Buyer beware: SEC warns investors to avoid coronavirus-related frauds and
The U.S. Securities and Exchange Commission is urging investors to beware of scams linked to the coronavirus pandemic, and to carefully consider claims relating to treatments, therapies and equipment that promise big investor returns.
The virus that has sickened more than 2.3 million Americans has also attracted bad actors seeking to profit from the worst public health crisis since 1918’s deadly flu outbreak.
“We’ve seen in other periods of crisis that people try to take advantage,” Stephen Peikin, co-director of the SEC’s Division of Enforcement, told MarketWatch in an interview. “We saw it with SARS, with Ebola, with Hurricane Katrina and after 9/11. A lot of individuals want to take advantage of investor concern and interest, and we’ve seen that in spades in connection with this crisis.”
The proliferation of news releases and social-media postings from individuals and companies claiming to have cures, home testing kits or products that guarantee immunity, has already led the agency to temporarily halt trading in the shares of more than 30 companies in an effort to protect investors.
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‘We’ve seen in other periods of crisis that people try to take advantage. We saw it with SARS, with Ebola, with Hurricane Katrina and after 9/11.’
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In May, the SEC filed charges against Florida-based Praxsyn Corp.
PXYN,
and its chief executive for falsely claiming they were negotiating the sale of millions of N95 masks. Those masks are much in demand among health-care workers and people at high risk, as they can prevent the virus’s spread via the droplets that are released when people cough or speak.
That same month, the agency filed a complaint against Applied Biosciences Corp.
APPB,
in federal court for the Southern District of New York over a press release published on March 31 that said it had started offering and shipping supposed finger-prick COVID-19 tests to the general public. The tests could be used for “homes, schools, hospitals, law enforcement, military, public servants or anyone wanting immediate and private results,” said the release, and could produce results in under 15 minutes.
The complaint alleged that the tests were not intended for home use and could be used only with the help of medical professionals. It further alleged that the company had not shipped any such tests as of March 31.
For more, see: SEC files charges against 2 more companies for false claims about COVID-19
The problem is so widespread that the SEC created a coronavirus steering committee in March led by Peikin…
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