>> Sam Waksal, the infamous former ImClone CEO, who passed on tips that landed Martha Stewart in jail is back. A new public company and Wall Street isn't buying what he's selling. Kadmon Holdings, the biotech company founded by Waksal after he came out of jail going public on the New York Stock Exchange Wednesday and the stock has lost about 20% of its value right out of the gate.
>> I'm Conley Gibbs in New York. Waksal cannot legally run a public company or sit on the board, because of his five year sentence for insider trading, but that doesn't mean that he's walking away from this IPO empty handed. Under scrutiny, a reported clause that will allow him to walk away with $25 million now that this company has gone public even though the IPO is a dud.
>> Other possible strikes against this IPO, early investors are losing money right from the get go. The price of the IPO was set below of the promised range and that's not all. While a filing with the Securities and Exchange Commission laid out how the proceeds of the IPO would be used to fund clinical trials, it wasn't until later that early investors learned about a $150 million lawsuit that could affect their investment.
A doctor is suing Kadmon, because he says, he was promised and equity stake in exchange for helping raise the money to get the company started six years ago and a proposed 6.5 to 1 stock split will quickly dilute any shareholder value. All this leaving disgruntled investors wondering, if Waksal learned anything from his five years behind bars.