Yesterday, the SEC continued its undefeated streak in its FY 2016 federal court trials. The SEC announced that on April 29, following a two week trial in the U.S. District Court for the Northern District of Illinois, a jury returned a verdict in favor of the SEC in its case against Stephen D. Ferrone.
The SEC alleged in its complaint that Ferrone, who was CEO of biopharmaceutical company Immunosyn Corp., signed and certified certain public filings that
misled investors about the regulatory status of its sole product called SF-1019, a drug derived from goat blood that was intended to treat a variety of ailments. Ferrone’s company allegedly misrepresented that human clinical trials were ready to commence and omitted that the Food and Drug Administration had issued full clinical holds on the regulatory approval applications.
The SEC stated yesterday that the jury found that Ferrone’s statements did fraudulently mislead investors and that Ferrone signed and filed false certifications in several annual and quarterly reports. Andrew Ceresney, Director of the SEC's Division of Enforcement, added that the agency was pleased with the verdict and "will continue to hold executives accountable when their companies provide misleading information and fail to give investors a full and honest picture of what’s happening with their products.”
Following the verdict in this trial, the SEC's scorecard in FY 2016 now includes four trials. In all four of these cases, the SEC has achieved outright victories (in which it won on all of its claims). Here is the list as it currently stands:
SEC v. National Note of Utah and Wayne L. Palmer: VERDICT—FOR SEC (Dec. 2015)
SEC v. Bonan Huang, et al.: VERDICT—FOR SEC (Jan. 2016)
SEC v. Payton: VERDICT—FOR SEC (Feb. 2016)
SEC v. Ferrone, et al.: VERDICT—FOR SEC (April 2016)