According to the SEC’s complaint, filed in the United States District Court for the District of Nevada, Thompson, Loveless, and Mylock provided Spyr’s auditors with false and misleading information about an SEC investigation into Spyr’s investment in a biotechnology company. The SEC alleges that the defendants told Spyr’s auditors that they were not aware of “any situations where the company may not be in compliance with any federal or state laws or government or other regulatory body regulations,” even after Spyr had received a Wells notice, settlement discussions with SEC staff had broken down, and management believed that an SEC action would be filed soon. The complaint also alleges that Thompson and Loveless signed Spyr’s 2017 Form 10-K and 2018 first quarter Form 10-Q, neither of which disclosed the potential SEC enforcement action. According to the complaint, Spyr was required by generally accepted accounting principles to disclose the potential SEC enforcement action because it was reasonably possible that it could lead to a material loss for the company.
Source: James R. Thompson, et al. (Release No. LR-25517; Sep. 23, 2022)
