Phillip Frost coughs up $5.5M to settle pump-and-dump charges with SEC

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Diversified healthcare firm OPKO Health has become the latest to propose settlement terms in a case brought by the U.S. Securities and Exchange Commission (SEC) over alleged breaches of securities laws.

Proposing a settlement on behalf of OPKO Health, the firm’s CEO and Chairman Dr. Phillip Frost was also announced to have reached a settlement with the regulator over alleged personal breaches of securities law.

The settlement aims to resolve issues with the firm arising from SEC v. Honig et al., 18 Civ. 08175 (S.D.N.Y), the culmination of an SEC investigation into a pump-and-dump scheme alleged to involve a group of up to 10 corporate investors and executives, including OPKO Health and Frost.

The arrangements are still subject to court approval, but would close the matter in respect of OPKO and Frost if ultimately accepted.

In a press release issued by the firm, OPKO Health said it had agreed a settlement “without admitting or denying” the charges levelled at them. It stated, “Without admitting or denying the SEC’s allegations, OPKO agreed to an injunction from certain violations of the Securities Exchange Act of 1934…a $100,000 penalty; and will perform certain undertakings related to the Exchange Act.”

“Dr. Frost agreed, without admitting or denying the SEC’s allegations, to injunctions from certain violations of the Securities Act of 1933 and the Exchange Act; approximately $5.5 million in penalty, disgorgement, and prejudgment interest; and a prohibition, with certain exceptions, from trading in penny stocks,” according to the OPKO statement.

In light of his personal settlement with the SEC, and the firm’s refusal to admit or deny the allegations, Phillip Frost is expected to remain in post.

According to OPKO, “Dr. Frost will continue to serve as OPKO’s CEO and Chairman.”

Welcoming agreement with the securities regulator, Dr. Frost said the settlement would allow the firm to finally put the matter to bed and “focus on an exciting and productive 2019 for OPKO Health.”

While the settlement might be the quickest way to get OPKO off the hook, it remains to be seen which of the next defendants will step up to attempt to settle their alleged responsibility.