether there are any 7 unknown claims (including both claims to an interest in securities and creditor claims) against the 8 Receivership Entities? 5. 9 10 any other known shortfalls in securities interests at this time. 6. 11 The Receiver’s efforts, if any, to recover the mis-distributed Square shares; the 12 For the Northern District of California United States District Court Whether, other than the claimed shortfall of Square and Palantir shares, there are feasibility and cost of re-acquiring the mis-distributed shares; and whether the investors to whom 13 Square shares were over-distributed have an interest in the pre-IPO securities of other companies. 7. 14 15 experienced investors? In which companies are these members believed to have invested? 8. 16 17 18 19 20 21 What is the profile of members of the SRA Fund Investor Group? Are they What is the total number of investors who are not part of the SRA Fund Investor Group? Are they experienced investors? In which companies do they believe they have invested? Have they received notice of the plans proposed by the SEC, the Receiver, and the SRA Fund Investor Group? 9. If the funds are not liquidated, are there alternative investment managers other than Mr. Cilano? What process would the parties propose for choosing a manager? IT IS SO ORDERED. 22 23 24 25 Dated: ______________________________________ EDWARD M. CHEN United States District Judge 26 27 28 2

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