Former CFO of Osiris Therapeutics, Inc. Receives Final Consent Judgment for Role in Fraudulent Conduct

Philip R. Jacoby, the former CFO of the biotech company Osiris Therapeutics, Inc., received a final judgment of consent by the U.S. District Court for the District of Maryland, March 17, 2023. Jacoby was involved in Osiris’s fraudulent activities.

The Securities and Exchange Commission had filed a lawsuit against Osiris in November 2017. It accused the company of regularly overstating its performance and issuing fabricated financial statements for more than two years. Jacoby, according to the SEC played a part in Osiris’s misconduct because he recorded fictitious revenue and provided misleading information to auditors. Jacoby was found guilty by the District Court on February 2, 2021 of various federal securities laws, including fraud, false certifications and aiding and abetment false filings.

Jacoby, in accordance with the consent judgment, has agreed that he will be permanently barred from future violations of certain sections of the Securities Act of 1933 as well as the Securities Exchange Act of 1933. Also, he is prohibited from being an officer or a director of any publicly traded company. Jacoby is also liable to reimburse $223.965.88 of Osiris’ stock sale profits in accordance with the Sarbanes-Oxley Act of 2001. Jacoby will have to pay only $45,000 and a civil penalty won’t be imposed on the basis of his financial statement.

Osiris settled SEC charges with a civil penalty of $1.5 million. Gregory I. Law, former Osiris Chief Financial Officer, was dismissed by the court in September 2019. Bobby Dwayne Montgomery – the former Chief Executive Officer of Osiris – consented, in October 2019, to a judgement that included a permanent injunction and a civil fine of $40,000. Lode Debrabandere was fired as Osiris’s CEO in November 2022. This litigation comes to an end with the judgment of Jacoby.

Laura Ordaz and Anne Romero conducted the SEC investigation under the supervision Laura Metcalfe, Jason Burt. Nicholas Heinke led the litigation, Zach Carlyle and Polly Atkinson were overseen by Greg Kasper and Jason Burt.

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SEC

The Securities and Exchange Commission is an American government agency that regulates and supervises the securities sector, which includes stock exchanges and securities brokers and dealers. It also oversees investment advisors and mutual funds. The primary mission of the SEC is to protect investors and maintain fair and efficient market conditions.

The SEC enforces federal securities laws such as the Securities Act of 1935 and the Securities Exchange Act of 1974, which are designed to ensure that companies give accurate and complete information when they issue securities. The SEC reviews and approves the periodic reports and registration statements filed by public companies. It also monitors insider trades and investigates possible violations of securities law.

In addition, the SEC is a key player in maintaining market integrity, by enforcing regulations against fraud, manipulating markets and other illegal activity. The SEC also regulates and structures the securities exchanges to ensure fair and transparent trading.

The SEC encourages education of investors and offers resources that help them make informed investments decisions. It also administers Securities Investor Protection Corporation (SIPC), which is a nonprofit organization that protects investors in the case of broker dealer bankruptcy.

SEC’s overall mission is to protect investors, foster confidence in securities markets and encourage capital formation.

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