The SEC is actively investigating Galena Biopharma (GALE) and the hiring of the now-infamous stock promotions firm The DreamTeam Group.

How do I know this? Lion Biotechnologies (LBIO) received an SEC subpoena on April 23, related to an investigation "In the Matter of Galena Biopharma Inc. File No. HO 12356," according to a disclosure in Lion's 10-Q

On April 23, 2014, the Company received a subpoena from the Securities Exchange Commission (the "SEC") that stated that the staff of the SEC is conducting an investigation In the Matter of Galena Biopharma, Inc. File No. HO 12356 and that the subpoena was issued to the Company as part of the foregoing investigation.  Galena Biopharma is an unaffiliated, publicly-held biopharmaceutical company.  In the Form 10-K that Galena Biopharma, Inc. filed with the SEC on March 17, 2014, Galena Biopharma stated that the SEC is investigating certain matters relating to Galena Biopharma and an outside investor-relations firm that it retained in 2013.  The SEC's subpoena and accompanying letter do not indicate whether the Company is, or is not, under investigation.  The Company has contacted the SEC's staff regarding the subpoena, and the Company is cooperating with the SEC.

Lion and Galena are not related, so why are SEC investigators issuing a subpoena to Lion?

The answer is not entirely clear, but here's what Lion says in its 10-Q:

The subpoena requires the Company to give the SEC, among other materials, all communications between anyone at the Company and certain persons and entities (which include investor-relations firms and persons associated with the investor-relations firms), all documents related to the listed persons and entities, all articles regarding the Company posted on certain equity research or other financial websites, and documents and communications related to individuals who post or have posted articles regarding the Company on equity research or other financial websites.

I have a theory about what's going on, just speculation, no proof, but here goes. Lion Bio is run by CEO Manish Singh. Before joining Lion, Singh was CEO of

ImmunoCellular Therapeutics

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, which was a client of The DreamTeam Group. 

The other commonality is Sanford Hillsberg, the chairman of Galena's board and a director on Lion's board. 

On Feb. 12, TheStreet published a story documenting how Galena paid an investor relations firm, The DreamTeam Group, to engage in a stock-promotion campaign on behalf of the company. The DreamTeam's work for Galena included publishing promotional articles written under false names on the investor web siteSeeking Alpha

Aided by this promotional campaign, Galena shares tripled in value from last summer. Coincidence or not, Galena insiders, including CEO Mark Ahn, made millions of dollars by selling company stock in January.

Galena disclosed an SEC investigation into these activities on March 18.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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