SEC files charges against 2 more companies for false claims about COVID-19
SEC continues crackdown on fraud during the pandemic
The Securities and Exchange Commission said Thursday it has filed charges against two companies for making misleading claims relating to COVID-19 in the latest crackdown on fraud during the pandemic.
The regulator has already temporarily halted trading in the shares of about 30 companies because of claims made by officers or third parties regarding tests, treatments or equipment to combat the virus, which has infected more than 1.4 million Americans and killed more than 84,000. The SEC has put out several warnings to investors since Feb. 4 to beware of scams. The Federal Trade Commission and the U.S. Food and Drug Administration have also taken action against companies.
“We are actively monitoring the markets to detect potential fraudsters who seek to use the COVID-19 crisis as a basis for investment scams,” said Stephanie Avakian, co-director of the SEC’s enforcement division, according to a statement.
The SEC filed a complaint against Applied Biosciences Corp.
in federal court for the Southern District of New York, over a press release published on March 31 that said it had started offering and shipping supposed finger-prick COVID-19 tests to the general public. The tests could be used for “Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results,” said the release, adding that they could produce results in under 15 minutes.
The complaint alleges that the tests were not intended for home use and could be used only with the help of medical professionals. It also alleges that the company had not shipped any such tests as of March 31.
In a press release dated April 24, the company said it had terminated the agreement to offer test kits, after learning from the FDA that it was not permitted to use them for home use.
The SEC filed a separate complaint against Tampa, Fla.–based Turbo Global
and its chief executive, Robert Singerman, in federal court in the Middle District of Florida, alleging that it issued false and misleading press releases on March 30 and April 3 regarding a purported “multinational public-private-partnership” to sell thermal scanning equipment to detect individuals with fever.
The release said the technology could play a major role in blocking transmission of the virus. It cited the founder and executive chairman of a company called BeMotion Inc. as saying the technology was 99.99% accurate and was designed for immediate deployment to each state.
In the April 3 release, Singerman said: “I can confirm that every U.S. Governor office and their Chief of Staff have been contacted and we have submitted the Technical Documents for our technology. I can also confirm that I have personally contacted the CEO’s of Wal-Mart
Publix and Whole Foods
and also advised we are standing by to assist with expedited procurement.”
The SEC complaint alleges that the company had no agreement to sell the product, no partnership with government entities and the CEO of the company’s alleged corporate partner did not make or authorize statements attributed to him.
The SEC is charging both companies with violating antifraud provisions of the federal securities laws, and seeks permanent injunctive relief and civil penalties. The regulator is also seeking to bar Singerman from serving as an officer or director of a public company in the future.
Neither company immediately responded to a request for comment.
Shares of Applied Biosciences fell 13% Thursday to trade at 20 cents. Turbo Global shares were trading down 78% at zero, according to FactSet. The S&P 500
was up 0.1%.