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Univ. of Toledo College of Law

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Wednesday, June 2, 2010

SEC Charges Former Officer of Biotech Company with Lying about Downs Syndrome Test

The SEC charged Elizabeth A. Dragon, the former Senior Vice President of Research and Development at Sequenom, Inc., a biotechnology company, with making false statements to investors about her company's prenatal test for Down syndrome.  The SEC alleges that Dragon lied during at least three public events where she made presentations to analysts and investors. She claimed that the test could predict whether a fetus had Down syndrome with almost 100 percent accuracy. However, the SEC alleges that Dragon knew the test was far less accurate than she claimed publicly. When Sequenom later announced that it was no longer relying on the data that Dragon presented and the test would not be launched as planned, the company's stock price plummeted by approximately 76 percent.

Dragon has consented to a judgment permanently enjoining her from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and barring her from serving as an officer or director of a public company. The court will determine the amount of a financial penalty to be paid by Dragon at a later date.

http://lawprofessors.typepad.com/securities/2010/06/sec-charges-former-officer-of-biotech-company-with-lying-about-downs-syndrome-test.html

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