In December, the SEC filed a complaint against Decision Diagnostics and its CEO, Keith Berman, for falsely claiming the company had developed a finger prick blood test that could instantaneously detect COVID-19. As stated in its complaint, the SEC temporarily suspended trading of Decision Diagnostics’ securities on April 23, 2020.
Now, investors have brought suit as well. Three institutional investors claim the company – which was already in financial distress as a result of alleged misappropriations by Berman – falsely disclosed it was developing an at-home COVID-19 test nearing regulatory authorization and then denied investors their right to convert their shares, which were worth millions at the time. The complaint alleges Berman also falsely announced a distribution partnership with a company owned by members of the plaintiff companies. Once the alleged fraud became known to the market, the company’s stock took a nosedive. Through their lawsuit, the investor companies seek, among other things, to restrain defendants’ assets pending the appointment of a receiver, a complete accounting, and restitution to the investors.
Check back here for updates on this case, as well as others on securities claims relating to companies’ COVID-19 disclosures.