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Diana Containerships latest firm with Kalani dealings under the legal microscope

US national securities law firm Faruqi & Faruqi is investigating potential claims against Diana Containerships and is calling on investors who have suffered losses above $50,000 to contact the firm.

Faruqi & Faruqi did not reveal the reasons for its investigation, however Diana Containerships is one of three Greek shipping firms to have raised funds by issuing new shares to Kalani Investments at discounted rates. Kalani, which has been linked in the press to Canadian hedge fund manager Marc Bistricer, then resold the shares onto the market.

Both Evangelos Pistolis and Top Ships as well as George Economou and DryShips are facing class action lawsuits claiming they enriched themselves from transactions with Kalani while the companies suffered from plummeting share prices, hitting investors hard.

All three companies used reverse stock splits to attempt to prop up prices through the process.

Hours after Faruqi & Faruqi announced their investigation, another firm Robbins Geller Rudman and Dowd announced that a class action has commenced against Diana Containerships in the Eastern District of New York for violations of the Securities Exchange Act of 1934.

The complaint is seeking damages, alleging that Diana’s chairman and CEO Symeon Palios caused the company to engage in a series of manipulative share issuance/sales transactions with Kalani and related entities.

“The manipulative scheme worked as follows: Through his control of Diana, Palios caused Diana to sell its common shares and securities convertible into common shares to Kalani at a significant discount to market price and to file registration statements so that Kalani could resell these shares into the market. When Kalani’s sales of Diana stock caused the price of Diana stock to decline, the Company would reverse split the stock, causing a certain number of outstanding shares to be merged into a single share, thereby raising the price of Diana stock. Then Diana would again sell securities to Kalani and the same pattern of transactions would ensue,” the law firm said of the complaint in a release.

The complaint added that Diana management failed to disclose the true purpose of the transactions that it says benefited Palios and his related companies and family members.

Grant Rowles

Grant spent nine years at Informa Group based in London, Sydney, Hong Kong and Singapore. He gained strong management experience in publishing, conferences and awards schemes in the shipping and legal areas, working on a number of titles including Lloyd's List. In 2009 Grant joined Seatrade responsible for the commercial development of Seatrade’s Asia products. In 2012, with Sam Chambers, he co-founded Asia Shipping Media.
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