Stoltmann Law Offices is pursuing investment losses for customers who were sold investments in Staffing 360. Staffing 360 Solutions, Inc. (“Staffing 360”) started as a scam, and still is nothing more. Originally, the company was “Golden Fork Corporation”, a South African catering company that was organized in the State of Nevada in December 22, 2009. In 2011, Golden Fork reported to the SEC that it did not have any revenue, yet for whatever reason, in February 2012, TRIG Special Purpose 1, LLC purchased Golden Fork, and the following month the company changed its name to “Staffing 360 Solutions”. According to its website, Staffing 360 acquires domestic and international staffing organizations in the United States and United Kingdom targeting the finance and accounting, administrative, engineering and IT industries. It became publicly traded on the NASDAQ on February 22, 2013, but continued to make private offerings. Staffing 360 made a nominal Form D private offering of $1.75 million in November 2013, with $1.35 million sold at the time. Accelerated Capital Group, which is now out of business, was the placement agent for Staffing 360’s private offerings. Even when it went public, Staffing 360 was already drowning in debt and continued to report a net loss each quarter.
As of November 30, 2013, Staffing 360 reported that it had accumulated $5.5 million in debt, had a working capital of negative $2.5 million, and reported a net loss of $1.8 million for the previous six-months. Its 10-Q report for the end of 2013 was essentially a cry for help, explaining the desperate need to raise money to keep the company viable. Staffing 360 continued to sell PIPE offerings and convertible bonds as a last-ditch effort to raise equity. It financials only got worse. By April 2014, Staffing 360 reported $7 million in debt, and negative $5.1 million in working capital. This means that within just months, Staffing 360’s negative working capital doubled and its debt increased by 50%. Brokers continued to sell Staffing 360 to their clients despite these horrific financials.
Staffing 360 is currently being publicly traded on the NASDAQ (STAF) for pennies. Clients who invested in Staffing 360 when it was a private investment have lost between 90% and 99% of their initial investment.
Brokerage firms are required to perform due diligence into investments prior to recommending them to customers, especially Regulation D private placements. According to FINRA Rule 2111, brokerage firms must perform a two-tier suitability analysis. First, they must perform due diligence into an investment to determine whether it is suitable for any investors. Then, if the investment passes this phase, the broker-dealer must then perform a customer-specific suitability analysis to determine whether the investment is suitable for that particular customer in light of their investment objectives, risk tolerance, age, investment horizon, investment sophistication, background, liquidity needs, and the composition of their assets, amongst other factors. By failing to perform this analysis, the brokerage firm breaches the contractual and fiduciary duties owed to their clients. The horrific financials of Staffing 360 should have been discovered by broker dealers, and as a result never should have been offered to clients. Unfortunately, the sale of speculative, high-commissioned private placements, like Staffing 360 is far too common in the securities industry.
If your broker or registered investment advisor sold you Staffing 360 and you have suffered damages, please contact our office at 312-332-4200 for a free evaluation. We work on a contingency fee basis, so we don’t make any money until you do!