The Securities and Exchange Commission has charged the president and chief science officer of a biotechnology company with making false and misleading statements about the development of a COVID-19 test, the agency said.

The SEC charged in a complaint filed Friday in U.S. District Court in San Jose in Securities and Exchange Commission v. Mark Schena that Mr. Schena, president and chief science officer of Sunnyvale, California-based Arrayit Corp., also misled investors by making false and misleading statements about the status of Arrayit’s delinquent financial reports, both of which “led to surges in the pricing and trading volume of Arrayit stock,” according to the complaint.

The complaint charges Mr. Schena with violating federal securities law. Trading in the stock was halted in April, the complaint states.

The complaint states Mr. Schena claimed in emails to investors in March and April 2020 that the company had a COVID-19 test “before Arrayit possessed all the essential components for such a test.” It said the company did not order the reagents for a COVID-19 test until March 17, 2020, and these were not shipped to Arrayit until two days later. Reagents help to produce test results.  

The complaint said an auditing firm hired by the company never completed its audits of Arrayit’s 2014 and 2015 financial statements because the company failed  to provide the necessary documents and information, and the firm performed virtually no work on the company’s 2015, 2017 and 2018 financial statements.

It states that despite knowing the auditing firm’s stalled status, Mr. Schena and the company’s CEO “made numerous statements to investors falsely assuring them that Arrayit would soon become current with its required periodic reporting, including the filing of audited financial statements, at times specifying the first quarter of 2019.” It did not, though, file any quarterly or annual reports in 2019’s first quarter “or anytime thereafter,” the complaint said.

It submitted a form that gave notice of its suspension of a duty to file financial reports with the Commission in August 2019, the complaint said.

“Mark Schena’s false and misleading statements affected the price and trading volume of Arrayit’s stock,” the complaint said, with its stock price increasing at one point by 313%, before subsequently declining.

“A pandemic does not exempt public company executives from their responsibility to make accurate disclosures,” Erin E. Schneider, director of the SEC’s San Francisco Regional office, said in a statement. The company did not respond to a request for comment.

More insurance and risk management news on the coronavirus crisis here.