National investment fraud lawyers KlaymanToskes is investigating brokerage firms and financial advisors that sold or managed concentrated positions in Sorrento Therapeutics, Inc. (NASDAQ: SRNE) following the company’s announcement that it has filed for chapter 11 bankruptcy protection in connection with its $173 million in licensing dispute judgments.
Sorrento Therapeutics opened with a stock price of $7.25 per share in its 2013 IPO. Today, as of April 24th 2023, the company’s stock is worth $0.33 per share, representing a 95% decline. Additionally, the company’s negative net income as reported in December 2022 was -$223 million.
Brokerage firms that failed to recommend risk management strategies to customers with large, concentrated or margined positions in SRNE and/or any other pharmaceutical and biotechnology stocks may be liable for investor losses.
Investors who suffered significant losses in Sorrento Therapeutics at a full-service brokerage firm are encouraged to contact attorney Lawrence L. Klayman at (888) 997-9956 or lklayman@klaymantoskes.com for a free consultation to discuss recovery options. We do not collect attorney’s fees unless we are able to obtain a financial recovery.
On February 13th, 2023, Sorrento Therapeutics, Inc. (NASDAQ: SRNE) and its wholly-owned direct subsidiary, Scintilla Pharmaceuticals, Inc., began Chapter 11 bankruptcy proceedings under the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.
Sorrento Therapeutics, prior to its bankruptcy filing, faced an arbitration case against NantCell, Inc. and Immunotherapy NANTibody LLC, before the American Arbitration Association. Sorrento Therapeutics allegedly breached its “Exclusive License Agreement” entered into with NantCell and a second agreement entered into with NANTibody.
On December 2, 2022, the arbitrators ruled against Sorrento Therapeutics and issued an award granting $156,829,562 to NantCell and $16,681,521 to NANTibody in contractual damages and pre-award interest, exclusive of post-award, prejudgment interest.
According to Sorrento Therapeutics’ press release on February 21, 2023, the U.S. Bankruptcy Court for the Southern District of Texas granted the company’s interim approval of $75 million in debtor-in-possession financing from JMB Capital Partners. The company has stated that its approved financing from JMB Capital will allow it to continue its operations as it restructures its debt.
Sorrento Therapeutics (NASDAQ: SRNE) disclosed in its 8-K filing with the SEC that on February 13th, 2023, the company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) notifying Sorrento that the Company’s common stock would be delisted.
The Nasdaq’s reasoning for the delisting stated that the decision was made as a result of the company’s Chapter 11 Filings and also due to concerns regarding the residual equity interest of the existing listed securities holders. The Nasdaq also stated its concerns regarding Sorrento’s ability to sustain compliance with all of its requirements for continued listing on Nasdaq, in compliance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1.
Are Brokerage Firms Liable for Losses on Concentrated Positions?
FINRA (Financial Industry Regulatory Authority) is the self-regulatory body responsible for supervising all registered brokers and brokerage firms. In order to comply with FINRA Rule 2111 (Suitability) brokers/investment advisors and their firms have a duty to recommend suitable financial products and trading strategies based on their client’s best interests and needs.
Investment accounts holding large or concentrated stock positions carry significant downside risks. Some investors holding concentrated positions may be unable or unwilling to sell due to unfavorable tax consequences, company/regulatory restrictions, or sentimental value.
Brokerage firms and registered brokers/advisors have a responsibility to ensure that their customers understand the risks associated with holding concentrated positions. They also have a duty to disclose and recommend the availability of risk management strategies which can be used to protect the value of the concentrated portfolio.
When full-service brokerage firms fail to recommend risk management strategies to protect concentrated positions, they can be held liable in FINRA arbitration claims. Brokers and financial advisors who failed to reasonably conduct due diligence in order to ensure that their investment recommendations are suitable, may be held responsible for any investment losses incurred by customers.
Investors who have experienced significant investment losses in Sorrento Therapeutics Inc. at the hands of their brokerage firm are encouraged to contact attorney Lawrence L. Klayman, Esq. at 1-888-997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss recovery options and learn more about the arbitration process.
KlaymanToskes offers legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com