SEC Charges Medical Device CEO with $41 Million Financial Fraud

SEC Charges Former CEO of Medical Device Startup Stimwave with $41 Million Fraud

The Securities and Exchange Commission today charged Laura Tyler Perryman, the former CEO and co-founder of Florida-based medical device startup Stimwave Technologies Inc., with defrauding investors out of approximately $41 million by making false and misleading statements about one of the company’s key medical device products. According to the SEC’s complaint, the medical device comprised several components, one of which was a fake, non-functional component that was implanted into patients’ bodies.

The SEC’s complaint alleges that, during capital fundraising events from 2018 through 2019, Perryman made material misrepresentations about Stimwave’s peripheral nerve stimulation device, or PNS Device, which purported to treat chronic nerve pain by delivering electrical signals to targeted nerves. The device consisted of three key components: (1) a transmitter; (2) a receiver; and (3) an electrode array. The transmitter was worn by patients in a pouch outside the body and sent a wireless signal into the body. A receiver and electrode array were implanted inside patients’ bodies and were together supposed to receive the signal and convert it into electrical currents that stimulated target nerves. As alleged, Stimwave included two receivers of different sizes with the PNS Device, the smaller of which was designed to be used when the larger receiver was too big to implant. The SEC’s complaint alleges that Perryman knew, or was reckless in not knowing, that the smaller receiver was, in reality, fake and nothing more than a piece of plastic. According to the complaint, Perryman misrepresented to investors that the PNS Device was approved by the U.S. Food and Drug Administration and was the only effective device of its kind on the market. The complaint also alleges that Perryman made false and misleading statements to investors about Stimwave’s historical revenues, revenue projections, and business model. After Perryman’s fraud unraveled in the fall of 2019, Stimwave voluntarily recalled the PNS Devices and eventually filed for bankruptcy.

First official 8k filing after the new SEC cybersecurity disclosure rule

We have our first official 8k filing after the new SEC cybersecurity disclosure rule went into effect yesterday.

VF Corporation, the owner of Vans, The North Face, Timberland and Dickies, is having trouble fulfilling orders after a Wednesday (Dec. 13) cyberattack.

From the 8k:

“As the investigation of the incident is ongoing, the full scope, nature and impact of the incident are not yet known. As of the date of this filing, the incident has had and is reasonably likely to continue to have a material impact on the Company’s business operations until recovery efforts are completed. The Company has not yet determined whether the incident is reasonably likely to materially impact the Company’s financial condition or results of operations.”

Test their mettle — Defendants’ decision to challenge SEC in court is paying off

In recent years, the Securities and Exchange Commission (SEC) has taken a more aggressive approach toward enforcement of the federal securities laws, accompanied by much fanfare and saber-rattling. In response to the SEC’s ambitious enforcement agenda, insistence on broad-ranging charges and demands for high monetary remedies and exacting injunctive relief, an increasing number of entities and individuals are going to trial. This has led to a decrease in the percentage of cases settled pre-filing as compared to prior SEC administrations.

Although many of these litigations are still nascent, the willingness of entities and individuals to accept the risks of litigating against the government appears to be paying off for them. The SEC’s pre-litigation demands for concessions on charges, remedies, and other relief is often giving way to split jury verdicts, considerably reduced monetary and injunctive relief, and even post-filing settlements on terms as good or better than those offered by the SEC staff before the complaint.

As a result, the playbook has changed; in contrast to the quick cooperation, proffers, and pre-Wells deals of the past, entities and individuals may reap rewards by challenging the SEC.

Bitcoin Spot ETF Biggest Development on Wall Street in Last 30 Years, Says Michael Saylor

Markets shouldn’t underestimate the significance of the coming spot bitcoin (BTC) ETFs, said MicroStrategy (MSTR) Executive Chairman Michael Saylor in a Bloomberg TV appearance on Tuesday.

“It’s not unreasonable to suggest that this might be the biggest development on Wall Street in 30 years,” said Saylor, suggesting the last comparable new product was the S&P 500 ETF, which allowed investors one-click exposure to that widely-followed index.

Mainstream investors – whether at the individual or institutional level – to date have not had a “high bandwidth” compliant channel for putting money into bitcoin, said Saylor, and that’s all about to change with the spot ETF. This new vehicle, argued Saylor, is going to drive a demand shock for bitcoin which will soon be followed by a supply shock in the form of April’s halving event – at which point there will be just 450 bitcoin produced each day versus the current 900.

Nasdaq, SEC Knock Bids to Review Court’s Board Diversity Support

Nasdaq and the SEC are back on the defense in court supporting stock exchange rules intended to put more women and minorities on corporate boards.

A three-member panel of the US Court of Appeals for the Fifth Circuit was correct in its October decision to uphold the requirements for thousands of Nasdaq-listed companies to have diverse boards or explain why they don’t, Nasdaq and the Securities and Exchange Commission said in court filings Monday.

The Hot New Market in Crypto? Trading FTX’s Carcass

After the FTX cryptocurrency exchange filed for bankruptcy last year, Thomas Braziel, an investor who specializes in collapsed businesses, started brokering an unusual kind of transaction: a market to profit from FTX’s downfall.

Mr. Braziel put one of his clients in touch with a large financial firm that had lost nearly $100 million when FTX went under. Last December, the firm agreed to sell its claim in the FTX bankruptcy — essentially an i.o.u. from the collapsed exchange — for 6 cents on the dollar, betting that it was better to collect some fast cash than wait years for the husk of FTX to start paying creditors back.

Then the market for FTX claims exploded. Mr. Braziel recently brokered the sale of a $19 million FTX claim for 68 cents on the dollar, collecting a nearly $100,000 commission, he said. Some claims are selling for more than 70 cents, as investors grow optimistic that FTX’s new leadership will recover a sizable portion of the roughly $8 billion that the founder, Sam Bankman-Fried, was convicted of stealing from customers.

“The market is insane,” said Mr. Braziel, a partner at the investment firm 117 Partners. “It’s so hot.”