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Virus-related class action filed against diagnostics company

Posted On: Jan. 19, 2021 1:06 PM CST

class action

A putative federal securities class action lawsuit was filed Friday against a medical diagnostics company that had been sued by the U.S. Securities and Exchange Commission for allegedly making false claims about a rapid COVID-19 test.

Beginning in March, Westlake Village, California- based Decision Diagnostics Corp. began to claim it had developed a finger-prick blood test that could detect COVID-19, and made various representations regarding its progress toward achieving U.S. Food and Drug Administration emergency use authorization for the test, according to the complaint filed Friday in U.S. District Court in Los Angeles in Anthony Sanchez v. Decision Diagnostics Corp. and Keith M. Berman. The lawsuit was first reported in the D&O Diary blog.

In December, the SEC filed a complaint against the company and Mr. Berman, its CEO, chief financial officer, secretary and sole director, in U.S. District Court in New York, charging it with making false and misleading claims about the test.

Friday’s complaint states that following the SEC lawsuit, the company’s common share price fell 6 cents per share to close at 4 cents per share. It charges the defendants with violating federal securities law.

A company spokesman could not be reached for comment.

In March, a putative securities class action lawsuit was filed against a pharmaceutical company that allegedly falsely promised a quick coronavirus vaccine, and whose stock plunged once it failed to deliver.

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