The SEC announced today that it is charging Praxsyn Corp. and its CEO Frank Brady for allegedly issuing false and misleading press releases regarding its ability to acquire and supply N95 respirator masks during the COVID-19 pandemic.
According to an SEC news release, West Palm Beach, Fla.-based Praxsyn issued a Feb. 27 news release announcing that it was negotiating the sale of millions of N95 masks and “evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule.”
A release the following week on March 4 stated that the company had a large amount of masks on hand and was creating a pipeline from manufacturers and suppliers to buyers. Brady was quoted as saying the company was accepting orders of a minimum of 100,000 masks.
The SEC alleges that Praxsyn, contrary to its claims, never had any masks in its possession, never made orders for masks and never had a single contract with a manufacturer or supplier to obtain masks. The SEC issued a March 26 order to temporarily suspend trading in the securities of Praxsyn and, on March 31, following regulatory inquiries, Praxsyn issued a press release admitting that it never had masks available to sell.
Eric Bustillo, director of the SEC’s Miami Regional Office, said in the release that, as alleged in the complaint, Praxsyn and Brady “sought to exploit unsuspecting investors” with false and misleading press releases.
“Today’s fraud action against Praxsyn and its CEO demonstrates the SEC’s dedication to investor protection and accountability,” SEC Division of Enforcement co-director Steven Peikin said in the release. “We will move swiftly against those who seek to profit off this national emergency by cheating or misleading investors.”
The SEC charged Praxsyn and Brady with violating antifraud provisions of the federal securities laws. It seeks permanent injunctive relief and civil penalties, while it also is pursuing an officer and director bar against Brady. An investigation is ongoing with the assistance of the Financial Industry Regulatory Authority (FINRA).
“The Enforcement Division is committed to swiftly shutting down COVID-19 investment scams, seeking trading suspensions where appropriate, and pursuing fraud charges against both entities and individuals when warranted,” co-director of the SEC’s Division of Enforcement Stephanie Avakian said.