In a case reminiscent of last year’s blockbuster government actions against Theranos and its former executives, the U.S. Department of Justice and the U.S. Securities and Exchange Commission have separately charged two former executives of a privately held company for falsely touting the firm’s products. On February 12, 2019, the SEC filed a civil enforcement action in Indiana federal court against two former executives of Lucent Polymers Inc., a plastic manufacturing company, for allegedly making false claims hyping the company’s technology for turning recycled scrap metal into strong plastics. The alleged fraud included false product information, deceptive marketing reports and fraudulent data submitted to auditors. In a parallel action, the two former Lucent Polymers executives were arrested and are being prosecuted criminally by the DOJ.
The government’s aggressive action here is a reminder that securities regulators and law enforcement agencies are increasingly scrutinizing statements made by private companies, especially statements that create investor fervor and lead to inflated share valuations.
‘Enforcement 40’ for 2020
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