On Monday, August 1, 2011, the SEC filed suit against eight defendants for making false statements in public filings regarding the status of the human clinical trials for the drug SF-1019 by Argyll Biotechnologies LLC. The statements did not disclose that the Food and Drug Administration had issued clinical holds on testing for the drug, which is derived from goat blood and was Argyll's sole product. In addition, three executives were charged with insider trading for selling shares of Immunosyn Corporation (the company which made the false filings) for $20 million during the same period. SEC v. Ferrone, No. 11-cv-05223 (N.D. Ill. Filed Aug. 1, 2011).

Specifically, the SEC alleged that Immunosyn stated in the public filings that Argyll (which was Immunosyn's controlling shareholder) was commencing or had plans to commence clinical drug trials for SF-1019. Absent from the filings was the fact that the FDA had issued clinical holds on clinical testing for the drug. The Commission also alleged that false statements were made that the regulatory approval process for the drug was underway or would be in the near future in Europe when no application for European clinical testing had been submitted.

The CEO and Chief Scientific Officer of Argyll were each charged with insider trading, along with Immunosyn's CFO. The Commission alleged that the three raised approximately $20 million by selling Immunosyn's shares at the time the false statements about the Argyll clinical testing were on file.

The SEC seeks judgment permanently enjoining all defendants from future violations of the antifraud provisions, and a director and officer bar against the individuals. The Commission also seeks disgorgement of the ill-gotten gains that they received as a result of their wrongful conduct (including any losses they avoided), prejudgment interest and civil penalties. A copy of the SEC's Press Release is available here.