PolarityTE Inc. fired its CEO John Stetson after the healthcare executive was charged with fraud by the U.S. Securities and Exchange Commission.
The SEC charged 10 individuals, including Stetson and Opko Health Inc. chairman and CEO Phillip Frost as well as several associated companies, for allegedly facilitating market manipulation schemes.
In its complaint, the SEC alleged that "a group of prolific South Florida-based microcap fraudsters," including Frost and Stetson, manipulated share prices of three companies' stocks in collusion with biotech and bitcoin investor Barry Honig.
Honig and his associates allegedly drove up the price of certain stocks artificially and then "dumped" their shares to make a profit off "unsuspecting investors." The SEC said the group made more than $27 million in stock sales from the schemes, which ran from 2013 to 2018.
Salt Lake City, Utah-based PolarityTE terminated Stetson's employment, noting that it does not "tolerate the behavior outlined in the complaint," adding that it had no knowledge or involvement with the activities mentioned in the complaint.
The biotechnology and regenerative biomaterials company also stated that it did not have any recent management, employment, or consulting relationships with the defendants listed in the complaint filed by the SEC.
Meanwhile, Opko Health said the SEC's complaint contained "serious factual inaccuracies," noting that the regulator did not follow its own standard procedures by failing to provide a prior notice to the company before filing the complaint.
The Miami-based diagnostic instrument maker said it could have answered a number of SEC's questions and as a result, the lawsuit against Frost could have been avoided. Opko added that it was confident the matter will be resolved favorably for the company and Frost once a proper investigation is completed.