Westlake Village, Calif.-based Decision Diagnostics and its CEO Keith Berman are alleged to have made the claims in numerous press releases, saying that the company had developed a working, breakthrough technology for detecting COVID-19 through a blood test, according to an SEC release.
The SEC, which temporarily suspended trading in Decision Diagnostics’ securities on April 23, 2020, alleges that Berman and the company “seized upon” the ongoing COVID-19 pandemic with false claims that Decision Diagnostics had developed a finger prick blood test for detecting COVID-19 in less than one minute.
In the complaint, the SEC said the company and the CEO made the false claims from March 2020 to at least June 2020, stating that they were headed toward FDA emergency use authorization. According to the SEC allegations, Decision Diagnostics lacked a proven method for detecting the virus and had no physical testing device.
Additionally, advisors warned that the kit they were trying to manufacture would not work as the company described, while the statements it made misled people to believe that it was set to be on the market soon, leading to surges in the price and trading volume of Decision Diagnostics’ stock.
“During this unprecedented time, when the need for truthful disclosures concerning COVID-19 tests is of vital importance, Decision Diagnostics and its CEO allegedly misled investors by claiming to have made a working test device when all they had was an idea that had not materialized into a product,” SEC Division of Enforcement Director Stephanie Avakian said in the SEC release. “With the onset of the global pandemic, we quickly pivoted to identify potential areas of fraud. This case is another example of how the Commission will hold accountable those who exploit the pandemic to harm investors.”
“In our complaint, we allege that Decision Diagnostics and Berman repeatedly made baseless representations to the investing public about market-moving events like progress in obtaining FDA approval and having breakthrough technology,” added Division of Enforcement Associate Director Anita B. “Today’s filing is a credit to the dedicated SEC staff, who continued to investigate after the trading suspension and quickly uncovered the alleged fraud.”