SEC: You can’t always trust press releases

In 2006, the investors in Southwestern Medical Solutions (then traded on the Pink Sheets) were informed via multiple press releases of the joyous news that the FDA had approved the company’s diagnostic tests. However, the SEC alleges that these were not true:

The complaint also alleges that Southwestern submitted false and misleading information about its business to the Pink Sheets, an inter-dealer electronic quotation and trading system in the over-the-counter securities market. The complaint further alleges Hedges, Powell, and Meecham were responsible in various capacities for preparing and disseminating the false press releases and false information provided to the Pink Sheets.

See the litigation release or the detailed complaint (pdf). If history is any guide, those individuals behind the company will only be forced to pay a small fine.

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