The Securities and Exchange Commission this week charged biotech company Osiris Therapeutics and four former top executives with prioritizing revenue growth over lawful accounting and misleading investors in the process. Osiris Therapeutics agreed to settle the charges without admitting or denying the allegations and must pay a $1.5 million penalty.
The SEC alleges that Osiris Therapeutics routinely overstated company performance and issued fraudulent financial statements for a period of nearly two years. According to the SEC’s complaint, the company improperly recognized revenue using artificially inflated prices, backdated documents to recognize revenue in earlier periods, and prematurely recognized revenue upon delivery of products to be held on consignment. Osiris Therapeutics and its executives also allegedly used pricing data that they knew was false and attempted to book revenue on a fictitious transaction, among other accounting improprieties.
The litigation continues against four executives who led Osiris during the alleged period of accounting fraud from 2014 to 2015: Chief Executive Officer Lode Debrabandere; Chief Financial Officers Philip Jacoby and Gregory Law; and chief business officer Bobby Dwayne Montgomery. The SEC’s complaint seeks disgorgement of ill-gotten gains plus interest and penalties along with officer-and-director bars.