George Economou’s DryShips has revealed in its second quarter results that it has received a subpoena from the Securities and Exchange Commission (SEC) requesting documents and information related to offerings made by the company between June 2016 and July 2017.
The controversial offerings saw DryShips issue around $700m worth of discounted new shares to Kalani Investments, who then resold them on the open market. The dilution saw DryShips shares continuously slide, only halted temporarily by a series of reverse stock splits.
DryShips has been hit by a wave of class action law suits in regards to the transactions, alleging the company has violated federal securities laws. DryShips has since terminated the latest new share sale agreement with Kalani, while Economou also agreed to acquire $100m of the company’s shares at an inflated price of $2.75 and not resell any of the shares he holds for a six-month period.
New York-listed DryShips, which reported a second quarter loss of $15.6m, said it is providing the requested information to the SEC.
DryShips shares finished the day on $3.04, down 11.6%, and after hours activity indicates they look set for a much larger drop when trading resumes.