U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23238 / April 10, 2015
Securities and Exchange Commission v. Michael M. Cohen and Proteonomix, Inc.,, Civil Action No. 2:15-cv-01292-MCA-JBC
SEC Obtains Injunctive Relief and Bars Against CEO of New Jersey Biotechnology Company
The Securities and Exchange Commission today announced that on March 6, 2015, the United States District Court for the District of New Jersey entered a judgment against Michael M. Cohen that, among other things, enjoined Cohen from violating certain provisions of the federal securities laws, permanently barred Cohen from acting as an officer or director of any publicly-traded company, and permanently barred Cohen from participating in any offering of penny stock.
The District Court's judgment, which was entered by consent, permanently enjoined Cohen from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933; Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the "Exchange Act'); Rules 10b-5, 13a-14, and 13b2-1 thereunder; and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, and 13a-13 thereunder.
Based on the entry of the injunction by the District Court, the Commission separately instituted a settled administrative proceeding against Cohen that permanently suspended him from appearing or practicing before the Commission as an accountant.
The Commission's Complaint, which was filed in the District Court on February 19, 2015, alleged that, from approximately 2008 through 2012, Proteonomix and Cohen -- who was the company's Chief Executive Officer, Chairman of its Board of Directors, and at times its Chief Financial Officer -- committed multiple violations of the securities laws that enabled Cohen to pocket more than $600,000 for his own or his family's benefit. The Commission alleged that Proteonomix and Cohen fraudulently issued and transferred millions of Proteonomix shares to corporate entities that were named after Cohen's wife and children and nominally controlled by Cohen's father-in-law. In fact, however, Cohen secretly controlled brokerage and bank accounts in the names of these entities. Cohen directed the issuance and transfer of Proteonomix shares to these entities, directed the subsequent sale of these shares into the open market, and directed that proceeds from these share sales be transferred to Cohen or spent for his direct benefit. The Commission alleged that Proteonomix and Cohen falsely recorded these share issuances and transfers on the company's accounting books and records and failed to disclose in the company's SEC filings that the transactions with his father-in-law's entities were related party transactions. The Commission also alleged that Cohen improperly directed his father-in-law's entities to transfer shares of Proteonomix stock in unregistered transactions to pay the company's debts, and that Cohen falsely certified the accuracy of Proteonomix's reports and financial statements that were filed with the SEC.
In addition to the relief described above, the District Court's judgment against Cohen provides that Cohen shall pay disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty in an amount to be determined by the Court.
On February 19, 2015, Cohen also pled guilty to a criminal charge related to some of the same conduct alleged in the Commission's Complaint. See United States v. Michael M. Cohen, Crim. No. 2:15-cr-00091-MCA-1 (D.N.J.).
For additional information, see Litigation Release 23201 (Feb. 19, 2015).