SEC Charges Medical Test Manufacturer with Misrepresenting Performance of Covid-19 Test

ADMINISTRATIVE PROCEEDING
File No. 3-21320

March 2, 2023 - The Securities and Exchange Commission today announced settled charges against Chembio Diagnostics, Inc., a New York-based manufacturer of medical diagnostic tests, for making a false and misleading statement about the performance of its COVID-19 antibody test shortly before a securities offering in which it raised millions of dollars.

The SEC's order finds that Chembio made a material misrepresentation about the performance of its newly developed COVID-19 test in a prospectus supplement filed with the Commission on May 8, 2020. According to the SEC's order, Chembio falsely stated that its COVID-19 test was 100% accurate when used more than eleven days after the onset of symptoms. According to the SEC's order, this statement was based on a subset of early performance data about the test, but was at odds with the results of a more recent independent evaluation as well as Chembio's ongoing internal analysis, which indicated that the test generated a notable rate of false negative results. Chembio raised over $30 million in a stock offering that closed on May 11, 2020.

The SEC's order finds that Chembio violated the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, orders Chembio to cease and desist from committing any future violations of those provisions, and orders Chembio to pay a civil penalty of $500,000. Chembio consented to entry of the order without admitting or denying the SEC's findings.

The SEC's investigation was conducted by Eric J. Day, Daniel M. Konosky, and Helena Engelhart Bean of the Denver Regional Office, with assistance from Sharan E. Lieberman of the Trial Unit. The investigation was supervised by Danielle R. Voorhees, Nicholas Heinke, and Jason Burt.