SEC charges companies for making false COVID-19 claims

Dive Brief:

The Securities and Exchange Commission (SEC) charged two companies with making false COVID-19 claims. The move is a warning sign to other companies who may attempt to do the same.
"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.
The two companies, Applied BioSciences and Turbo Global, sought to take advantage of the COVID-19 crisis by misleading investors about their ability to provide solutions, the SEC said.

Dive Insight:

According to the agency's complaint against Applied BioSciences, the company had issued a press release on March 31, saying it had begun offering and shipping finger-prick COVID-19 tests to the general public that could be used for "Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results."

Contrary to these claims, the tests were not intended for home use by the general public, and could be administered only in consultation with a medical professional, the SEC said. The complaint further alleges Applied BioSciences had not shipped any COVID-19 tests as of March 31, and its press release failed to disclose that the tests were not authorized by the Food and Drug Administration (FDA).

The SEC's complaint against Turbo Global and its CEO, Robert Singerman, alleged the company issued false and misleading press releases on March 30 and April 3 regarding a "multi-national public-private-partnership" to sell thermal scanning equipment to detect individuals with fevers.

The company claimed this technology could be instrumental in "breaking the chain of virus transmission through early identification of elevated fever, one of the key early signs of COVID-19," according to the complaint.

The press releases included statements, attributed to the CEO of Turbo Global’s corporate partner in the partnership, that the technology "is 99.99% accurate" and was "designed to be deployed IMMEDIATELY in each State."

In fact, Turbo Global had no agreement to sell the product, there was no partnership involving any government entities, and the CEO of Turbo Global's supposed corporate partner did not make or authorize the statements attributed to him, the SEC said.

"These fraud actions demonstrate the SEC's vigilance over public companies that make materially misleading claims in press releases," said Steven Peikin, co-director of the SEC's enforcement division.

Both companies, and Singerman, were charged with violating antifraud provisions of federal securities laws. The SEC is seeking permanent injunctive relief and civil penalties against them. The agency is also seeking to bar Singerman from being an officer or director of any public company going forward.