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Company and two execs charged by SEC for misleading disclosures

The Securities and Exchange Commission has announced charges against Parallax Health Sciences Inc. for making misleading statements about its efforts to fight COVID-19. The SEC also charged Parallax’s chief executive officer Paul Arena and its chief technology officer Nathaniel Bradley for their roles in the statements. Each party has offered to settle the charges. The SEC temporarily suspended trading in Parallax’s common stock on April 10, 2020, due to questions about the accuracy of the company’s statements.

According to the SEC’s complaint, Parallax issued a series of press releases in March and April 2020 falsely claiming that its purported COVID-19 screening test would be “available soon” and that it had medical and personal protective equipment (PPE) for “immediate sale.” The complaint alleges that Parallax’s insolvency prevented it from developing the screening test, and that the company’s projections showed that, even if the company had the funds, it would take more than a year to develop the test.

The complaint also alleges that Parallax never had the medical equipment or PPE it offered for sale and that several factors prevented the company from acquiring the equipment, including that it did not have enough money to purchase the equipment and that it lacked the Food and Drug Administration registrations required to import and sell the equipment. Additionally, the complaint alleges that Arena drafted the misleading press releases to boost Parallax’s declining stock price, and that the company’s stock price increased after they were disseminated.

Without admitting or denying the SEC’s allegations, Parallax, Arena, and Bradley consented to judgments permanently enjoining them from future violations of the charged provisions and requiring them to pay penalties of $100,000, $45,000, and $40,000, respectively. Arena also agreed to be prohibited for five years from acting as a public company officer or director and from participating in an offering of penny stock. Bradley, who assisted Arena in drafting two of the misleading press releases, agreed to be prohibited for three years from participating in an offering of penny stock. The settlements are subject to court approval.

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