Dive Brief:
- Parallax Health Sciences made misleading statements by saying its COVID-19 screening test would be available soon, when it wouldn’t be, and that it had protective equipment for sale, when it didn’t, the Securities and Exchange Commission charged.
- Company CEO Paul Arena and its chief technology officer, Nathaniel Bradley, were charged separately for their roles in the statements.
- In settlements, the company agreed to pay $100,000, Arena $45,000, and Bradley $40,000.
Dive Insight:
According to the SEC, even though it was insolvent, Parallax issued a series of press releases in March and April 2020 claiming that its screening test would be available soon and that it had medical and personal protective equipment (PPE) for immediate sale.
The company’s insolvency prevented it from developing the screening test, the SEC said. What’s more, the company’s own projections showed that even if it had the funds, it would take more than a year to develop the test.
In addition, the company never had the medical equipment or PPE it offered for sale and lacked a path for getting it. Among other things, it didn’t have enough money to purchase the equipment and it lacked FDA registrations for importing and selling the equipment.
By issuing the press releases, the SEC said, CEO Arena was trying to boost Parallax’s declining stock price.
“We allege that Parallax misled investors that the company was positioned to capitalize on opportunities created by the COVID pandemic,” said Paul Levenson, director of the SEC’s Boston Regional Office. “Such misinformation jeopardized investors at precisely the moment when investors were attempting to respond to the financial implications of a public health emergency.”
