Securities Lawyers Blog
The law offices of Gana Weinstein LLP have been investigating the sales of Servergy, Inc. (Servergy) stock through a private placement by WFG Investments, Inc (WFG) to its clients. The Securities and Exchange Commission (SEC) recently filed an action in the Northern District of Texas against Servergy concerning possible violations of the anti-fraud provisions of federal and state securities laws. Between August 2009 and February 2013, Servergy raised approximately $26 million by selling shares of its common stock to private investors
Servergy is a Nevada company headquartered in Texas formed in August 2009. The company’s main product is the developing and manufacturing the Cleantech 1000 Server (CTS-1000), technology that can be used in network function virtualization, distributed storage, and cloud computing. The SEC’s Servergy lawsuit concerns misstatements made by Servergy’s CEO, William Mapp III, to investment advisors and investors regarding Servergy’s prospects. Specifically, it was alleged that the company made statements indicating that Freescale Semiconductor had previously ordered CTS-1000 servers, that Amazon.com, Inc. had pre-ordered the server, and that the CTS-1000 consumes 80% less power, cooling, and space than its competitors.
However, according to the SEC, there was no evidence to back up that Mapp’s statements that Freescale’s ever placed such orders of the CTS-1000. The SEC also alleged that the claims concerning pre-orders from Amazon for the CTS-1000 did not exist. Finally, the SEC alleged that there were errors in a chart titled “Comparing Servergy to the Blade Server Competition” that was included in one of the Company’s private placement memoranda.