Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Securities newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (August 24, 2020, 1:23 PM EDT ) A Florida company and its chief executive will together pay $65,000 to end U.S. Securities and Exchange Commission allegations that they lied about having personal protective equipment to sell as the threat of the global COVID-19 pandemic began to loom in the U.S.
Proposed final judgments against Praxsyn Corporation and its CEO Frank Brady were filed Friday by the SEC with U.S. District Judge Rodolfo Ruiz, court records show.
According to the terms of the proposed settlement agreements, Praxsyn would pay a $50,000 civil penalty and Brady would pay $15,000 in three installments over the year following entry of the judgment against him.
Brady would also be barred from running a public company for five years, and both Brady and his company would be barred from future violations of fraud provisions of federal securities laws. Neither Praxsyn nor Brady admitted or denied any of the SEC's allegations.
Praxsyn was among dozens of companies for which the SEC suspended trading in connection with claims that the firms took advantage of the coronavirus pandemic by misleading investors in an attempt to bolster trading prices.
The SEC's suit against the company, which appears to be the first such action brought by the regulator, was an additional enforcement measure that accused the company of "blatantly" lying about being able to provide N95 respirators to would-be buyers.
In the suit, the federal regulator cited a pair of press releases, one from Feb. 27 and one from March 4, that falsely detailed the company's efforts to line up reliable suppliers for the gear, which was already in high demand.
For example, Praxsyn's Feb. 27 press release stated that the company was currently "negotiating the sale of millions of" N95 masks. The press release went on to suggest that the company was at the point of evaluating orders and vetting suppliers so that it could "guarantee a supply chain" for the respirators.
The company's March 4 press release "made even more egregiously false statements," the SEC said, because it claimed the company had "created a direct pipeline from manufacturers and suppliers to buyers giving those that qualify, the fairest price on the market" for minimum orders of 100,000 N95 units.
The company ultimately had to acknowledge the claims weren't true, which it did in another press release on March 31, the SEC said. The World Health Organization declared COVID-19 a pandemic on March 11, records show.
On Monday, the SEC and counsel for Praxsyn and Brady did not immediately respond to requests for comment.
The SEC is represented in-house by Robert Kent Levenson.
Praxsyn and Brady are represented by Stanley C. Morris of Corrigan & Morris LLP.
The case is Securities and Exchange Commission v. Praxsyn Corporation et al., case number 9:20-cv-80706, in the U.S. District Court for the Southern District of Florida.
--Additional reporting by Dean Seal. Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
