On 25th January 2016, a clinical-stage pharmaceutical company called Relmada Therapeutics, which develops new drug products to treat chronic pain, filed a complaint and lawsuit motion against Laidlaw & Company Ltd in the Nevada District Court. The complaint and the lawsuit are based on the allegations that Laidlaw & Company Ltd violated its fiduciary duty to Relmada by disclosing confidential information that it obtained while serving as Relmada’s primary investment bank. Moreover, Relmada is also seeking monetary compensation for the expenses and fees it incurred acting on Laidlaw’s fabricated and distorted proxy materials in December 2015.
Surprisingly, I learned that both Relmada and Laidlaw had had amicable working interactions in the past. Based on this trust, Relmada held discussions with Laidlaw about the prospect of getting on-board new investors in the spring of 2015. So Laidlaw planned a non-deal road show, had confidential discussions with Relmada regarding its business and prospects and introduced Relmada to particular institutional investors. The lawsuit, in this case, springs from interactions between Laidlaw and one of the investors who had signed a confidentiality accord with Relmada. Laidlaw wrote a letter to their Board in addition to filing a Schedule 13D with the SEC, which unlawfully revealed confidential details concerning Relmada’s fundraising initiatives and communications with investors.
In the initial attempt to resolve the dispute, Relmada’s Board of Directors organized a meeting with Laidlaw on December 1, 2015. In this meeting, Laidlaw’s CEO, Mathew Eitner and Managing Partner, James Ahern demanded the authority to elect the majority of Relmada’s directors. Three days later, Laidlaw released a press statement, a source of Relmada’s legal complaint, saying they were unveiling a proxy solicitation to appoint five directors to control Relmada.
Laidlaw & Company is an investment bank and brokerage Company providing personalized investment guidance to private and public companies as well as wealthy individual investors. Mathew Eitner and James Ahern are Laidlaw’s CEO and Managing Partner respectively.
In my research about the company, I found out that Laidlaw has a bad history of violations against state and federal securities regulations. Moreover, it has been on the receiving end of censures and suspensions by state regulators as well as numerous customer complaints and claims.