The U.S. Securities and Exchange Commission (SEC) has charged Parallax Health Sciences, alleging that the company made misleading statements about its efforts to fight COVID-19.
Parallax’s CEO Paul Arena and Chief Technology Officer Nathaniel Bradley were also charged for their roles in the statements. The SEC temporarily suspended trading in Parallax’s common stock on April 10, 2020, due to questions about the accuracy of the company’s statements. Each party has offered to settle the charges.
According to the complaint filed in the U.S. District Court for the Southern District of New York, Parallax issued a series of press releases in March and April 2020 falsely claiming that its purported COVID-19 screening test would be “available soon.” It also said that it had medical and personal protective equipment (PPE) for “immediate sale.”
The complaint alleges that Parallax’s insolvency prevented it from developing the screening test. Further, the SEC said that the company’s projections showed that even if the company had the funds, it would take more than a year to develop the test. In addition, the SEC alleges that Parallax never had the medical equipment or PPE it offered for sale and that several factors prevented the company from acquiring the equipment, including lack of money and lack of Food and Drug Administration registrations required to import and sell the equipment.
The SEC alleges that Arena drafted the misleading press releases to boost Parallax’s declining stock price. The companyʻs stock price increased after they 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,” Paul Levenson, director of the SEC’s Boston Regional Office, said.
Without admitting or denying the SEC’s allegations, Parallax, Arena, and 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. Also, Arena agreed to be prohibited for five years from acting as a public company officer or director and from participating in an offering of penny stock. Bradley agreed to be prohibited for three years from participating in an offering of penny stock.