NJ securities fraud law, breach of contract

This comment is not intended to be legal advice or to form an attorney-client relationship. However, I am admitted in NJ and I have a master's degree in securities regulation so I am qualified to comment on your interesting situation.

You obviously sold your website to National Lampoon. The CEO, Mr. Laikin, is in big trouble with the SEC for breaking both the "anti-touting" and "anti-kickback" provisions of the securities laws. (This was one of the biggest bone headed moves I have seen in a long time.) As it relates to you, the question is, "Did his scheme to illegally inflate the value of his stock work?" I think it did so you accepted inflated shares in exchange for your company which gives you a cause of action under numerous SEC provisions for either damages or rescission ("undo" the deal). I do not believe the R. 144 restrictions are relevant.

I think you can EVENTUALLY get your money from the deal but I cannot say for sure without looking at NL's balance sheet info and getting some kind of grip on its exposure on the securities fraud issues. Such eventual payment will take a long time and possibly involve a NL bankruptcy. I think it might be a much better idea just to ask a court for rescission of the deal (whether under contract or securities laws theories -- or both). It does not seem that you want to do that but, if NL is broke, that would clearly be relief you could get.

NL has not been delisted -- trading has been suspended. I doubt that the company will be delisted from AMEX. If having an idiot CEO who costs the company tens of millions of dollars were grounds for being delisted, all the financial and auto firms would have been delisted long ago. After all, delisting is mainly going to hurt the shareholders, such as yourself, who have already been ripped-off by the illegal activity to date. Also, even if it is delisted from AMEX, it could still trade on NASDAQ. The main item I take from this delisting provision is that I am glad to see there are some provisions that run to the CEO personally. Hopefully, there are others more directly on point to getting your situation resolved -- but there is a very real possibility that he is a bankrupt.

All this is very interesting -- and there is too little information to say anything else. Since I find this interesting and your situation is very complex, I'd be happy to expand my usual 15 minute free consultation to 2 hours so I can fully understand your situation. After that, the securities fraud laws do mandate payment of attorney's fees so I (or any other qualified attorney) may be willing to work for the possibility of these defendant paid fees -- but then there is the issue of the possible bankruptcies in the way again.

Good luck with your situation -- and, please, whatever you do get some advice as soon as possible. You have contract, securities laws and bankruptcy issues piled on top of each other and it is going to take a very thorough review to sort your situation out.