On Tuesday, April 24, 2018, it was announced that the chief executive officer of PixarBio Corp. and two associates were arrested and charged with securities fraud in relation to a scheme to manipulate trading in the company’s shares. PixarBio is a Boston-based biotech company. 55-year-old Frank Reynolds, 51-year-old M. Jay Herod and 45-year-old Kenneth Stromsland were charged with securities fraud.
CEO Reynolds and his two associates are accused of engaging in a scheme to defraud the company’s investors by making false and misleading statements about the company in or around August of 2013. They are also accused of being involved in manipulative trading. The complaint alleges that in December of 2015, an email was sent to potential investors promising a huge return on investment for any investors in PixarBio’s NeuroRelease. The email also claimed that “At only $1,000,000,000 right now, as we prepare to replace morphine in the clinic in late 2017 or early 2018, and we expect our valuation to long-term trend UP.”
In reality, it is alleged that the company did not have a market value of one billion dollars or a product that could end morphine and opiate addiction. The complaint alleges that the company’s prospective drug is not a treatment for opiate addiction at all. Additional details have been made available here.