A Medical Device Daily
The SEC reported that a court has entered a final judgment vs. Vector Medical Technologies (Boca Raton, Florida) and some of its executives and principals.
The SEC described Vector as a development-stage, biomedical company “purportedly focused on the commercial development and marketing of a non-invasive transdermal delivery system for a variety of high-density molecular weight drugs, including the delivery of insulin through patches.“
Vector will pay a little over $14.2 million in disgorgement and prejudgment interest; and executives Michael Salit, James Farnell and Michael Farnell have been fined. Salit must pay a $486,000 civil penalty; James Farnell must pay nearly $1.13 million in disgorgement and prejudgment interest and a $100,000 civil penalty; and Michael Farnell must pay $715,000 in disgorgement and prejudgment interest, and a $100,000 civil penalty.
The SEC brought the action to permanently restrain and enjoin Vector, Salit, the two Farnells, David Zimmerman and Stanley Wasser from violating securities laws through unregistered fraudulent offerings and sales of securities issued by Vector.
According to the commission, from early 1999 through at least April 2000, the defendants raised almost $16 million from about 450 investors nationwide by selling Vector stock through an in-house “boiler room“ operation in south Florida. Defendants used false offering documents, misleading sales scripts and high-pressure sales tactics to induce investors to purchase Vector stock, the SEC said.
It said the defendants made false and misleading representations and omissions regarding the company's rights to use patented breakthrough transdermal patch technology, its $700 million valuation, that an underwriter had committed to complete an imminent initial public offering, success in FDA testing and that it would not use investors' proceeds to pay sales commissions.
Vector, the SEC said, did not own the rights to use the patented technology, its valuation was baseless, it did not have a firm commitment with its underwriter to take it public and its FDA testing was never successful.
The company was incorporated in Florida on March 20, 1998, as Global Medical Technologies , and in January 1999 changed its name to Vector Medical Technologies. Subsequently, Vector became a Delaware-registered corporation and remains one today.
The SEC said that Vector has never been registered with the commission in any capacity.