Investor Alert

May 2, 2020, 12:45 p.m. EDT · CORRECTED

SEC continues crackdown on claims made during the coronavirus pandemic

Move is the latest in a federal crackdown on claims about tests, treatments or equipment

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By Ciara Linnane, MarketWatch

An earlier version of this report incorrectly said the SEC had temporarily halted trading in shares of Nano Magic stock because of claims made by the company. In suspending trading, the SEC cited information in the marketplace about the company’s product. This report has been corrected.

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An Indian health official sprays disinfectant on a colleague inside a COVID-19 mobile testing van in New Delhi on Thursday.

The Securities and Exchange Commission continued its crackdown on false information in the marketplace relating to COVID-19 tests, treatments or equipment on Friday.

The SEC has now halted the stocks of at least 26 companies in connection with statements made by companies or third parties relating to the coronavirus disease COVID-19. The SEC has released several warnings to investors since Feb. 4 to beware of fraud, illicit schemes and other misconduct during the pandemic.

See: SEC takes enforcement action against 23 companies for claims relating to COVID-19

On Friday, the SEC temporarily halted trading in the shares of Bloomfield Hills, Mich.–based Nano Magic Inc. /zigman2/quotes/200004280/delayed NMGX 0.00%  because, the agency said, it has questions “regarding the accuracy and adequacy of information in the marketplace since at least February 24, 2020.”

Those questions relate to “publicly available information” including: “(a) information in the marketplace claiming that the company has a patent for a disinfectant that kills “coronavirus”; and (b) a statement made by NMGX on April 7, 2020 regarding the Company’s involvement in the fight gainst COVID-19.”

Nano Magic makes specialty cleaning products that it says are powered by nanotechnology. In a press release from April 7, Chief Executive Tom Berman said the company was “eager to join the Covid-19 fight.”

“We have accelerated the development and commercialization efforts of our household cleaning and protectant solutions in order to help create a cleaner and safer world,” he said.

In the same statement, the company changed its name from PEN Inc. and adopted a new ticker symbol. The stock last traded at $1.97 and has gained about 234% in the year to date. The company did not immediately respond to a request for comment.

On Monday, the SEC filed charges against Praxsyn Corp. and its chief executive over false statements about N95 masks.

West Palm Beach, Fla.–based Praxsysn said in a release published Feb. 27 that it was negotiating the sale of millions of N95 masks, according to the SEC. The masks can block tiny particles of matter and are much in demand among health-care workers treating patients suffering from COVID-19, which has infected more than 3 million people worldwide, including more than 1 million in the U.S., and killed more than 230,000.

The company said it was “evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule.”

See: These 21 companies are working on coronavirus treatments or vaccines — here’s where things stand

That release was followed on March 4 with another statement claiming the company had created a “direct pipeline from manufacturers and suppliers to buyers” of the masks. It cited Praxsyn’s CEO, Frank J. Brady, as telling any interested buyers that the company was accepting orders for a minimum of 100,000 masks.

Daily recap: Coronavirus update: German infection rate ticks higher after reopening moves, offers lesson to U.S. governors

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