August 2, 2011 / 9:20 PM / 6 years ago

U.S. SEC charges Immunosyn with securities fraud

* Company misled investors about goat blood drug

* Three executives charged with insider trading

WASHINGTON, Aug 2 (Reuters) - U.S. securities regulators charged Immunosyn Corp IMYN.PK, a California-based biopharmaceutical company, with misleading investors about the regulatory status of the company’s sole product, a drug derived from goat blood.

The U.S. Securities and Exchange Commission also charged three executives with insider trading, and four senior executives and three shareholders with securities fraud.

The SEC alleges Immunosyn misleadingly stated in various public filings from 2006 to 2010 that its controlling shareholder, Argyll Biotechnologies LLC, either planned to seek or had sought U.S. regulatory approval for human clinical trials for SF-1019.

That is a drug derived from goat blood that was intended to treat a variety of ailments.

But the filings failed to disclose that the U.S. Food and Drug Administration had already twice issued clinical holds on drug applications for SF-1019, prohibiting clinical trials from occurring, according to the SEC complaint.

The SEC alleges Immunosyn also misled investors that it was seeking regulatory approval for human clinical trials in Europe for the drug, when in fact Argyll never submitted an application in Europe to conduct such trials.

According to the SEC’s complaint, Chief Financial Officer Douglas McClain Jr., Argyll’s Chief Scientific Officer Douglas McClain Sr. and Argyll’s CEO James Miceli engaged in insider trading by raising about $20 million from their sale of Immunosyn shares while knowing misrepresentations were being made about the regulatory status of SF-1019.

The company’s chief executive officer, Stephen Ferrone, was also charged in the securities fraud scheme, but not insider trading.

The SEC is seeking financial penalties and disgorgement of ill-gotten gains against the defendants.

The company did not immediately return telephone calls seeking comment on the SEC complaint, which was filed in federal court in Chicago on Monday.

Immunosyn’s shares dropped 31.82 percent to $0.03 in pink sheet trading on Tuesday. (Reporting by Andrea Shalal-Esa; editing by Tim Dobbyn and Andre Grenon)

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