The Securities and Exchange Commission has begun a probe of direct marketing company GenesisIntermedia Inc. and the company's chief executive has resigned.
The Los Angeles company named Stephen Weber as interim chief executive, succeeding Ramy El-Batrawi.
“I have concluded that current circumstances dictate that it is in the best interest of the company that I resign my positions,” El-Batrawi said in a company statement.
GenesisIntermedia said Weber and other company representatives met Oct. 4 with representatives of the Nasdaq stock market concerning the halt in trading of the company's shares Sept. 25. The shares have not traded since.
Nasdaq has sought information relating to certain transactions, including those involving Ultimate Holdings Ltd., a substantial shareholder of GenesisIntermedia, and Native Nations Securities Inc., as well as El-Batrawi's possible role in those transactions.
GenesisIntermedia's flagship product is the Centerlinq system, an interactive marketing, advertising and promotional network located in shopping malls and accessible via the Internet. The mall system consists of large video monitors in common areas, such as a food court, and interactive touch-screen kiosks in high-traffic areas.
Consumers can access the Centerlinq system for money-saving coupons, sales notices and premiums. Advertisers can have links to their Web sites featured on the system.
In early July, GenesisIntermedia said it was evaluating several potential acquisitions after securing a $100 million conditional credit commitment from financier Carl Icahn's Riverdale LLC.
At the time, El-Batrawi said he had bought an additional 1.3 million of the company's shares on the open market, bringing his stake to about 10.4 million shares, or slightly more than half of those outstanding.
In late June, GenesisIntermedia said it issued warrants to acquire 4 million common shares, and El-Batrawi granted Riverdale options to acquire 1.5 million.
Riverdale, which agreed to provide investment-banking services to the company, would hold a 20 percent stake if it exercises all warrants and options.