A penny stock company received federal relief money to weather the pandemic two weeks after its shares were suspended by regulators who said it made misleading statements about its ability to distribute coronavirus antibody tests.
The U.S. Securities and Exchange Commission suspended trading in the shares of Predictive Technology Group on April 21 after questioning whether the company could, as it claimed, “immediately distribute large quantities of serology tests to detect the presence of Covid-19 antibodies,” according to the order.
On May 6, the Salt Lake City-based company received a $1.7 million loan as part of the Small Business Administration’s Paycheck Protection Program, according to a regulatory filing.
The company’s shares resumed trading that same day after a two-week suspension. It didn’t respond to multiple requests for comment.
There’s nothing in the PPP relief law that prevents a company whose shares were suspended from receiving loans from the program.
What’s more, Predictive Technology isn’t the only publicly traded company that’s had run-ins with the SEC and also received PPP funding that’s remained out of reach for many small businesses.
Cool Holdings Inc., which sells electronics equipment, received a loan despite being under investigation for securities fraud. MiMedx Group Inc. was awarded a $10 million PPP loan after paying a $6.5 million penalty in April to end a Justice Department probe into claims it defrauded the federal government. MiMedx, which didn’t admit wrongdoing as part of the settlement, has since returned its loan for reasons unrelated to the Justice Department probe.
Predictive Technology, whose board includes Republican former Senator Orrin Hatch of Utah, is a biotechnology company that’s run by Chief Executive Officer Bradley Robinson and has about 110 employees. In a previous venture, Robinson was accused in a 2013 lawsuit of making false claims tied to a cholesterol-lowering algae water product that he said would be pitched to the television personality Dr. Oz, the Gates Foundation and Walgreen executives. The suit was settled out of court, a lawyer for the complainants said.
Hatch and Robinson didn’t respond to requests for comment.
The SEC, in suspending Predictive Technology’s shares, cited three news releases published by the company in March and early April. In one, on March 25, the company stated it planned to distribute a finger-prick test that screens for coronavirus antibodies, delivering results within 15 minutes. In another news release on April 8, the company said it had a million initial orders.