SEC Charges TherapeuticsMD, Inc. with Violations of Regulation FD
Aug. 20, 2019
File No. 3-19362
August 20, 2019 - The Securities and Exchange Commission today announced settled charges against TherapeuticsMD, Inc., a pharmaceutical company headquartered in Boca Raton, Florida, for violations of Regulation FD in connection with its sharing of material, nonpublic information with sell-side research analysts without also disclosing the same information to the public.
The SEC's order finds that on two separate occasions in 2017, TherapeuticsMD selectively shared material information about the company's interactions with the Food and Drug Administration. According to the SEC's order, on May 31, 2017, TherapeuticsMD publicly announced that it would hold a meeting with the FDA two weeks later to discuss a deficiency the FDA identified in the company's New Drug Application for its only drug in the FDA review pipeline. As detailed in the SEC's order, on June 15, 2017 - the day after the FDA meeting - TherapeuticsMD sent private messages to sell-side analysts describing the meeting as "very positive and productive." TherapeuticsMD's stock price closed up 19.4% on heavy trading volume the next day; at that time, the company had not issued a press release or made any other market-wide disclosure about the meeting.
According to the SEC's order, on July 17, 2017, TherapeuticsMD issued an early morning press release announcing it had submitted additional information to the FDA, but did not yet have a clear path forward regarding its New Drug Application. TherapeuticsMD's stock price declined approximately 16% in early morning trading following the issuance of the press release. The SEC's order finds that in a call and email to sell-side analysts shortly after the press release and still before the market opened, the company shared previously undisclosed details about the June meeting and the information it had subsequently submitted to the FDA. According to the SEC's order, all of the analysts then published research notes containing these details, and the stock rebounded to close down only 6.6% for the day. The SEC's order found that, at the time of these selective disclosures, TherapeuticsMD did not have policies or procedures regarding compliance with Regulation FD.
The SEC order finds that TherapeuticsMD violated Regulation FD and Section 13(a) of the Securities Exchange Act of 1934. Without admitting or denying the SEC's findings, TherapeuticsMD agreed to settle by consenting to a cease-and-desist order and a civil monetary penalty of $200,000.
The SEC's investigation was conducted by Lory Stone and Rebecca Schendel Norris, under the supervision of Laura B. Josephs and Carolyn M. Welshhans.