The SEC announced today that it levied a complaint against Parallax Health Sciences and two top executives for making allegedly misleading statements about COVID-19-related products.
Without admitting or denying the allegations, Parallax, its CEO Paul Arena, and CTO Nathaniel Bradley consented to judgments permanently enjoining them from future violations of the charged provisions and requiring them to pay penalties of $100,000, $45,000, and $40,000, respectively, according to the SEC.
The judgments, which are still subject to court approval, would also prohibit Arena from acting as a public company officer or director and from participating in an offering of penny stock over the next five years. In addition, Bradley would be subject to a three-year prohibition from participating in an offering of penny stock.
The SEC temporarily suspending the trading of Parallax’s common stock on April 10, 2020, due to questions about the accuracy of statements made by the company and its executives.
In the SEC’s complaint filed in the U.S. District Court for the Southern District of New York, the commission says that Parallax issued several press releases over March and April 2020, falsely claiming that the company’s purported COVID-19 test would be “available soon.” The company also said it had medical and personal protective equipment (PPE) — which was in particularly high demand at that early stage of the pandemic — for “immediate sale.”
The SEC’s complaint alleges that Parallax’s insolvency prevented it from developing the COVID-19 test. At the same time, company projections demonstrated that even with the funds, it would take more than one year to develop the test. Additionally, the SEC alleges that Parallax never had the medical equipment or PPE that it offered.
A range of factors preventing the company from acquiring the equipment, the SEC said, including the lack of funds and the lack of FDA registrations required to import and sell such equipment.
The complaint alleges that Arena drafted the misleading press releases — with Bradley assisted him on two of them — to boost Parallax’s declining stock price, which worked as the company’s common stock price increased after the press releases were disseminated.
“We allege that Parallax misled investors that the company was positioned to capitalize on opportunities created by the COVID pandemic. Such misinformation jeopardized investors at precisely the moment when investors were attempting to respond to the financial implications of a public health emergency,” SEC Boston Regional Office director Paul G. Levenson said in the release.