Dive Brief:

• The Securities and Exchange Commission (SEC) further advanced a crackdown against companies that make fraudulent claims about COVID-19-related products by charging New York-based SCWorx and its former CEO for announcing bogus orders for coronavirus test kits.
• Soon after the onset of the pandemic, SCWorx and former CEO Marc Schessel claimed in an April 13, 2020, press release that a buyer had ordered 2 million COVID-19 rapid test kits as well as planned weekly orders for an additional 2 million kits for 23 weeks valued at $35 million per week, according to SEC allegations. Shares in SCWorx, which was financially troubled, soared 425% on a trading volume of 96.2 million, or more than 900 times the prior three-month average daily volume.
• “We allege that the defendants engaged in an age-old fraud — lying about their business prospects — to capitalize opportunistically on the COVID pandemic,” SEC Chair Gary Gensler said in a statement. “The SEC will continue to root out fraud and prosecute those who attempt to use the surge of uncertainty from the pandemic to defraud the investing public.”

Dive Insight:

Since the start of the pandemic in early 2020, the SEC has brought charges against several companies and top executives for exploiting the crisis by making false claims about coronavirus test kits, face masks and thermal scanners used to detect fevers. The agency has also ferreted out coronavirus-related stock manipulation and often targeted microcap companies.

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