American Apparel shares soar 27% after it secures financial lifeline

  1:38pm

American Apparel stock jumped 27% on Monday following news that a group of Canadian investors had agreed to inject up to $45 million to help the Los Angeles clothing company.

Shares increased 34 cents to $1.58.

Now that it has secured a financial lifeline, American Apparel will focus on optimizing efficiency at its downtown L.A. factory and increasing sales productivity at its stores, Chief Executive Dov Charney said in an interview Monday.

"Maybe once we optimize the factory and the top line of each average store, we might look at increasing store count," Charney said. "We still think it's a business in its early stages, and we'll continue to work to grow the company. ... We really think we can take the company to another level."

The deal, announced last week, helped the company stave off a potential bankruptcy filing. The investors agreed to pump in $15 million in equity at 90 cents a share, a 27% discount to the company's $1.24 closing price Thursday. The stock market was closed Friday in observance of Good Friday.

The investors also are getting warrants to buy an additional $30 million worth of shares over the next six months, also at 90 cents a share.

Charney agreed to contribute $700,000 of his own money. However, unlike other existing investors whose ownership stakes will be diluted by the issuance of shares to the new investors, Charney said his prior ownership stake can be restored if the stock price rises in coming years.

The investment group is headed by Michael Serruya, a prominent Canadian financier.

Just a few weeks ago, American Apparel -- which in recent months had faced a slumping stock price, sales declines and two sexual-harassment lawsuits brought by five former employees -- had warned that it had doubts about its ability to continue as a going concern.

-- Andrea Chang

Silver rallies closer to $50, gold gains as buyers keep coming

  1:01pm

The price of silver made a run for the $50 mark on Monday, the previous nominal peak reached 31 years ago, as the wild bull market in precious metals rolls on.

April silver futures in New York traded as high as $49.10 an ounce but fell back to close at $47.15, up $1.09 for the session, or 2.4%.

The more active May silver contract made it closer to $50, trading as high as $49.82 before retreating.

SEC shuts down Beverly Hills hedge fund and wealth management business

  3:45pm

In an unusual move, the Securities and Exchange Commission has temporarily shut down a Beverly Hills hedge fund and wealth management business -- which allegedly sought to defraud investors -- before anyone actually invested.

Elijah Bang and Daniel Lee, who operated IU Group Inc., allegedly targeted retirees, professors and Christians by misrepresenting the business and its financial performance, soliciting clients using a variety of company names and claiming that the fund managed over $800 million, according to an SEC statement on Monday.

Some websites stated that the company was founded by "devoted Christians who believe in God, Jesus Christ and the Holy Spirit," the SEC said. Lee sent email solicitations to college professors. Both men told potential clients that they handled money for professional athletes, actors, executives and politicians. 

The SEC obtained a temporary restraining order to halt business activities and filed a complaint in the U.S. District Court in central California accusing Bang and Lee of fraud and seeking financial penalties.

John McCoy III, the associate regional director for the Los Angeles office of the SEC, said it was unusual, but not unheard of, for the SEC to stop a business scam before any investors were lured in.

"Often, particularly with defrauded investors, we don't get a complaint or tip until someone actually puts in money, tries to get it out and then the person says, 'Oh well, I don't actually have any of it,' " McCoy said.

In this case, the SEC received an early tip from the public, and subsequent investigations have uncovered zero investors and no money, McCoy said. But further digging could turn up new evidence.

"Part of the problem with these cases is the lack of transparency," he said. "There's always the caveat that we don't know what we don't know."

According to the SEC, Bang and Lee are also old hands at securities fraud. In 2009, the California Department of Corporations ordered the two to desist and refrain from illegal and fraudulent sale of securities.

But last year, they began soliciting money again under UI Group, whose business license was suspended in California, and under a variety of other company names not registered with the SEC or the state.

Calls and emails to Bang and Lee were not returned. David Van Havermaat, an attorney for the SEC, said neither men had hired a lawyer yet.

McCoy added that the district attorney's office or U.S. attorney's office could also bring criminal charges against the two men.

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-- Shan Li

 

American Apparel shares soar 27% after it secures financial lifeline

  1:38pm

American Apparel stock jumped 27% on Monday following news that a group of Canadian investors had agreed to inject up to $45 million to help the Los Angeles clothing company.

Shares increased 34 cents to $1.58.

Now that it has secured a financial lifeline, American Apparel will focus on optimizing efficiency at its downtown L.A. factory and increasing sales productivity at its stores, Chief Executive Dov Charney said in an interview Monday.

"Maybe once we optimize the factory and the top line of each average store, we might look at increasing store count," Charney said. "We still think it's a business in its early stages, and we'll continue to work to grow the company. ... We really think we can take the company to another level."

The deal, announced last week, helped the company stave off a potential bankruptcy filing. The investors agreed to pump in $15 million in equity at 90 cents a share, a 27% discount to the company's $1.24 closing price Thursday. The stock market was closed Friday in observance of Good Friday.

The investors also are getting warrants to buy an additional $30 million worth of shares over the next six months, also at 90 cents a share.

Charney agreed to contribute $700,000 of his own money. However, unlike other existing investors whose ownership stakes will be diluted by the issuance of shares to the new investors, Charney said his prior ownership stake can be restored if the stock price rises in coming years.

The investment group is headed by Michael Serruya, a prominent Canadian financier.

Just a few weeks ago, American Apparel -- which in recent months had faced a slumping stock price, sales declines and two sexual-harassment lawsuits brought by five former employees -- had warned that it had doubts about its ability to continue as a going concern.

-- Andrea Chang

Silver rallies closer to $50, gold gains as buyers keep coming

  1:01pm

The price of silver made a run for the $50 mark on Monday, the previous nominal peak reached 31 years ago, as the wild bull market in precious metals rolls on.

April silver futures in New York traded as high as $49.10 an ounce but fell back to close at $47.15, up $1.09 for the session, or 2.4%.

The more active May silver contract made it closer to $50, trading as high as $49.82 before retreating.

Gas prices could reach $4.25 nationally by Memorial Day

 12:17pm

Crude oil fell from 31-month highs Monday, but analysts were predicting that the reprieve wouldn’t reach motorists. Pump prices were expected to continue their rise, with some predicting $4.25 gasoline by Memorial Day.

Gas prices could reach $4.25 nationally by Memorial Day

 12:17pm

Crude oil fell from 31-month highs Monday, but analysts were predicting that the reprieve wouldn’t reach motorists. Pump prices were expected to continue their rise, with some predicting $4.25 gasoline by Memorial Day.