SEC Charges Kiromic Biopharma and Former C-Suite Executives for Misleading Practices
The Securities and Exchange Commission recently took action against Kiromic BioPharma, Inc., its former CEO, Maurizio Chiriva-Internati, and its former chief financial officer, Tony Tontat, for not disclosing important information about their cancer fighting drug candidates before, during, and after a public offering that raised $40 million in July 2021.
Kiromic and Tontat have agreed to settle the SEC’s charges, with Kiromic not being ordered to pay a civil penalty due to self-reporting, cooperation, and remediation efforts. Chiriva and Tontat have agreed to pay civil penalties to resolve the charges against them.
Eric Werner, Director of the SEC’s Fort Worth Regional Office, emphasized the importance of holding Kiromic’s former top officials accountable for their lack of disclosure while also recognizing Kiromic’s cooperation and efforts to address the issue.
The SEC’s order against Kiromic revealed that the company had raised funds for clinical trials of its cancer fighting drug candidates, but failed to disclose that the FDA had placed the candidates on clinical hold just before the public offering. Despite disclosing the potential risks of a clinical hold, Kiromic did not inform investors about the actual holds.
Chiriva, according to the SEC’s complaint, was aware of the FDA clinical holds but did not disclose this information in reports filed with the SEC or during investor calls leading up to the offering. As part of the settlement, Chiriva will be permanently enjoined from violating certain securities laws, barred from serving as an officer or director of a public company for three years, and required to pay a civil penalty.
Tontat, on the other hand, received detailed letters from the FDA about the clinical holds after the offering, but failed to disclose this information in Kiromic’s filings. Tontat has agreed to cease and desist from future violations of securities laws and pay a civil penalty as part of the settlement.
The SEC’s investigation and legal proceedings were overseen by experts in the Fort Worth Regional Office, and the litigation will be led by Jennifer Reece with supervision from Keefe Bernstein. The SEC’s orders and complaint against Kiromic, Tontat, and Chiriva provide detailed information about the violations.
Overall, the SEC’s actions highlight the importance of transparency and full disclosure in the securities industry, ensuring that investors have access to all relevant information when making investment decisions.