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Health sciences firm settles COVID-19-related SEC case

Posted On: Jul. 9, 2021 1:53 PM CST


A health sciences company and its officials have agreed to pay a total of $185,000 to settle U.S. Securities and Exchange Commission charges that they made misleading COVID-19-related statements about a screening test and personal protective equipment.

The SEC said Wednesday that Santa Monica, California-based Parallax Health Sciences Inc. will pay a $100,000 fine, while its CEO, Paul Arena, agreed to pay a $50,000 fine, and its chief technology officer, Nathaniel Bradley, will pay a $40,000 fine.

The parties agreed to pay the fines without admitting or denying the SEC’s allegations. The company’s website has been suspended, and neither the company nor the executives involved could be reached for comment.

The SEC said it had suspended trading in Parallax’s common stock in April 2020 because of questions about the accuracy of the company’s statements.

The complaint filed in U.S. District Court in Manhattan said Parallax had issued a series of press releases in March and April 2020 that falsely claimed its purported COVID-19 screening test would be “available soon” and that it had medical and personal protective equipment for “immediate sale.”

The complaint said Parallax’s insolvency prevented it from developing the screening test and the company’s projections showed it would take more than a year to develop the test even if the company had the funds.

The SEC also said Parallax never had the medical equipment or PPE it offered for sale and that several factors prevented the company from acquiring it. These included Parallax not having enough money to purchase the equipment nor the U.S. Food and Drug Administration registrations required to import and sell it.

The SEC said Mr. Arena had drafted the misleading press releases to boost the company’s declining stock price, which increased after they were issued.

The SEC charged the parties with violating U.S. securities law.  Mr. Arena also agreed to be prohibited for five years from acting as a public company officer or director and from participating in a penny stock offering. Mr. Bradley agreed to be prohibited from participating in a penny stock offering for three years.

In January, a putative federal securities class action lawsuit was filed against a medical diagnostics company that had been sued by the SEC for allegedly making false claims about a rapid COVID-19 test.