What is National Holdings?
If you’ve been active in the banking sector, then you would’ve surely heard the name of National Holdings Corporation. They are a major investment firm, which deals in selling securities, bonds and many other investment tools.
National Holdings Corporation came in the limelight recently due to some lawsuits filed against them. Just a few months ago, they had paid $325,000 for a class-action lawsuit. This company has been facing several litigation challenges because of its wrongdoings.
This company claims to be one of the good guys. From afar, they seem like a large but simple investment firm. But like many other firms Wall Street, they don’t have a clean white-collar as well.
They have done plenty of wrong things to get where they are. And the recent evidence suggests that it’s a dishonest and corrupt organization, which doesn’t care about its employees.
Why did they fire their Compliance Officer?
The lawsuit I was talking about was filed by their ex-CCO Ms Johnson. She worked at this organization for 16 years and she alleges that she was fired because she had become dangerous for them. And that’s because she had gotten close to evidence which shows that the executives at National Holdings are indulged in insider trading.
Now that’s a big allegation. And when it comes from an ex-top level executive, it certainly seems credible. She claimed that she was fired because of her research related to the insider trading the executives at National Holdings do.
But her lawsuit isn’t limited to insider trading. She has also alleged that the executives at National Holdings are misogynists and sexist. Furthermore, National Holdings was being investigated in late 2018 for insider trading, just months before this lawsuit was filed.
This lawsuit is directly related to that investigation. Although Ms Johnson hasn’t said anything on this matter, her lawsuit paints a clear picture.
It states that she was given ‘the largest bonus she ever received’ two months before the firing. This bonus was nearly double the size of her previous largest bonus. National Holdings claim that they fired her for reorganization. But that reason doesn’t hold up.
The CEO of the company, Mr Mullen, had stated in her latest performance review that ‘he envisions Kay as president of the company or even beyond’. Now, why would the company fire a top-level executive for reorganization reasons when the CEO suggested that she has a bright future in the same organization?
It indicates that something was wrong in the company. Either Mullen didn’t know what she was up to or he just blatantly lied so she wouldn’t suspect a thing. If he was lying then, it means that they were conspiring to fire her way before.
Another reason why I think it was a conspiracy is mentioned in her lawsuit. Like I mentioned before, she received her largest bonus ever two months before her firing. Why would the company give her a bonus of this size?
I believe it was to silence her. As an employee, she would be too grateful to take any action against her company. But I guess that didn’t work out so well. So they fired her later.
Are the Allegations True?
You might question her character and think that it’s nothing more than a mere shakedown. You might also question her intentions. After all, a disgruntled employee can make up some allegations just to get back at their ex-employer for firing them.
However, that’s not the case here. Her allegations hold up so far.
Ms Johnson started looking into the insider trading of National Holdings in September 2018, when a clearing firm told her of some suspicious activity. It was related to TG Therapeutics, whose CEO is a member of Fortress Biotech.
Fortress Biotech owned National Holdings at that time. Now here’s when things get interesting. Ms Johnson has mentioned in her lawsuit that on 12th September 2018, Mr Mullen had opened an options account.
He had used that account to purchase 470 put options on TG Therapeutics for a total of $114,745.52.
A put option indicates a bet that the respective company’s stock will fall in value. This put option was approved by a regional supervisor at National Securities clearing firm (a part of National Holdings Corp) on September 13 2018.
On September 25, 2018, TG Therapeutics announced some disappointing test results which cause their stock to drop by 44% over two weeks. The value of their stock fell from $11.90 to $5.15 a share
The day TG Therapeutics declared their disappointing results; Mr Mullen sold his put option and made a profit of more than 200% within two weeks. This entire ordeal seems suspicious but it gets more suspicious when we take a look at another allegation of Ms Johnson.
She has alleged that Mr Mullen had only made one option trade (this one) since he opened this account. He never made an options trade before.
So Mr Mullen, the CEO of National Holdings Corp, made only one option trade and that too, was timed so perfectly that it made him a profit of 200%. That couldn’t be a coincidence.
Unsafe Environment for Employees
Ms Johnson’s allegations aren’t limited to insider trading. She also alleges that National Holdings Corp’s executives are misogynists. She has complained of sexual harassment at this organization as well.
The lawsuit paints a clear picture in this regard. It says that Ms Johnson, along with another female executive, was dismissed from a dinner meeting because the other executives had decided to go to a strip club.
She has also mentioned that another female employee was fired after two days of her joining because she was sexually harassed. The company had awarded her $75,000.
These are pretty major allegations. The reputation of National Holdings Corporation isn’t good in terms of culture and work environment. And these allegations only make the matters worse.
From insider trading to sexual harassment, the list of allegations is long and detailed. It doesn’t look good for National Holdings Corporation. The level of detail these allegations indicates that they could be true.
This means National Holdings Corp is not only a dangerous organization for females to work in but it’s also indulged in criminal activities. Insider trading is illegal and the way Mr Mullen made his profit on the TG Therapeutics trade, it’s clear that he gets tips in advance.
Moreover, her allegations are only a suggestion. An honest and proper investigation can reveal many other instances of insider trading. At least that’s what these allegations indicate.
All in all, National Holdings Corp doesn’t look like an honest organization at the moment. They were already being investigated for insider trading when this lawsuit came up. Something must be wrong.