A Medical Device Daily

Aurora Medical Technology (Bay Shore, New York) reported that an internal investigation has been initiated by its board of directors related to the trading of its stock between Jan. 1 and July 31.

It said that the investigation is the result of action initiated by the Securities and Exchange Commission (SEC) against “certain individuals,” who allegedly participated in a scheme to manipulate the market for the stock of Aurora.

Because of the ongoing investigation, the company said it will delay the release of its financial statements for the quarter ended June 30, and the six months ended Dec. 31, 2005.

The company said that around July 14 it received a subpoena from the SEC requesting the production of certain undisclosed documents. In addition, it said that officers, shareholders and board members Harry Soroff, MD, Jahangir Rastegar, PhD, and Marc Leahy each received a subpoena from the SEC requiring their oral testimony.

Aurora is developing the RACE system, a portable system designed for use in the homecare of patients with CHF. The portable system “as it is envisioned,” the company says on its web site, consists of a compressor, a vacuum-pump module and a control unit and sensor (EKG) module installed in the patient's home.

In other legalities, the SEC reported charges against David Pillor, former senior vice president for sales and marketing and a member of the board of InVision Technologies , a manufacturer of explosive detection machines used in airports that is now a business of GE (Fairfield, Connecticut).

The complaint, filed in federal district court in San Francisco, alleges that Pillor abetted InVision's failure to establish adequate internal controls to prevent the company from violating the Foreign Corrupt Practices Act (FCPA) and that he indirectly caused the falsification of the company's books and records.

With filing of the SEC's complaint, Pillor agreed, without admitting or denying the allegations, to pay a $65,000 civil penalty and to entry of a permanent injunction against future violations.

In February 2005, InVision settled related charges by the SEC by paying $1.1 million in disgorgement and penalties and agreeing to a commission order to desist from future FCPA violations.

In December 2004, InVision paid $800,000 in penalties to settle similar charges brought by the U.S. Department of Justice.

The SEC's complaint says that from late 2001 through June 2004, InVision completed sales to airports in China, the Philippines and Thailand and that in the course of these transactions, Pillor received e-mail messages from his Asian regional sales manager that suggested that InVision's overseas sales agents and distributors intended to make improper payments or other gifts to foreign government officials, in violation of the FCPA. InVision subsequently paid invoices to its agents and distributors in China and the Philippines and improperly recorded the payments as legitimate business expenses.

The conduct alleged by the SEC occurred prior to InVision's acquisition by GE in December 2004.