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SEC Charges Decision Diagnostics, CEO With Fraud Over Coronavirus Blood Test

NEW YORK ─ The US Securities and Exchange Commission on Friday announced charges against Decision Diagnostics and its CEO, Keith Berman, alleging the firm made false and misleading claims about developing a blood test that could accurately detect COVID-19.

The SEC alleges in a complaint filed in the US District Court for the Southern District of New York that Los Angeles-based Decision Diagnostics and Berman "seized upon the global pandemic through a series of press releases that falsely claimed Decision Diagnostics had developed a finger-prick blood test that could detect COVID-19 in less than a minute."

The complaint alleges that the firm and its CEO violated antifraud provisions of the securities laws, the SEC said. It is seeking a court order enjoining Decision Diagnostics and Berman from violating those provisions and ordering them to pay civil penalties.

According to the complaint, from March to at least June, Decision Diagnostics and Berman "made false and misleading statements about the existence of Decision Diagnostics' COVID-19 device" and about progress toward US Food and Drug Administration Emergency Use Authorization, the SEC said.

"As alleged, at the time of these claims, Decision Diagnostics lacked a proven method for detecting the virus and had no physical testing device," the SEC said. "Further, its advisors had warned that the testing kit they were trying to manufacture would not work as Decision Diagnostics had described. The complaint also alleges that the statements created the misleading impression that the test was soon to be introduced to the market and led to surges in the price and trading volume of Decision Diagnostics' stock."

The SEC added it had temporarily suspended trading in Decision Diagnostics' securities on April 23 because of questions about the accuracy and adequacy of information in the marketplace since March 3 or earlier.

The questions related to press releases claiming that the firm perfected technology to manufacture and sell a COVID-19 test kit, the SEC said in its order of suspension of trading.

Decision Diagnostics had also issued sales forecasts of up to $525 million for COVID-19 test kits sold in the first year of production, the agency added.

The Department of Justice's Market Integrity and Major Frauds Unit on Friday announced parallel criminal charges against Berman filed in the US District Court for the District of Columbia, according to the SEC.

Separately, Decision Diagnostics announced Monday that it is doing final testing on its GenViro! COVID-19 Saliva Swift Kit and anticipates releasing a series of test results this week.