SEC continues crackdown on claims made during the coronavirus pandemic
An earlier version of this report incorrectly said the SEC had temporarily halted trading in shares of Nano Magic stock because of claims made by the company. In suspending trading, the SEC cited information in the marketplace about the company’s product. This report has been corrected.
The Securities and Exchange Commission continued its crackdown on false information in the marketplace relating to COVID-19 tests, treatments or equipment on Friday.
The SEC has now halted the stocks of at least 26 companies in connection with statements made by companies or third parties relating to the coronavirus disease COVID-19. The SEC has released several warnings to investors since Feb. 4 to beware of fraud, illicit schemes and other misconduct during the pandemic.
See:SEC takes enforcement action against 23 companies for claims relating to COVID-19
On Friday, the SEC temporarily halted trading in the shares of Bloomfield Hills, Mich.–based Nano Magic Inc.
because, the agency said, it has questions “regarding the accuracy and adequacy of information in the marketplace since at least February 24, 2020.”
Those questions relate to “publicly available information” including: “(a) information in the marketplace claiming that the company has a patent for a disinfectant that kills “coronavirus”; and (b) a statement made by NMGX on April 7, 2020 regarding the Company’s involvement in the fight gainst COVID-19.”
Nano Magic makes specialty cleaning products that it says are powered by nanotechnology. In a press release from April 7, Chief Executive Tom Berman said the company was “eager to join the Covid-19 fight.”
“We have accelerated the development and commercialization efforts of our household cleaning and protectant solutions in order to help create a cleaner and safer world,” he said.
In the same statement, the company changed its name from PEN Inc. and adopted a new ticker symbol. The stock last traded at $1.97 and has gained about 234% in the year to date. The company did not immediately respond to a request for comment.
On Monday, the SEC filed charges against Praxsyn Corp. and its chief executive over false statements about N95 masks.
West Palm Beach, Fla.–based Praxsysn said in a release published Feb. 27 that it was negotiating the sale of millions of N95 masks, according to the SEC. The masks can block tiny particles of matter and are much in demand among health-care workers treating patients suffering from COVID-19, which has infected more than 3 million people worldwide, including more than 1 million in the U.S., and killed more than 230,000.
The company said it was “evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule.”
See:These 21 companies are working on coronavirus treatments or vaccines — here’s where things stand
That release was followed on March 4 with another statement claiming the company had created a “direct pipeline from manufacturers and suppliers to buyers” of the masks. It cited Praxsyn’s CEO, Frank J. Brady, as telling any interested buyers that the company was accepting orders for a minimum of 100,000 masks.
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Following SEC inquiries, the company admitted in a third release published March 31 that it had never had any masks available to sell.
“As alleged in the complaint, in the midst of the ongoing COVID-19 pandemic, Praxsyn and Brady sought to exploit unsuspecting investors by issuing false and misleading news releases concerning Praxsyn’s ability to source and supply N95 masks for the COVID-19 virus,” Eric I. Bustillo, director of the SEC’s Miami office, said in a statement.
The SEC complaint was filed in federal court in the Southern District of Florida. It charges Praxsyn and Brady with violating antifraud provisions of the federal securities laws, and seeks permanent injunctive relief and civil penalties. The SEC is further seeking to bar Brady from serving as an officer or director of a public company.
The SEC had already suspended trading in Praxsyn shares on March 25.
In a press release on its website covering financials for 2018 and 2017, the company says it was incorporated in June 2005 as American Antiquities Inc., an Illinois-based company. In October of 2010, it changed its name to Pet Airways Inc., and on April 15 to Praxsyn Corp. The website does not specify the company’s exact line of business, but does say it’s “Empowering Healthcare.”
Praxsyn did not immediately respond to a MarketWatch request for comment.
The SEC also halted trading in the stock of Kleangas Energy Technologies Inc., which is also known as CaliPharms Inc. That stock
was halted because of “questions regarding the accuracy and adequacy of information in the marketplace since at least April 1, 2020,” the SEC said in a statement.
Specifically, the company made claims on Twitter claiming it had access to and sales of personal protective equipment, or PPE — the gowns, gloves, masks and other equipment that are in dire shortage across the U.S. The company claimed its PPE had been approved by the National Institute for Occupational Safety and Health of the Centers for Disease Control.
CaliPharms describes itself as a U.S.-based company focused on medical marijuana.
Last week, the SEC temporarily halted trading in the shares of Decision Diagnostics Corp.
a Los Angeles–based maker of diabetic test strips. The SEC said the suspension was due to questions regarding the accuracy and adequacy of information in the marketplace since at least March 3, 2020.”
Those questions relate to statements claiming to have perfected the technology needed to make and see a COVI-19 test kit that would provide results in 15 seconds, based on just a finger-prick blood sample. The company also said it expected to sell up to 525 million test kits in the first year of production.
Decision Diagnostics said the trading halt came after its chief executive, Keith Berman, voluntarily submitted to more than three hours of interviews with SEC staff and agreed to another interview. Instead, the SEC halted trading in the stock, the company said.
“While the proposed testing kit would be new, and to the best of DECN’s knowledge, different than any other kit for which regulatory approval is now also being sought, the technology is fundamentally built on a platform designed by the company in 2018 to service diabetics,” the company said.
Read on: SEC halts trading in two stocks amid claims about COVID-19 tests