OPKO, a Miami-based biotech company whose CEO, Dr. Philip Frost, also serves as chairman of the Ladenburg Thalmann broker-dealer network, responded to a Securities and Exchange Commission lawsuit alleging he participated with nine other people in a pump-and-dump scheme with a public rebuke. Last week, the SEC charged the 10-member investor group with securities fraud contending they manipulated penny stocks that left many investors holding worthless shares.
The SEC is requesting that the investors disgorge their “ill-gotten gains” of $27 million with interest and be barred from future penny-stock offerings.
The OPKO statement claimed the agency failed to provide notice of its intent to sue Frost and the others. It added that the complaint contained “factual inaccuracies” and said Frost would “have gladly provided information” to the SEC.
Frost is an 81-year-old billionaire and a major investor who serves on the boards of several companies, including Ladenburg Thalmann, which owns Securities America, Triad Advisors and Investacorp. A spokesman for the brokerage network noted that the allegations in the SEC complaint are “unrelated to Ladenburg, our subsidiaries and our business activities.” Frost reportedly owns about 33 percent of Ladenburg Thalmann.
According to the complaint, the group led by Barry Honig of Boca Raton, Fla., purchased shares of penny stocks at deep discounts and then promoted the shares to drive up their prices while selling the shares. Honig reportedly owned as much as 10 percent of Riot Blockchain, a controversial stock, and was once its largest shareholder.
In the wake of the SEC action, Riot Blockchain CEO John O’Rourke, another of the ten investors, resigned. Riot Blockchain wasn't named in the complaint. At presstime, Frost retained both his CEO position at OPKO and as chairman at Ladenburg.
OPKO claimed that the SEC failed to follow its standard procedures in its complaint. “OPKO learned today that the Securities and Exchange Commission has filed a lawsuit in the Southern District of New York against a number of individuals and entities, including OPKO and its CEO and Chairman Phillip Frost,” the company said in a prepared statement. “The SEC failed to provide notice of its intent to sue prior to filing the complaint, which contains serious factual inaccuracies.
“Had the SEC followed its own standard procedures, OPKO and Dr. Frost would gladly have provided information that would have answered a number of the SEC's apparent questions, and filing of this lawsuit against them could have been avoided,” the company continued. “OPKO and Dr. Frost have always prided themselves on adhering to the highest standards of financial disclosure, and they are confident that once a proper investigation is completed and the facts of the case have been fully disclosed, the matter will be resolved favorably for them."
Frost has served as CEO and chairman of IVAX Corp., which was sold to Teva Pharmaceuticals in 2006. He reportedly served as chairman of Teva for four years ending in 2014.