Securities Fraud Attorneys Blog
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.
Investors should be warned about private placement deals their broker may be trying to sell them. In recent years, according to a Wall Street Journal article yesterday, hundreds of billions of dollars in private placements have been sold each year by stockbrokers, and these brokers are more likely than others to have sketchy records. One in eight brokers marketing private placements had three or more red flags on their records, including complaints, regulatory actions, criminal charges, or employment separations. Brokers selling private placements are also six times as likely as the average broker to report at least on regulatory action against them. Private placements are used by businesses to raise money for projects typically in the real estate, or oil and gas development realms. In 2017 alone, private placement using brokers totaled at least $710 billion, almost three times as much as in 2009. Brokers like to market these to seniors, who may not know that they are unsuitable for them. A broker must take into account a customer’s age, net worth, and investment risk tolerance before recommending or selling a security. If he does not, his brokerage firm may be liable for losses. Private placements tend to be high-risk and illiquid investments, not suitable for the elderly.
