Securities Industry Commentator by Bill Singer, Esq.

NYSE EQUITIES TAPE B AND C - TEMPORARY SYMBOL SUSPENSION

12:24 pm, 04/25/2018

Due to the previously announced price scale code issue affecting BCCG execution reports, trading in the following Tape C symbols will be suspended for the balance of the trading day. Any open orders in these securities will be cancelled.

AMZN

BKNG

GOOG

GOOGL

ZNWAA

All other systems are operating normally.   

NYSE TAPE B AND C - EXECUTION REPORT PRICE SCALE CODE ADVISORY

11:16 am, 04/25/2018

NYSE customers using Binary CCG order entry ports are advised that execution reports priced at or above $1000 in some Tapes B and C securities (including AMZN, BKNG, GOOG, GOOGL) are being published with a 'price scale' code of 5.  NYSE expects this behavior to continue for trading today and will provide a further update before the start of trading tomorrow.

All other systems, including the price scale code for Tapes B and C market data, are operating normally. 

1. This matter concerns material misstatements and omissions by Yahoo, one of the world's largest Internet media companies, regarding a 2014 data breach affecting more than 500 million of its user accounts. In late 2014, Yahoo learned of a massive breach of its user database that resulted in the theft, unauthorized access, and acquisition of hundreds of millions of its users' data, including usernames, birthdates, and telephone numbers. At that time, the breach was the largest known theft of user data. 

2. Despite its knowledge of the 2014 data breach, Yahoo did not disclose the data breach in its public filings for nearly two years. To the contrary, Yahoo's risk factor disclosures in its annual and quarterly reports from 2014 through 2016 were materially misleading in that they claimed the company only faced the risk of potential future data breaches that might expose the company to loss of its users' personal information stored in its information systems, as well as potential future litigation, remediation, increased costs for security measures, loss of revenue, damage to its reputation, and liability, without disclosing that a massive data breach had in fact already occurred. Yahoo management's discussion and analysis of financial condition and results of operations ("MD&A") in those reports was also misleading to the extent it omitted known trends or uncertainties with regard to liquidity or net revenue presented by the 2014 data breach. 

3. Yahoo's disclosure violations continued in connection with a proposed sale of its operating business to Verizon Communications, Inc. ("Verizon") in July 2016. Although Yahoo was aware of additional evidence in the first half of 2016 indicating that its user database had been stolen, Yahoo made affirmative representations denying the existence of any significant data breaches in a July 23, 2016 stock purchase agreement with Verizon, by which Verizon was to acquire Yahoo's operating business for $4.825 billion. The stock purchase agreement was attached to a Form 8-K filed with the Commission on July 25, 2016. 

4. In September 2016, Yahoo disclosed the 2014 data breach in a press release filed as an attachment to a Form 8-K and also disclosed the 2014 data breach to Verizon. The day after Yahoo publicly disclosed the breach, Yahoo's market capitalization fell nearly $1.3 billion by virtue of a 3% decrease in its stock price. After Yahoo disclosed the 2014 data breach, Verizon renegotiated the stock purchase agreement to reduce the price paid for Yahoo's operating business by $350 million, representing a 7.25% reduction in price. 

5. Based on the foregoing conduct, and the conduct described herein below, Yahoo violated Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.

[I]n a December 2015 email and memorandum to potential investors, Reynolds promised investors "a HUGE return on investment (ROI) for any investors in PixarBio's NeuroRelease." He told investors: "The value of our portfolio on Wall Street is soaring with excitement around our sales partnership. At only $1,000,000,000 right now, as we prepare to replace morphine in the clinic in late 2017 or early 2018, and we expect our valuation to long-term trend UP." In reality, the government alleges, PixarBio did not have a market value of one billion dollars, or a product to end "thousands of years of morphine and opiate addiction." Rather, the complaint alleges, the prospective drug, carbamazepine, is not a treatment for opiate addiction at all, but an existing drug for which PixarBio purported to have developed an additional means of delivery, via injection, in a time-release form. 

• Securities Industry Commentator
• Bill Singer