Relmada Theraputics has sued Laidlaw & Company, according tothis article on PR Newswire. There seems to be two particular issues.
First, Laidlaw breached its fiduciary duty by disclosing confidential information about Relmada Theraputics to the Securities and Exchange Commission.
This is confusing. The SEC is the federal government agency responsible for regulating the entire financial services industry. It’s not a competitor to Relmada. Public companies such as Relmada are required to release lots of information to the SEC. What kind of information would its investment banker, Laidlaw at the time, know that the SEC should not? How did release of that information damage Relmada? Did it become publicly available to everybody, including Relmada competitors? That seems odd, though. As a federal agency, doesn’t the SEC safeguard any information in its possession that the law does not require to be disclosed?
Second, Laidlaw released false and misleading proxy materials about Relmada.
Laidlaw is based in the United Kingdom, though they have an office in New York City and conduct business in the United States. Matthew D. Eitner is the Chief Executive Officer and James P. Ahern is the Managing Partner and Head of Capital Markets. It’s a boutique investment banking firm managing wealth for individuals and providing investment banking services for companies such as Relmada Theraputics.
According to GlassDoor, just 54% of Laidlaw employees would recommend it to a friend. Opinions did vary, however. Some of the UK employees really like the company. However, many others complained of its unprofessional, frat house atmosphere.
According to information on Bloomberg, Relmada’s suit says Laidlaw did not comply with SEC regulations. If that is true, their lawsuit makes a lot of sense. Failing to comply with SEC requirements can get companies into a lot of financial and legal trouble.