id A Broker Sell You PixarBio Corporation Investments?
Soreide Law Group is investigating claims on behalf of investors who have been sold PixarBio Corp. by a broker or financial advisor. PixarBio is a biotechnology company headquartered in Fort Lee, New Jersey who purports to be developing “NeuroRelease,” a proprietary method of treating post-operative pain through the delivery of a non-opioid pain-killer, carbamazepine. PixarBio is currently being sued by the Securities and Exchange Commission (“SEC”) for securities fraud.
SEC Alleges PixarBio, CEO Francis Reynolds Committed Fraud
Particularly, on April 24, 2018, the SEC brought fraud charges against PixarBio, Francis Reynolds (its president, chief executive officer, and chief financial officer), Kenneth Stromsland (its chief information officer and vice president) and M. Jay Herod (Reynolds’ acquaintance and PixarBio investor). United States Securities and Exchange Commission vs. PixarBio Corp., et. al. Case #1:18-cv-10797. The SEC’s Complaint against the company, Reynolds Stromsland and Herod alleges that they accumulated $12,700,000.00 in funds from approximately 211 investors through the fraudulent offering of PixarBio’s unregistered securities.
Reynolds was accused by the SEC of making misleading and false statements to investors in order to steer them towards purchasing the PixarBio investments. Specifically, Reynolds claimed, inter alia: PixarBio had acquired a $10,000,000.00 credit line; PixarBio procured adequate funding in 2016 to finance its operations into 2017; it commenced clinical studies in humans; United States Food & Drug Administration hastened the approval process for a drug under PixarBio’s development; and Reynolds was responsible for pioneering a medical device designed to treat spinal cord injuries. SEC indicated that Herod and Stromsland personally solicited investors, exposing them to the seemingly misleading materials that Reynolds authored in hopes of convincing them to invest.
The SEC further alleged that in 2016, Reynolds concocted a fraudulent scheme involving the merger of PixarBio with a public shell company. Reynolds purportedly concealed his control of nearly all of the merged PixarBio entity’s free-trading shares. Reynolds, according to the SEC, directed Herod to sell PixarBio’s shares to the public, contravening federal securities laws designed to restrict a publicly-traded company’s stock from being sold by an affiliate of the company.
The Complaint alleged that from October 2016 to January 2017, Reynolds made arrangements for Herod to sell the shares of PixarBio on the OTC markets for about $910,000.00. Apparently, $500,000.00 of the $900,000.00 had been funneled by Herod to PixarBio; the other $300,000.00 funneled to Reynolds. SEC further contended that during the period that the illicit sales had been made, Herod and Stromsland attempted to pump the PixarBio stock up by effecting manipulative trades – the two allegedly bought and sold shares to themselves, creating the appearance of legitimate market activity.
The SEC claims that the fraudulent securities offering is ongoing. Particularly, since November 2017, PixarBio has reportedly accumulated $440,000.00 from investors. The Complaint also stated that the company made plans as of February 2018 to accumulate at least $5,000,000.00 more from willing investors.
The Complaint charged PixarBio, Reynolds, Stromsland and Herod with fraud in connection with securities purchases or sales; fraud in the offer and sale of securities; and unregistered securities sales. The Complaint charged them with violating Sections 10(b) of the Securities Exchange Act, Rule 10b-5, and Sections 5 and 17(a) of the Securities Act. Herod and Stromsland have additionally been charged with violating Section 9(a) of the Exchange Act for manipulative stock trading; and Stromsland and Reynolds were charged with violating Section 15(a) of the Exchange Act by acting as unregistered brokers.
Less than a month after the SEC’s Complaint, on May 22, 2018, Reynolds and M. Jay Herod were indicted for felony securities fraud and manipulative trading in connection with their offer, sale and trading of PixarBio shares. United States v. Frances M. Herold and M. Jay Herod, Criminal #1:18-cr-10154-DPW (May 22, 2018).
Have you been sold PixarBio by a stockbroker or financial advisor? If so, call (888) 760-6552 for a free consultation with Soreide Law Group’s experienced counsel. Our firm has recovered millions of dollars for investors who have been victim to broker and brokerage firm misconduct. We represent clients on a contingency fee basis and advance all costs.