SEC Charges TherapeuticsMD With Regulation FD Violations

The Securities and Exchange Commission today charged TherapeuticsMD Inc., a pharmaceutical company headquartered in Boca Raton, Florida, with violations of Regulation FD based on 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 with analysts about the company’s interactions with the U.S. Food and Drug Administration (FDA).  As detailed in the SEC’s order, on June 15, 2017, one day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as “very positive and productive.”  TherapeuticsMD’s stock price closed up 19.4 percent 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, early in the morning of July 17, 2017, TherapeuticsMD issued a press release announcing that 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 percent in pre-market trading following the issuance of the press release.  The SEC’s order finds that in a call and email to sell-side analysts after the press release was issued but before the market opened, the company selectively shared previously undisclosed details about the June FDA meeting and the information it had subsequently submitted to the FDA.  According to the SEC’s order, all of the analysts published research notes containing these details, and the stock rebounded to close down only 6.6 percent 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. 

“Information about a pharmaceutical company’s interactions with the FDA can be critical to investors.  It is essential that when companies disseminate material, nonpublic information, they do so fairly and appropriately to all investors and not just a select few analysts,” said Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement.

TherapeuticsMD consented to the SEC’s order without admitting or denying the findings and was ordered to cease and desist from future violations of Regulation FD and Section 13(a) of the Securities Exchange Act of 1934.  The company agreed to pay a $200,000 penalty. 

The SEC’s investigation was conducted by Lory Stone and Rebecca Schendel Norris, and supervised by Laura B. Josephs and Ms. Welshhans.