Saturday, 31 January 2015
Last updated 11 hours ago
Jan 31 2011 | 1:37am ET
In the face of signs that a federal investigation is reaching a critical point, NIR Group founder Corey Ribotsky wrote to investors earlier this month to assure them that they have nothing to worry about.
In the Jan. 14 missive—a rare communication to the Roslyn, N.Y.-based hedge fund's investors—Ribotsky wrote that he was being "maligned in the press." The firm, which specializes in private investments in public equities, has been under investigation since 2009, with authorities looking into the firm's valuation practices and whether it paid kickbacks to help it inflate the value of some of its investments.
That matter may be coming to a head: Reuters reports that investigators may be stepping up their probe. What's more, Daryl Dworkin, the former NIR analyst who last year pleaded guilty to taking kickbacks from a pair of PIPE dealers, has had his sentencing date pushed back from earlier this month to July 15—a move common in cases of cooperating witnesses, who are often not sentenced until an investigation ends.
Ribotsky dismissed such talk as "rumor and innuendo."
"We are forwarding this letter in order to attempt to alleviate some of the concerns you may have," he wrote. "We do not believe NIR has engaged in any wrongdoing, and NIR continues to cooperate fully in the governmental investigation."
In his plea, Dworkin did not implicate Ribotsky, and specifically said he "took steps to conceal the kickbacks from NIR's senior management."
Still, NIR has been sued at least twice by angry investors who claim the firm's claims of positive returns in 114 of 117 months are "fanciful." One of those investors, Palmetto Partners, last month won the right to depose Ribotsky as part of its litigation; according to Reuters, federal investigators hope to mine that deposition as part of their probe.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…