Securities Arbitration Lawyers BlogMarker Therapeutics Loses Case To Katalyst Securities
New York U.S. District Judge Laura T. Swain has ordered Marker Therapeutics to pay $2.5 million to Katalyst Securities, a brokerage that helped place their securities with their own investor-customers as a private placement in 2017. Additionally, Judge Swain also ordered Marker to pay about $120,000 in prejudgment interest.
The company signed a contract with Katalyst for two private placements in 2016 and 2017, establishing a placement agency to offer these placements to the investor-customers in exchange for fees and warrants to buy shares of Marker’s stock. A one-year “tail period” and additional compensation was included in the contract for Katalyst if they brought in more investors and completed financing during that period. Marker later hired two other companies in 2018 for the same type of work.
Katalyst accused Marker of securing financing for investors that were introduced to Marker by Katalyst during the tail period. In a motion filed by Maker, the company claimed that Katalyst had already been paid and the tail period had expired. Katalyst also sent Marker a proposed modification to the remaining agreement to continue the tail period and include the 2018 offering. Maker declined, stating that the 2018 offering was outside of Katalyst’s one-year tail period. Therefore, Katalyst wasn’t eligible to receive to any more of the offerings. Katalyst then began the process for arbitration, according to Maker.
The contract also stipulated a two-step system for dispute resolution with the first step of mediation. Should the mediation be unsuccessful, the parties would then go to arbitration with FINRA. Following unsuccessful mediation, Katalyst took the matter to FINRA arbitration, who awarded the company $2.5 million. Maker refused to pay, then went to court to have the arbitration set aside.
Last week, Judge Swain agreed with FINRA arbitrators. Marker failed to provide evidence that the arbitrators had deliberately disregarded the applicable law or had any other biased intent.
In her opinion, Judge Swain wrote, “Marker fails entirely to support its argument that the panel’s interpretation ignored clear and explicitly applicable law, asserting instead, without citation, that ‘[t]he parade of dictionary definitions and case law that Marker provided to the FINRA panel left no doubt’ that Marker’s proposed interpretation was correct.” She also stated that this type of dispute resolution should be left in FINRA’s hands, not the court’s.
Marker Therapeutics is a publicly traded company that develops innovative immunotherapy and cancer therapy with its own MultiTAA targeted T cells. The company has seven clinical trials ongoing at Baylor College of Medicine in Houston, with more than 150 patients treated with this therapy. The T cell’s target indications include breast cancer, acute myeloid leukemia, multiple myeloma, and non-Hodgkin’s lymphoma.
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Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice. Contact us for a consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.