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Dec. 18-24, 2015	 Proudly serving Santa Barbara, Ventura and San Luis Obispo counties		 Vol. 16, No. 42
By Philip Joens
Staff Writer
Sientra failed to disclose information about
regulatoryinquiriesbeforeitssecondpublicof-
fering on Sept. 23, according to a lawsuit filed
onbehalfoftheretirementplanfor2,600retired
police who lost money after the stock tanked.
TheOklahomaPolicePension&Retirement
systemfiledoneofthreerecentlawsuitsalleging
theGoleta-basedbreastimplantmakerandits
underwritersmadefalseandmisleadingclaims
aboutitsmanufacturingprocessesleadingupto
the secondary offering.
The complaint was originally filed in San
Mateo County Superior Court on Oct. 28. Simi-
lar complaints were also filed in San Mateo
County Superior Court on Nov. 5 and Nov. 19.
Sientra’sattorneyssuccessfullymovedthecom-
plaints to a federal court in Northern California
onDec.4andaskedthattheybecombinedinto
one case.
What’sbecomingclearisthe2,602members
of the Oklahoma Police Pension & Retirement
system and their 707 beneficiaries are among
the victims of a stock price collapse that oc-
curred on Sept. 24.
While Sientra told investors it relied on a
Sientrafacesdisclosurelawsuits
The Federal Reserve’s decision to
slowly begin the process of normal-
izing interest rates may not have all
thatmuchtodowiththeeconomyor
inflation.
The economy isn’t really over-
heated and any threat of inflation
remains far off in the future. Pars-
ing the Fedspeak of the Dec. 16 an-
nouncementthatregulatorsare“rea-
sonably confident” that inflation will
returnto2percentoverthe“medium
term”showsjusthowtepidconsumer
price increases really are.
However, in my view, the unani-
mous decision to gradually raise the
federal funds rate — telegraphing
quarterly increases through 2016 —
is a subtle admission that too much risk has
creeped back into the financial markets.
Zerointerestrateshavemotivatedwork-
ers and retirees to take bigger and bigger
risks with their hard earned savings. The
risk-takinghasbeenevidentintheextreme
volatility that’s hit the stock and bond
By Philip Joens
Staff Writer
California’s renewable energy future sits in the San
Luis Obispo County desert between two of its fossil fuel
cousins.
The $1.3 billion California Valley Solar Ranch is
aboutanhourdrivefromoilfieldsnearTaftandtheaban-
donedgeneratingstationinMorroBay.Thesolarfarmis
sofarfromcivilizationthatvisitorsaretoldtobringfood,
waterandextragasincasetheygetstrandedontheside
of the road.
An historic accord reached on Dec. 12 committed
195 countries, including the U.S., to take actions to limit
globaltemperatureincreasesto2degreesCelsiusbythe
end of the century.
California is doing its part to reduce carbon emis-
sions. On Oct. 7, Gov. Jerry Brown signed a bill which
requires the state to get half of its electricity from
Fedrateincreaseshouldhelptakeriskoutoffinancialmarkets
The California Valley Solar Ranch generates 250 megawatts.
Race for renewablesNIKBLASKOVICHPHOTO
see SIENTRA on page 18A
see RENEWABLE on page 19A
see DUBROFF on page 17A
henry
dubroff
Editor
$1.50
Sports Academy coming
to Thousand Oaks
See page 3A
Central Coast
Cal Poly SLO offers
new master’s degree
See page 7A
THE 	 	 INDEX
THE LIST: Stock Brokerages.... . . . . . . . . 15A
Commentary. . . . . . . . . . . . . . 16A
Leads. . . . . . . . . . . . . . . . . . . . . . 13A
Newsmakers. . . . . . . . . . . . . . . . 5A
REAL ESTATE . . . . . . . . . 4A
Tri-county senior housing surges
WINE BUZZ. . . . . . . . . . . 6A
Uber Wine vies with tours
15th
An n i v e r s a r y
The $1.3 billion California Valley Solar Ranch sits in the San Luis Obispo County desert about an hour east of San Luis Obispo.
NIKBLASKOVICHPHOTO
SLOCountytakesleadingeneratingsolar,windenergy
18A 	 Pacific Coast Business Times	 Dec. 18-24, 2015 Dec. 18-24, 2015	 Pacific Coast Business Times	 19A
SIENTRA
Continued from page 1A
ACADEMY
Continued from page 3A
RENEWABLE
Continued from page 1A
STREET SMARTS
Continued from page 3A
renewablesourcesby2030.Thebillamends
a bill Brown signed in 2011 mandating the
state get 33 percent of its energy from re-
newable sources by 2020.
SLO COUNTY LEADS THE WAY
Asthestateracestomeetthebill’sdead-
line, it’s clear San Luis Obispo County is
already a hub for renewable energy.
San Jose-based SunPower designed
the 250-megawatt California Valley Solar
Ranch. Houston-based NRG Energy owns
the plant, which opened in 2012, but Sun-
Power operates it.
Nine arrays of 749,088 solar panels pro-
vide enough power for 100,000 homes an-
nually and offset 336,000 tons of carbon
emissions, according to SunPower. Solar
Ranch officials chose its location because
transmission lines from the Morro Bay
GeneratingStationandasubstationseveral
miles east were already built.
“Access to high-powered transmis-
sion lines, high solarity and available land.
Those are kind of the trifecta of the things
that any solar developer is going to look
for,” said Nikki Nix, SunPower community
relations manager.
San Luis Obispo County could call it-
self the solar energy capital of California.
Sitting just eight miles away from the solar
ranchistheTopazSolarFarm,completedin
2014 at a cost of $2.5 billion.
The 550-megawatt project provides
enough power for 160,000 homes and off-
sets 377,000 tons of fossil-fuel emissions,
according to the owner, First Solar.
Thoughinitialcostswerestaggeringfor
bothsolarfarms,energycreatednowisba-
sically free. NRG pays only for occasional
maintenance of the solar arrays.
“Eventhoughoursystemtracks(thesun)
andhasmovingpartsandpieces,ithasvery
minimal maintenance,” said Skyler Shipley,
SunPower’s on-site project manager. “We
basically lube the engine (and) do regular
maintenance on the engine.”
Shipley also said large scale solar proj-
ects like the California Valley Solar Ranch
drive the cost of solar energy down.
TOWERING OVER MORRO BAY
Asrenewableenergybecomescheaper,
morepopularandmoreimportant,renew-
ableprojectscontinuetopopupthroughout
the region. To find the region’s renewable
energyMeccathough,allyouneedtodois
look to the past.
Threegrayconcretecoolingtowersfrom
the abandoned Morro Bay Generating Sta-
tiontoweraboverestaurants,touristshops
and fishing docks in Morro Bay. The 450-
foot high towers loom like ghosts in the
night, cold and no longer a source of civic
pride.
Built in 1953, the site was a natural-gas
firedplantcooledwithseawater.MorroBay
became an incorporated city in 1964 and
built itself around the plant.
At its peak, the plant employed more
than100people.BythetimeHouston-based
Dynegy closed it in February 2014, it em-
ployed just 30 people. The 650-megawatt
plantoperatedaroundtheclockduringthe
energy crisis of 2000 but ran at just 5 per-
centofitscapacityin2014.Theplantserved
about1millioncustomersatpeakcapacity
but served only about 325,000 in 2013.
With the plant sitting idol, two projects
plannedoffshorenearbyaimtotakeadvan-
tageofanexistingsubstationandtransmis-
sion lines on the property.
OFFSHORE WAVE ENERGY FARM
As Dynegy created plans to close the
existing plant, it also crafted plans for a
radical wave energy farm just offshore. Ac-
cording to filings with the Federal Energy
Regulatory Commission on Feb. 6, 2014,
theplantwill“convertoceanswellsintore-
newable electricity.”
Vesselswillbemooredinanareaatleast
amilewideeast-to-westand2.5mileslong
north-to-south.Beyondthatthough,theap-
plicationdoesnotsaymuchabouthowthe
system would work.
Cal Poly San Luis Obispo’s CalWave
project is also researching wave energy
technology independent of the proposed
Dynegy project.
Officials at Cal Poly said solar and wind
farms have already been built on most of
thebestplacesforthosesystemsandwave
energyoffersadvantagesoverwindandso-
lar energy.
“It’s renewable 24 hours per day,” said
Sam Blakeslee, CalWave project director.
“California has the good fortune of having
almost 800 miles of coastline.”
Some wave energy systems work like
tall pistons that move up and down with
the current. Others are like slim cantilevers
thatlayontheirsidesandrollinthewaves.
FLOATING WIND FARM
Morro Bay’s renewable energy future
may also be about to arrive in the form of
a floating wind farm. Officials from Seattle-
based Trident Winds met with the Morro
Bay residents for the first time Dec. 10. Tri-
dent Winds CEO Alla Weinstein described
the project as in “stage zero” and said it will
be at least five to seven years before con-
struction starts.
“Whenyouputfixedfoundationsonthe
oceanfloor,youhavetoputinafoundation.
Floatingfoundationsusemooringlinesand
anchors,” Weinstein said. “The impact on
the ocean floor is greatly reduced.”
With a design similar to those used to
supportoffshoreoilrigs,theradicaltechnol-
ogy is slowly gaining acceptance. In 2009, a
floatingwindturbinestartedatwo-yeartest
in the North Sea off the coast of Norway.
Engineers in Fukushima, Japan com-
pleteda344-foothighfloatingwindturbine
in April. On Oct. 30, a Danish company an-
nouncedplanstobuildafloatingwindfarm
in the Irish Sea.
On Nov. 2, a Norwegian company an-
nouncedplanstobuildafloatingwindfarm
in15-miledeepwatersoffthecoastofScot-
land.PlanswerealsoannouncedonNov.16
tobuildafloatingwindfarmoffthecoastof
Portugal that will begin operations in 2018.
“We’renotdoingsomethingthathasnot
been done before,” Weinstein said. “We’re
doingitwithtechnologiesthathavealready
been proven.”
Morro Bay City Manager David Buck-
inghamsaidcapacityatthegeneratingsta-
tion’s substation probably only exists for
eitherthewindprojectorthewaveproject,
not both.
Dynegyhastherightstousethesubsta-
tion for about three years after the existing
plant’sclosure.Theexactdatethepermitex-
pires is disputed.
ENVIRONMENTAL IMPACT
Renewable energy, while better for the
environment than fossil fuels, still has an
impact on the environment.
The California Valley Solar Ranch is
built on sensitive grasslands that are home
to more than 1,400 species of wildlife, in-
cludingcondors,sphinxmothsandevenen-
dangeredferryshrimpthatonlycometolife
when they get wet.
Thedesignwasbuiltaroundenvironmen-
tal concerns. Eleven arrays were originally
planned,buttwowerescrappedbecausegi-
ant kangaroo rats love the sites the arrays
were planned for.
“When this project was being built, one
ofthethingstheenvironmentalopposition
said is this is the Serengeti of North Amer-
ica,” said Dawn Ortiz-Legg, public affairs
adviser for NRG.
NRG and SunPower are tasked with tak-
ingcareofthesolarpanelsandthesite’sin-
habitants. Ruben Tapia, NRG solar site lead,
saidemployeescountthenumberofweeds,
plants and even kit fox poop droppings on
the site.
“We are the caretakers of this property,”
Tapia said.
Withalifespanof25years,plustwopos-
sible five-year extensions, the farm will not
beonthelandforever.Officialssaiddisman-
tling plans and funds already exist to tear
downthesolarpanelsandrestorethelandto
its natural state.
If either project off the shores of Morro
Bay is ever built, it will no doubt undergo
just as rigorous environmental scrutiny.
Weinstein said environmentalists are al-
readyquestioningtheimpactthewindfarm
might have on migratory birds.
When Brown signed the original bill in
2011, many skeptics thought that goal was
unattainable. Just four years later, it’s clear
thoughthestateiswellonitswaytohitting
the 33 percent benchmark by 2020.
With the new goal set, technology will
improve and Californians will find a way,
experts said.
“Thedemandisthere,thesupplyhasnow
metthatdemand,andnowwe’repushingan-
otherarenaandthedemandagainwillpush
supplyintomeetingourrequirements,”Shi-
pley said.
“It’s a real logistical chore,” he said.
An all-encompassing facility would
ease the burden on parents and improve
training and care — ultimately, quality of
life, Faulkner said.
“Once you eliminate all that friction of
getting from place to place, it makes life
simpler,”hesaid.“Andwhenyouhavepro-
fessionals who can solely concentrate on
their practice rather than building a busi-
ness, they can do what they do best.”
The 96,000-square-foot space will con-
tain six volleyball courts, two indoor sand
volleyball courts, five regulation-sized
basketball courts, a 5,000-square-foot turf
field, batting cages and pitching mounds,
andstrengthandconditioningequipment.
Faulkner described it as a blend of sci-
ence, school and sport. If a player gets in-
jured, there will be an onsite medical staff,
atreatmentandrehabilitationfacilityanda
biomechanical assessment lab.
A nutrition expert, neurologist and
sportspsychologistwillhelpathletesrecov-
er and stay healthy. To sharpen academic
skills, the academy will also provide tutor-
ing,collegecounselingandhomeworkhelp.
Coordination and education is key,
Faulkner said.
“We bring in the whole mind, body and
spirit into all the offerings here,” he said.
“It’smorethanjustaddressingthephysical
side of the athlete, we work toward overall
development.”
companiescannominatethroughwww.sba.
gove/ca/la. San Luis Obispo County com-
paniescancompeteviatheFresnoDistrict.
Thereareawardsforwomen-owned,minor-
ity-ownedandfamily-ownedcompanies,as
wellasexporters,youngentrepreneursand
innovative technology companies.
Speaking of awards, SLO-based Mind-
Body has again been honored with a Glass
doorEmployees’ChoiceawardintheirBest
Places to Work competition.
WORK OF ART
Kudos to pal Kathy Koury and the
Children’s Creative Project for winning
theSantaBarbaraCountyLeadershipinthe
Arts Award. The organization works with
the Santa Barbara County Office of Educa-
tion to promote arts education. Since 1987,
Koury has masterminded the iconic I Ma-
donnariItalianStreetPaintingFestivalheld
at the Santa Barbara Mission each spring.
GOOD WORKS
Avila Beach Community Foundation
hashandedout$52,950ingrantstoanum-
ber of organizations. Among them are the
Avila/Pismo Community News, a monthly
publication about activities and services.
Marian Medical Center reports that its
annual fundraising dinner in August raised
arecord$310,000tosupporttheexpansion
oftheemergencyservicesunitattheSanta
Maria hospital.
POLITICAL NOTEBOOK
•LongtimeSLOCountysolarenergyde-
veloperDawnOrtiz-Legghaslaunchedher
campaign for the Democratic Party nomi-
nation for the open seat currently held by
SLO Republican Katcho Achadjian in the
35th Assembly District.
• Debbie Arnold, running for re-elec-
tion for SLO County supervisor, has picked
upformerAssemblymemberTomBordona-
ro’s endorsement.
• Erik Nasarenko and Neal Andrews
arethenewmayoranddeputymayorofthe
city of Ventura.
• Joel Price, newly named mayor of
Thousand Oaks, will serve as vice chair
of the Public Safety & Crime Prevention
Committee of the National League of Cit-
ies. That should keep him busy.
• Entrepreneur Alon Goren backs Jesus
Torres in the contested 3rd District Super-
visor race in Ventura County.
FINAL SCENES
• BRAVO SB: Santa Barbara’s Sanford
Winery, Bacara Resort & Spa and the
city’s waterfront were featured in a recent
episode of Top Chef on the Bravo channel.
• HOT WHEELS: Ventura County
TransportationCommissionseeksinputon
better bike amenities. A survey is available
at www.goventura.org.
• TAKE A BOW: Sespe Consulting,
Harrison Industries and Fresh Realm
took home hardware at the Ventura cham-
ber’s 2015 Poinsettia Awards.
“
”
It’s renewable 24
hours per day.
California has the
good fortune of
having almost 800
miles of coastline.
Sam Blakeslee
CalWave project director
regulatory approval of a single Brazilian
manufacturer, Silimed, for its products, it
did not disclose information about an FDA
reviewofSientra’smanufacturingprocesses
before its initial public offering in October
2014. In its secondary offering documents,
Sientra did not disclose visits by German in-
spectors to the Silimed factory in April and
July.
German inspection agency TUEV SUED
suspended three Silimed quality manage-
ment certificates — known as CE-Marks —
on Sept. 17, six days before Sientra’s public
offering, because implants were contami-
natedwithsilicaandcottonparticles.Sientra
only sells products in the U.S. but Silimed
sells products in Europe.
BREAKING THE NEWS
News of the CE-Mark suspension only
came on Sept. 23, when British regulators
brokethenewsatnearlythesametimeSien-
tra sold three million new shares for $22
each.
“The offering documents included a dis-
closurethatSientrareliesonaforeignsource
manufacturer,butdidnotdisclosemanufac-
turingproblemsatthatmanufacturerleading
tothecontamination,”theOklahomapolice
complaint reads. “At the time of their pur-
chases of Sientra stock, plaintiff and other
members of the class were without knowl-
edgeofthefactsandcouldnothavereason-
ablydiscoveredthosefactspriortoSept.23,
2015.”
The suit names former CEO Hani Zeini,
new CEO Jeffrey Nugent and Chief Finan-
cialOfficerMatthewPigeonamongothersas
defendants.
Also named as defendants were under-
writers Piper Jaffray; Stifel, Nicolaus &
Company; Leerink Partners; and William
and Blair & Company. The complaint says
the underwriters had access to confidential
corporate information during the due dili-
gence investigation and helped Sientra de-
cidewhatdisclosurestomakeintheoffering
documents.
William and Blair & Company and Piper
Jaffray declined to comment, citing ongo-
ing litigation. The other underwriter defen-
dantsdidnotreturnrepeatedphonecallsby
the Business Times. Sientra also declined to
comment.
DID UNDERWRITERS KNOW?
“The underwriters knew or should have
known of Sientra’s existing problems,” the
complaint reads.
The underwriters earned about $4 mil-
lioncollectively,accordingtothecomplaint.
DocumentsfiledwiththeSecuritiesandEx-
change Commission also show the under-
writershadtheoptiontopurchaseupto3.5
millioncombinedsharesduringthesecond
public offering.
Underwritersalsoobtainedanindemnity
protecting them from legal action after the
secondary offering.
“We have agreed to indemnify the sev-
eral underwriters against certain liabilities,
including liabilities under the Securities Act
relating to losses or claims resulting from
materialmisstatementsinoromissionsfrom
thisprospectus,”thesecondaryofferingpro-
spectus from Sept. 18 reads.
Sientra is also fighting a separate lawsuit
in Southern California. Plaintiff John Flynn
filed a class-action lawsuit in federal court
in Los Angeles on Sept. 25. The Flynn suit
onlynamesSientraInc.,ZeiniandPigeonas
defendantsandasksthatshareholderswho
purchasedstockbetweenMarch18,2015and
Sept.24,2015becompensatedfordamages
caused by Sientra.
“Defendants made false and/or mislead-
ingstatementsandfailedtodisclosematerial
adversefactsaboutthecompany’sbusiness
operations,prospectsandperformance,”the
Flynn lawsuit reads. “Members of the class
purchased (Sientra) securities at prices arti-
ficiallyinflatedduetodefendants’misrepre-
sentations and omissions.”
FIGHT TO BE LEAD PLAINTIFF
JudgeJamesOteroreceivedthreememo-
randumsfromshareholdersonNov.24,stat-
ing why they should be the lead plaintiff in
thecase.Oneshareholderlost$16,000after
hebought5,100sharesforabout$20onSept.
18andsoldmostforbetween$14and$10on
Sept. 24 and Sept. 25.
Another group of three investors lost a
combined $62,044. The final group of three
investors,whichincludesFlynn,lost$86,765
after buying 8,633 shares.
Claims in the Flynn case fall under rule
20(a) of the Securities and Exchange Act,
which reads in part, “Any person who vio-
lates any portion of this title … by purchas-
ing or selling a security while in possession
of material non-public information shall be
liableinanycourtofcompetentjurisdiction.”
A lead plaintiff for the Flynn case could
be named on Dec. 28. Typically, lead plain-
tiffs are simply the person or group who in-
curredthemostdamagewhilefilingaclass-
action securities lawsuit.
SientraaskedthattheNorthernCalifornia
cases also be combined into the Flynn case.
SUSPENSION EXPIRES
The CE-Mark suspension for Silimed
productsexpiredonDec.17.Aspokeswom-
anfromtheUnitedKingdomMedicinesand
HealthcareProductsRegulatoryAgencysaid
theCE-Marksuspensionshouldberenewed
becauseafireatSilimed’sfactoryonOct.22
severelydamagedthelargestbuildingatthe
factory and it is not operational.
In an email to the Business Times, the
MHRA said inquiries about CE-Marks need
to be answered by Silimed. Medical devices
cannot be marketed in Europe without CE-
Marks,whichsimplymeanproductsaresafe
and meet regulatory requirements.
The Food and Drug Administration is
currently conducting a review of Sientra
products’ safety. Zeini said on a conference
call Oct. 28 that the FDA review should be
complete by the end of the year.
In April 2014, the FDA reviewed Sien-
tra’s manufacturing processes. The FDA ap-
proved Sientra implants for use in 2012 and
the agency inspected Silimed’s factory in
2013.
One out-of-state trader said he was sur-
prisedtolearnoftheApril2014investigation
by the FDA. Still, he said, Sientra could have
alotofupsideforinvestorsatitsclosingprice
of $5.08 on Dec. 16.
It has cash from the stock offering on its
balancesheetanditsbreastimplantsarestill
approvedforuseinU.S.ifSientraputsthem
back on the market.
Sports Academy CEO Chad Faulkner tests his peripheral vision and reflexes.
ALEXKACIKPHOTO
Theprivatelyfundedventureemploys
about 25 full-time people, most of whom
ran their own independent businesses,
Faulkner said. It plans to expand its work-
force as the Sports Academy rolls out.
Athletes and students of all ages and
skill can choose specific services a la cart,
from tutoring to sport-specific training.
It will also offer close-quarters tacti-
cal training geared toward individuals or
businesses that look to improve team co-
hesion while building self-defense skills.
There are many training facilities in
the region — ones that focus on strength
and conditioning, rehabilitation and the
like. There are few that incorporate aca-
demics,athletics,self-defenseandscience
like the Sports Academy, Assistant Ath-
letic Director Jason Nyhan said.
“There’s nothing as comprehensive as
what we offer,” he said. “The community
demographic and proximity to athletes
and families made a whole lot of sense.”
The area is home to some of the most
renowned athletic high school power-
houses in the state, including Oaks Chris-
tian, Harvard-Westlake and Saint Bo-
naventure.
Sports Academy is projected to open
sometime in the first quarter of next year.
Soon to follow is Easton Baseball/Soft-
ball.Itplanstoopenitsnewheadquarters
in Thousand Oaks in late spring of 2016.
“OneofthereasonsweselectedThou-
sand Oaks for our Easton headquarters is
for its community attractions, which in-
cludequalitylocalsportsprograms,”said
ToryMazzola,PerformanceSportsGroup
seniormanagerofcorporatecommunica-
tions. Performance Sports Group owns
Easton Baseball/Softball, Bauer Hockey
andMissionHockey,amongotherbrands.
Sports Academy will also have an in-
dependent foundation. Its nonprofit arm
wouldprovideathleticandacademicser-
vices for veterans, the developmentally
disabled and low-income families.
Faulkner, who was an all-conference
lineman and physiology major at Kansas
State, has repurposed his love for sports
into his business. The Witchita, Kansas
native embarked on his entrepreneurial
career providing temporary seating to
large stadiums throughout the country.
He later founded and ran Speedy Group
Holdings, a financial services provider
based in Witchita.
Faulkner said he had a limited choice
ofsuitablespaceoverhistwo-yearsearch.
The two other spaces were both smaller
than the current location.
Industrial vacancy in Thousand Oaks
dipped from 2.7 percent last year to 2.1
percentinthethirdquarterof2015.Thou-
sand Oaks is faring better than the rest of
Ventura County, which has struggled to
retainbusinessesandmaintainconsistent
job growth.
Back at the Sports Academy, ath-
letes were trying their hand at a neuro-
cognitive training device that improved
peripheral vision and decision-making
under stress. They fixed their eyes on the
center of a large black board and tapped
whitebuttonsthatflashedredasquickas
they could. It could help improve a point
guard’scourtvisionorhelpaquarterback
spot an oncoming blindside hit.
Helpingpeopledevelopphysically,so-
cially and academically is of the utmost
importance, Faulkner said.
“There’s a lot of purpose in that, a lot
of responsibility in that,” he said. “You
actually have something to offer that’s
relevant and that will be valued.”

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16.42 CSVR Renewable Energy 12-18-2016

  • 1. Dec. 18-24, 2015 Proudly serving Santa Barbara, Ventura and San Luis Obispo counties Vol. 16, No. 42 By Philip Joens Staff Writer Sientra failed to disclose information about regulatoryinquiriesbeforeitssecondpublicof- fering on Sept. 23, according to a lawsuit filed onbehalfoftheretirementplanfor2,600retired police who lost money after the stock tanked. TheOklahomaPolicePension&Retirement systemfiledoneofthreerecentlawsuitsalleging theGoleta-basedbreastimplantmakerandits underwritersmadefalseandmisleadingclaims aboutitsmanufacturingprocessesleadingupto the secondary offering. The complaint was originally filed in San Mateo County Superior Court on Oct. 28. Simi- lar complaints were also filed in San Mateo County Superior Court on Nov. 5 and Nov. 19. Sientra’sattorneyssuccessfullymovedthecom- plaints to a federal court in Northern California onDec.4andaskedthattheybecombinedinto one case. What’sbecomingclearisthe2,602members of the Oklahoma Police Pension & Retirement system and their 707 beneficiaries are among the victims of a stock price collapse that oc- curred on Sept. 24. While Sientra told investors it relied on a Sientrafacesdisclosurelawsuits The Federal Reserve’s decision to slowly begin the process of normal- izing interest rates may not have all thatmuchtodowiththeeconomyor inflation. The economy isn’t really over- heated and any threat of inflation remains far off in the future. Pars- ing the Fedspeak of the Dec. 16 an- nouncementthatregulatorsare“rea- sonably confident” that inflation will returnto2percentoverthe“medium term”showsjusthowtepidconsumer price increases really are. However, in my view, the unani- mous decision to gradually raise the federal funds rate — telegraphing quarterly increases through 2016 — is a subtle admission that too much risk has creeped back into the financial markets. Zerointerestrateshavemotivatedwork- ers and retirees to take bigger and bigger risks with their hard earned savings. The risk-takinghasbeenevidentintheextreme volatility that’s hit the stock and bond By Philip Joens Staff Writer California’s renewable energy future sits in the San Luis Obispo County desert between two of its fossil fuel cousins. The $1.3 billion California Valley Solar Ranch is aboutanhourdrivefromoilfieldsnearTaftandtheaban- donedgeneratingstationinMorroBay.Thesolarfarmis sofarfromcivilizationthatvisitorsaretoldtobringfood, waterandextragasincasetheygetstrandedontheside of the road. An historic accord reached on Dec. 12 committed 195 countries, including the U.S., to take actions to limit globaltemperatureincreasesto2degreesCelsiusbythe end of the century. California is doing its part to reduce carbon emis- sions. On Oct. 7, Gov. Jerry Brown signed a bill which requires the state to get half of its electricity from Fedrateincreaseshouldhelptakeriskoutoffinancialmarkets The California Valley Solar Ranch generates 250 megawatts. Race for renewablesNIKBLASKOVICHPHOTO see SIENTRA on page 18A see RENEWABLE on page 19A see DUBROFF on page 17A henry dubroff Editor $1.50 Sports Academy coming to Thousand Oaks See page 3A Central Coast Cal Poly SLO offers new master’s degree See page 7A THE INDEX THE LIST: Stock Brokerages.... . . . . . . . . 15A Commentary. . . . . . . . . . . . . . 16A Leads. . . . . . . . . . . . . . . . . . . . . . 13A Newsmakers. . . . . . . . . . . . . . . . 5A REAL ESTATE . . . . . . . . . 4A Tri-county senior housing surges WINE BUZZ. . . . . . . . . . . 6A Uber Wine vies with tours 15th An n i v e r s a r y The $1.3 billion California Valley Solar Ranch sits in the San Luis Obispo County desert about an hour east of San Luis Obispo. NIKBLASKOVICHPHOTO SLOCountytakesleadingeneratingsolar,windenergy
  • 2. 18A Pacific Coast Business Times Dec. 18-24, 2015 Dec. 18-24, 2015 Pacific Coast Business Times 19A SIENTRA Continued from page 1A ACADEMY Continued from page 3A RENEWABLE Continued from page 1A STREET SMARTS Continued from page 3A renewablesourcesby2030.Thebillamends a bill Brown signed in 2011 mandating the state get 33 percent of its energy from re- newable sources by 2020. SLO COUNTY LEADS THE WAY Asthestateracestomeetthebill’sdead- line, it’s clear San Luis Obispo County is already a hub for renewable energy. San Jose-based SunPower designed the 250-megawatt California Valley Solar Ranch. Houston-based NRG Energy owns the plant, which opened in 2012, but Sun- Power operates it. Nine arrays of 749,088 solar panels pro- vide enough power for 100,000 homes an- nually and offset 336,000 tons of carbon emissions, according to SunPower. Solar Ranch officials chose its location because transmission lines from the Morro Bay GeneratingStationandasubstationseveral miles east were already built. “Access to high-powered transmis- sion lines, high solarity and available land. Those are kind of the trifecta of the things that any solar developer is going to look for,” said Nikki Nix, SunPower community relations manager. San Luis Obispo County could call it- self the solar energy capital of California. Sitting just eight miles away from the solar ranchistheTopazSolarFarm,completedin 2014 at a cost of $2.5 billion. The 550-megawatt project provides enough power for 160,000 homes and off- sets 377,000 tons of fossil-fuel emissions, according to the owner, First Solar. Thoughinitialcostswerestaggeringfor bothsolarfarms,energycreatednowisba- sically free. NRG pays only for occasional maintenance of the solar arrays. “Eventhoughoursystemtracks(thesun) andhasmovingpartsandpieces,ithasvery minimal maintenance,” said Skyler Shipley, SunPower’s on-site project manager. “We basically lube the engine (and) do regular maintenance on the engine.” Shipley also said large scale solar proj- ects like the California Valley Solar Ranch drive the cost of solar energy down. TOWERING OVER MORRO BAY Asrenewableenergybecomescheaper, morepopularandmoreimportant,renew- ableprojectscontinuetopopupthroughout the region. To find the region’s renewable energyMeccathough,allyouneedtodois look to the past. Threegrayconcretecoolingtowersfrom the abandoned Morro Bay Generating Sta- tiontoweraboverestaurants,touristshops and fishing docks in Morro Bay. The 450- foot high towers loom like ghosts in the night, cold and no longer a source of civic pride. Built in 1953, the site was a natural-gas firedplantcooledwithseawater.MorroBay became an incorporated city in 1964 and built itself around the plant. At its peak, the plant employed more than100people.BythetimeHouston-based Dynegy closed it in February 2014, it em- ployed just 30 people. The 650-megawatt plantoperatedaroundtheclockduringthe energy crisis of 2000 but ran at just 5 per- centofitscapacityin2014.Theplantserved about1millioncustomersatpeakcapacity but served only about 325,000 in 2013. With the plant sitting idol, two projects plannedoffshorenearbyaimtotakeadvan- tageofanexistingsubstationandtransmis- sion lines on the property. OFFSHORE WAVE ENERGY FARM As Dynegy created plans to close the existing plant, it also crafted plans for a radical wave energy farm just offshore. Ac- cording to filings with the Federal Energy Regulatory Commission on Feb. 6, 2014, theplantwill“convertoceanswellsintore- newable electricity.” Vesselswillbemooredinanareaatleast amilewideeast-to-westand2.5mileslong north-to-south.Beyondthatthough,theap- plicationdoesnotsaymuchabouthowthe system would work. Cal Poly San Luis Obispo’s CalWave project is also researching wave energy technology independent of the proposed Dynegy project. Officials at Cal Poly said solar and wind farms have already been built on most of thebestplacesforthosesystemsandwave energyoffersadvantagesoverwindandso- lar energy. “It’s renewable 24 hours per day,” said Sam Blakeslee, CalWave project director. “California has the good fortune of having almost 800 miles of coastline.” Some wave energy systems work like tall pistons that move up and down with the current. Others are like slim cantilevers thatlayontheirsidesandrollinthewaves. FLOATING WIND FARM Morro Bay’s renewable energy future may also be about to arrive in the form of a floating wind farm. Officials from Seattle- based Trident Winds met with the Morro Bay residents for the first time Dec. 10. Tri- dent Winds CEO Alla Weinstein described the project as in “stage zero” and said it will be at least five to seven years before con- struction starts. “Whenyouputfixedfoundationsonthe oceanfloor,youhavetoputinafoundation. Floatingfoundationsusemooringlinesand anchors,” Weinstein said. “The impact on the ocean floor is greatly reduced.” With a design similar to those used to supportoffshoreoilrigs,theradicaltechnol- ogy is slowly gaining acceptance. In 2009, a floatingwindturbinestartedatwo-yeartest in the North Sea off the coast of Norway. Engineers in Fukushima, Japan com- pleteda344-foothighfloatingwindturbine in April. On Oct. 30, a Danish company an- nouncedplanstobuildafloatingwindfarm in the Irish Sea. On Nov. 2, a Norwegian company an- nouncedplanstobuildafloatingwindfarm in15-miledeepwatersoffthecoastofScot- land.PlanswerealsoannouncedonNov.16 tobuildafloatingwindfarmoffthecoastof Portugal that will begin operations in 2018. “We’renotdoingsomethingthathasnot been done before,” Weinstein said. “We’re doingitwithtechnologiesthathavealready been proven.” Morro Bay City Manager David Buck- inghamsaidcapacityatthegeneratingsta- tion’s substation probably only exists for eitherthewindprojectorthewaveproject, not both. Dynegyhastherightstousethesubsta- tion for about three years after the existing plant’sclosure.Theexactdatethepermitex- pires is disputed. ENVIRONMENTAL IMPACT Renewable energy, while better for the environment than fossil fuels, still has an impact on the environment. The California Valley Solar Ranch is built on sensitive grasslands that are home to more than 1,400 species of wildlife, in- cludingcondors,sphinxmothsandevenen- dangeredferryshrimpthatonlycometolife when they get wet. Thedesignwasbuiltaroundenvironmen- tal concerns. Eleven arrays were originally planned,buttwowerescrappedbecausegi- ant kangaroo rats love the sites the arrays were planned for. “When this project was being built, one ofthethingstheenvironmentalopposition said is this is the Serengeti of North Amer- ica,” said Dawn Ortiz-Legg, public affairs adviser for NRG. NRG and SunPower are tasked with tak- ingcareofthesolarpanelsandthesite’sin- habitants. Ruben Tapia, NRG solar site lead, saidemployeescountthenumberofweeds, plants and even kit fox poop droppings on the site. “We are the caretakers of this property,” Tapia said. Withalifespanof25years,plustwopos- sible five-year extensions, the farm will not beonthelandforever.Officialssaiddisman- tling plans and funds already exist to tear downthesolarpanelsandrestorethelandto its natural state. If either project off the shores of Morro Bay is ever built, it will no doubt undergo just as rigorous environmental scrutiny. Weinstein said environmentalists are al- readyquestioningtheimpactthewindfarm might have on migratory birds. When Brown signed the original bill in 2011, many skeptics thought that goal was unattainable. Just four years later, it’s clear thoughthestateiswellonitswaytohitting the 33 percent benchmark by 2020. With the new goal set, technology will improve and Californians will find a way, experts said. “Thedemandisthere,thesupplyhasnow metthatdemand,andnowwe’repushingan- otherarenaandthedemandagainwillpush supplyintomeetingourrequirements,”Shi- pley said. “It’s a real logistical chore,” he said. An all-encompassing facility would ease the burden on parents and improve training and care — ultimately, quality of life, Faulkner said. “Once you eliminate all that friction of getting from place to place, it makes life simpler,”hesaid.“Andwhenyouhavepro- fessionals who can solely concentrate on their practice rather than building a busi- ness, they can do what they do best.” The 96,000-square-foot space will con- tain six volleyball courts, two indoor sand volleyball courts, five regulation-sized basketball courts, a 5,000-square-foot turf field, batting cages and pitching mounds, andstrengthandconditioningequipment. Faulkner described it as a blend of sci- ence, school and sport. If a player gets in- jured, there will be an onsite medical staff, atreatmentandrehabilitationfacilityanda biomechanical assessment lab. A nutrition expert, neurologist and sportspsychologistwillhelpathletesrecov- er and stay healthy. To sharpen academic skills, the academy will also provide tutor- ing,collegecounselingandhomeworkhelp. Coordination and education is key, Faulkner said. “We bring in the whole mind, body and spirit into all the offerings here,” he said. “It’smorethanjustaddressingthephysical side of the athlete, we work toward overall development.” companiescannominatethroughwww.sba. gove/ca/la. San Luis Obispo County com- paniescancompeteviatheFresnoDistrict. Thereareawardsforwomen-owned,minor- ity-ownedandfamily-ownedcompanies,as wellasexporters,youngentrepreneursand innovative technology companies. Speaking of awards, SLO-based Mind- Body has again been honored with a Glass doorEmployees’ChoiceawardintheirBest Places to Work competition. WORK OF ART Kudos to pal Kathy Koury and the Children’s Creative Project for winning theSantaBarbaraCountyLeadershipinthe Arts Award. The organization works with the Santa Barbara County Office of Educa- tion to promote arts education. Since 1987, Koury has masterminded the iconic I Ma- donnariItalianStreetPaintingFestivalheld at the Santa Barbara Mission each spring. GOOD WORKS Avila Beach Community Foundation hashandedout$52,950ingrantstoanum- ber of organizations. Among them are the Avila/Pismo Community News, a monthly publication about activities and services. Marian Medical Center reports that its annual fundraising dinner in August raised arecord$310,000tosupporttheexpansion oftheemergencyservicesunitattheSanta Maria hospital. POLITICAL NOTEBOOK •LongtimeSLOCountysolarenergyde- veloperDawnOrtiz-Legghaslaunchedher campaign for the Democratic Party nomi- nation for the open seat currently held by SLO Republican Katcho Achadjian in the 35th Assembly District. • Debbie Arnold, running for re-elec- tion for SLO County supervisor, has picked upformerAssemblymemberTomBordona- ro’s endorsement. • Erik Nasarenko and Neal Andrews arethenewmayoranddeputymayorofthe city of Ventura. • Joel Price, newly named mayor of Thousand Oaks, will serve as vice chair of the Public Safety & Crime Prevention Committee of the National League of Cit- ies. That should keep him busy. • Entrepreneur Alon Goren backs Jesus Torres in the contested 3rd District Super- visor race in Ventura County. FINAL SCENES • BRAVO SB: Santa Barbara’s Sanford Winery, Bacara Resort & Spa and the city’s waterfront were featured in a recent episode of Top Chef on the Bravo channel. • HOT WHEELS: Ventura County TransportationCommissionseeksinputon better bike amenities. A survey is available at www.goventura.org. • TAKE A BOW: Sespe Consulting, Harrison Industries and Fresh Realm took home hardware at the Ventura cham- ber’s 2015 Poinsettia Awards. “ ” It’s renewable 24 hours per day. California has the good fortune of having almost 800 miles of coastline. Sam Blakeslee CalWave project director regulatory approval of a single Brazilian manufacturer, Silimed, for its products, it did not disclose information about an FDA reviewofSientra’smanufacturingprocesses before its initial public offering in October 2014. In its secondary offering documents, Sientra did not disclose visits by German in- spectors to the Silimed factory in April and July. German inspection agency TUEV SUED suspended three Silimed quality manage- ment certificates — known as CE-Marks — on Sept. 17, six days before Sientra’s public offering, because implants were contami- natedwithsilicaandcottonparticles.Sientra only sells products in the U.S. but Silimed sells products in Europe. BREAKING THE NEWS News of the CE-Mark suspension only came on Sept. 23, when British regulators brokethenewsatnearlythesametimeSien- tra sold three million new shares for $22 each. “The offering documents included a dis- closurethatSientrareliesonaforeignsource manufacturer,butdidnotdisclosemanufac- turingproblemsatthatmanufacturerleading tothecontamination,”theOklahomapolice complaint reads. “At the time of their pur- chases of Sientra stock, plaintiff and other members of the class were without knowl- edgeofthefactsandcouldnothavereason- ablydiscoveredthosefactspriortoSept.23, 2015.” The suit names former CEO Hani Zeini, new CEO Jeffrey Nugent and Chief Finan- cialOfficerMatthewPigeonamongothersas defendants. Also named as defendants were under- writers Piper Jaffray; Stifel, Nicolaus & Company; Leerink Partners; and William and Blair & Company. The complaint says the underwriters had access to confidential corporate information during the due dili- gence investigation and helped Sientra de- cidewhatdisclosurestomakeintheoffering documents. William and Blair & Company and Piper Jaffray declined to comment, citing ongo- ing litigation. The other underwriter defen- dantsdidnotreturnrepeatedphonecallsby the Business Times. Sientra also declined to comment. DID UNDERWRITERS KNOW? “The underwriters knew or should have known of Sientra’s existing problems,” the complaint reads. The underwriters earned about $4 mil- lioncollectively,accordingtothecomplaint. DocumentsfiledwiththeSecuritiesandEx- change Commission also show the under- writershadtheoptiontopurchaseupto3.5 millioncombinedsharesduringthesecond public offering. Underwritersalsoobtainedanindemnity protecting them from legal action after the secondary offering. “We have agreed to indemnify the sev- eral underwriters against certain liabilities, including liabilities under the Securities Act relating to losses or claims resulting from materialmisstatementsinoromissionsfrom thisprospectus,”thesecondaryofferingpro- spectus from Sept. 18 reads. Sientra is also fighting a separate lawsuit in Southern California. Plaintiff John Flynn filed a class-action lawsuit in federal court in Los Angeles on Sept. 25. The Flynn suit onlynamesSientraInc.,ZeiniandPigeonas defendantsandasksthatshareholderswho purchasedstockbetweenMarch18,2015and Sept.24,2015becompensatedfordamages caused by Sientra. “Defendants made false and/or mislead- ingstatementsandfailedtodisclosematerial adversefactsaboutthecompany’sbusiness operations,prospectsandperformance,”the Flynn lawsuit reads. “Members of the class purchased (Sientra) securities at prices arti- ficiallyinflatedduetodefendants’misrepre- sentations and omissions.” FIGHT TO BE LEAD PLAINTIFF JudgeJamesOteroreceivedthreememo- randumsfromshareholdersonNov.24,stat- ing why they should be the lead plaintiff in thecase.Oneshareholderlost$16,000after hebought5,100sharesforabout$20onSept. 18andsoldmostforbetween$14and$10on Sept. 24 and Sept. 25. Another group of three investors lost a combined $62,044. The final group of three investors,whichincludesFlynn,lost$86,765 after buying 8,633 shares. Claims in the Flynn case fall under rule 20(a) of the Securities and Exchange Act, which reads in part, “Any person who vio- lates any portion of this title … by purchas- ing or selling a security while in possession of material non-public information shall be liableinanycourtofcompetentjurisdiction.” A lead plaintiff for the Flynn case could be named on Dec. 28. Typically, lead plain- tiffs are simply the person or group who in- curredthemostdamagewhilefilingaclass- action securities lawsuit. SientraaskedthattheNorthernCalifornia cases also be combined into the Flynn case. SUSPENSION EXPIRES The CE-Mark suspension for Silimed productsexpiredonDec.17.Aspokeswom- anfromtheUnitedKingdomMedicinesand HealthcareProductsRegulatoryAgencysaid theCE-Marksuspensionshouldberenewed becauseafireatSilimed’sfactoryonOct.22 severelydamagedthelargestbuildingatthe factory and it is not operational. In an email to the Business Times, the MHRA said inquiries about CE-Marks need to be answered by Silimed. Medical devices cannot be marketed in Europe without CE- Marks,whichsimplymeanproductsaresafe and meet regulatory requirements. The Food and Drug Administration is currently conducting a review of Sientra products’ safety. Zeini said on a conference call Oct. 28 that the FDA review should be complete by the end of the year. In April 2014, the FDA reviewed Sien- tra’s manufacturing processes. The FDA ap- proved Sientra implants for use in 2012 and the agency inspected Silimed’s factory in 2013. One out-of-state trader said he was sur- prisedtolearnoftheApril2014investigation by the FDA. Still, he said, Sientra could have alotofupsideforinvestorsatitsclosingprice of $5.08 on Dec. 16. It has cash from the stock offering on its balancesheetanditsbreastimplantsarestill approvedforuseinU.S.ifSientraputsthem back on the market. Sports Academy CEO Chad Faulkner tests his peripheral vision and reflexes. ALEXKACIKPHOTO Theprivatelyfundedventureemploys about 25 full-time people, most of whom ran their own independent businesses, Faulkner said. It plans to expand its work- force as the Sports Academy rolls out. Athletes and students of all ages and skill can choose specific services a la cart, from tutoring to sport-specific training. It will also offer close-quarters tacti- cal training geared toward individuals or businesses that look to improve team co- hesion while building self-defense skills. There are many training facilities in the region — ones that focus on strength and conditioning, rehabilitation and the like. There are few that incorporate aca- demics,athletics,self-defenseandscience like the Sports Academy, Assistant Ath- letic Director Jason Nyhan said. “There’s nothing as comprehensive as what we offer,” he said. “The community demographic and proximity to athletes and families made a whole lot of sense.” The area is home to some of the most renowned athletic high school power- houses in the state, including Oaks Chris- tian, Harvard-Westlake and Saint Bo- naventure. Sports Academy is projected to open sometime in the first quarter of next year. Soon to follow is Easton Baseball/Soft- ball.Itplanstoopenitsnewheadquarters in Thousand Oaks in late spring of 2016. “OneofthereasonsweselectedThou- sand Oaks for our Easton headquarters is for its community attractions, which in- cludequalitylocalsportsprograms,”said ToryMazzola,PerformanceSportsGroup seniormanagerofcorporatecommunica- tions. Performance Sports Group owns Easton Baseball/Softball, Bauer Hockey andMissionHockey,amongotherbrands. Sports Academy will also have an in- dependent foundation. Its nonprofit arm wouldprovideathleticandacademicser- vices for veterans, the developmentally disabled and low-income families. Faulkner, who was an all-conference lineman and physiology major at Kansas State, has repurposed his love for sports into his business. The Witchita, Kansas native embarked on his entrepreneurial career providing temporary seating to large stadiums throughout the country. He later founded and ran Speedy Group Holdings, a financial services provider based in Witchita. Faulkner said he had a limited choice ofsuitablespaceoverhistwo-yearsearch. The two other spaces were both smaller than the current location. Industrial vacancy in Thousand Oaks dipped from 2.7 percent last year to 2.1 percentinthethirdquarterof2015.Thou- sand Oaks is faring better than the rest of Ventura County, which has struggled to retainbusinessesandmaintainconsistent job growth. Back at the Sports Academy, ath- letes were trying their hand at a neuro- cognitive training device that improved peripheral vision and decision-making under stress. They fixed their eyes on the center of a large black board and tapped whitebuttonsthatflashedredasquickas they could. It could help improve a point guard’scourtvisionorhelpaquarterback spot an oncoming blindside hit. Helpingpeopledevelopphysically,so- cially and academically is of the utmost importance, Faulkner said. “There’s a lot of purpose in that, a lot of responsibility in that,” he said. “You actually have something to offer that’s relevant and that will be valued.”