The Securities and Exchange Commission (SEC) charged Imaging3 and its founder and CEO Dean Janes with fraud. According to a June 25 release issued by the SEC, Janes made misleading statements regarding the FDA’s view of its imaging device during a November 2010 conference call.
In November 2010, the FDA denied approval for Imaging3’s 3D system. The denial came on the heels of two previous denials, one earlier in 2010 and one in 2008. The FDA listed concerns about the safety of the device and the quality of the images. However, Janes told investors that the FDA’s issues were “not substantive” and largely “administrative,” according to the release.
The FDA listed several reasons for its denial: the device’s potential for over-heating and some sample images that were “scientifically invalid and useless.”
When Janes was asked during the call whether any of the FDA’s concerns were “safety-related” or involved image quality, he replied, “Nope,” and that there was “really and honestly not one question about the technology or its consistency. It just doesn’t make sense to me.” In addition, the CEO allegedly mischaracterized the denial on his personal Facebook page. Imaging3 released the text of the denial letter in 2013, two years after it was issued.
“Shareholders have a right to trust corporate officers to tell them the truth about the business. When CEOs abuse that trust and make misstatements, innocent shareholders are victimized,” said Michele Wein Layne, regional director of the SEC’s Los Angeles Regional Office, in a release. “The SEC will hold corporate officers accountable for misleading shareholders.”
The SEC requests a court order to prevent Janes and Imaging3 from future violations of federal securities laws, require them to pay civil monetary penalties and bar Janes from serving as a public company officer or director.