A Swedish stock exchange has banned Global Gaming Factory X from offering its shares there after concluding the company "misled" investors about its ability to purchase The Pirate Bay.
AktieTorget, the Swedish stock market where shares of Global Gaming once traded, said a disciplinary group found the company had "provided false information," displayed "a lack of accountability," and "seriously violated" the exchange's transparency principles.
A report issued by AktieTorget's disciplinary group called into question most of Global Gaming's public statements since June, when the software company and operator of Internet cafes first announced it would acquire The Pirate Bay, a popular BitTorrent search engine. The banishment by AktieTorget, which last month suspended trading in Global Gaming's shares, is without a doubt the most serious barrier yet to the company's acquisition of The Pirate Bay.
The story now seems less about whether Global Gaming will take control of The Pirate Bay and more about whether anyone involved will be accused of a crime.
Sweden's Economic Crimes Bureau has already launched an investigation into possible insider trading stemming from a dramatic spike in trading of Global Gaming's shares a week before the company announced it would acquire The Pirate Bay.
AktieTorget's investigation did nothing but raise more questions.
In a report issued Wednesday by AktieTorget, a copy of which was posted to the exchange's Web site, the disciplinary group hammered Global Gaming and Hans Pandeya, the company's largest stakeholder and CEO.
The group said it reviewed a list of Global Gaming's press releases to assess their accuracy. Among some of the group's findings was that Global Gaming did not possess the money to buy The Pirate Bay when the company told the public it did; the company was never in the final stages of signing a content deal with the major entertainment company it boasted about in a press release; Pandeya could provide no proof that he received a bid to buy The Pirate Bay from unnamed Russian investors.
Also in the report, the disciplinary group noted how some of Global Gaming's and Pandeya's public statements effected the market.
Pandeya has throughout denied any wrongdoing and on Wednesday continued to maintain the acquisition would get done. He blamed AktieTorget's investigators for some of Global Gamings problems.
"It will be difficult for Aktietorget to explain when we close the deal in two weeks since the funding is not supposed to be in place," Pandeya wrote to CNET News. "People will start asking questions about what has been going on. I don't think Peter Gonczi (vice president and head of market surveillance at Aktietorget) will then be as active as he has been with the press."
Pandeya has said that he will guarantee the purchase of The Pirate Bay with his own personal funds or obtain a loan using his Global Gaming shares as security. But Pandeya's personal financial troubles are now famous in Sweden. In recent weeks, photos of his car, boat, and motorcycle being hauled away by debt collectors have been splashed on front pages throughout the country.
As for his shares of Global Gaming, it is unclear whether they are worth anything since the stock is no longer trading anywhere.
Wayne Rosso, the former Grokster president who worked for Global Gaming barely three weeks before going public with concerns about the company's ability to fund an acquisition, recalled in an interview what raised some of his suspicions.
Rosso, who Pandeya hired to help him negotiate licensing deals with film and music companies, said the amount of money Pandeya cited he had at his disposal kept changing in conversations. Pandeya also kept promising to pay Rosso and his staff but the money never arrived ("The check was always in the mail," Rosso said).
When Rosso flew to London to meet with Pandeya and entertainment companies, Pandeya was supposed to pay all of Rosso's expenses but Pandeya's credit card kept getting declined.
What really spooked Rosso, however, was Pandeya's insistence that he make public announcements.
"He kept pushing for press releases," Rosso said. "He would say, 'Can't we put out a press release that we're talking with this content owner,' or he'd say 'can't we announce we're going to do a deal with that content owner?' I told him we couldn't and then I asked him, 'You don't have the money, do you?' He said, 'Well, I do and I don't.' I told him, 'That means you don't.'"