SEC Files Settled Action Against Biotechnology Company Related to Unremediated Material Weaknesses Spanning Twelve Years
Oct. 10, 2019
File No. 3-19582
October 10, 2019 - The Securities and Exchange Commission today filed a settled action against Northwest Biotherapeutics (NWBO) for failing to maintain internal control over financial reporting (ICFR) for twelve consecutive annual reporting periods. In each of its annual Form 10-K filings with the Commission over more than a decade, NWBO disclosed material weaknesses, many of which recurred year after year, with insufficient effort at remediation.
According to the SEC's order, NWBO publicly disclosed material weaknesses in each of its Forms 10-K over a period of twelve years, from 2007 through 2018. NWBO's material weaknesses often repeated year after year, relating to numerous areas of importance, including the review, supervision and monitoring of accounting operations throughout the organization. NWBO disclosed in nine of the last twelve fiscal years that it lacked controls in place, including those surrounding related party transactions, to ensure that all material transactions and developments impacting its financial statements were reflected and properly recorded. In its most recent Form 10-K filed for FY2018, NWBO continued to disclose material weaknesses, including two newly-identified weaknesses, one of which is the lack of formalized and implemented policy and procedure documentation to evidence a system of ICFR. In addition, NWBO has failed to file timely its annual report on Form 10-K for sixteen consecutive years.
The SEC's order finds that NWBO violated the internal controls provisions of Section 13(b)(2)(B) of the Securities and Exchange Act of 1934 and Rule 13a-15(a) thereunder. Without admitting or denying the SEC's findings, NWBO consented to a cease-and-desist order and agreed to pay a $250,000 civil penalty and retain an independent consultant to review and evaluate NWBO's internal control over financial reporting.
The SEC's investigation was conducted by John Archfield, Yolanda Lavery, and Juan Migone, members of the Division of Enforcement's Financial Reporting and Audit Group (FRAud Group). The investigation was supervised by Margaret McGuire, Chief of the FRAud Group, and Melissa Hodgman, Associate Director. The staff's investigation continues.
Melissa Hodgman 202-551-4120
Margaret McGuire 202-551-4120
Gibson, Dunn & Crutcher LLP
Brian Lane 202-887-3646
Lissa Percopo 202-887-3770