On April 19, 2022, Judge James R. Knepp II of the U.S. District Court for the Northern District of Ohio approved consent judgments against biotechnology firm Rising Biosciences, Inc. and its CEO Arthur Hall for violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b–5 promulgated thereunder.
According to the complaint filed by the U.S. Securities and Exchange Commission, Rising Biosciences and Hall violated Section 10(b) and Rule 10b–5 by making false and misleading statements that the company’s disinfectant product — Oxithymol — had been approved by the U.S. Centers of Disease Control and Protection to disinfect against COVID-19 and had been registered with the U.S. Environmental Protection Agency. For example, in an April 2020 press release approved by Hall, he stated that Rising Biosciences was “pivoting away from [its] normal sector” and “repurposing [its] lab to produce over 10,000 gallons of much-needed disinfectant a month,” which the press release claimed was “proprietary, non-toxic,” and “CDC approved.” In actuality, the SEC contended, Oxithymol was made from another company’s pesticide, and Hall purportedly knew that neither Oxithymol nor the pesticide had been approved by the CDC or met EPA criteria for use against COVID-19. The SEC alleged that the defendants’ false and misleading statements resulted in substantial increases in both the trading volume and price of the company’s stock.
The consent…
