U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23528 / May 3, 2016
Securities and Exchange Commission v. Stephen D. Ferrone, et al., Civil Action No. 1:11-cv-05223 (N.D. Ill.)
SEC Obtains Jury Verdict in Its Favor in Case Against Biopharmaceutical Company CEO
The Securities and Exchange Commission announced today that on April 29, 2016, a jury in federal district court in Chicago, Illinois returned a verdict against Stephen Ferrone, the former CEO of biopharmaceutical company Immunosyn Corporation, finding him liable for violating the antifraud provisions of the federal securities laws.
The SEC charged Ferrone and other defendants in August 2011, alleging, among other things, that Ferrone made materially false and misleading statements during 2007-2010 regarding the status of regulatory approvals for Immunosyn's sole product, a drug referred to as "SF-1019." The SEC's complaint alleged that Ferrone falsely stated in public filings with the SEC and in other presentations that Argyll Biotechnologies, LLC, Immunosyn's controlling shareholder, planned to commence the regulatory approval process for human clinical trials for SF-1019 in the U.S. or that the regulatory approval process was underway. The complaint alleged that these statements deceived investors because the statements failed to disclose that the U.S. Food and Drug Administration had issued clinical holds on drug applications for SF-1019, which prohibited clinical trials involving SF-1019 from occurring.
After a two-week trial, the jury found Ferrone liable for violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 thereunder, and Exchange Act Rule 13a-14. The jury found Ferrone not liable for aiding and abetting Immunosyn's failure to file annual, quarterly, and current reports that were accurate and not materially misleading under Exchange Act Section 20.
The trial team from the SEC's Chicago Regional Office consisted of attorneys Eric Phillips, Tracy Lo, and Christine Bautista, and paralegal Kristine Rodriguez.
The Court will determine remedies against Ferrone at a later date.
For additional information, see Litigation Release No. 22057 (Aug. 2, 2011).