Opko Health: If These SEC Charges Were Surprising Then You Haven't Been Paying Attention
Sep. 11, 2018 12:32 PM ET
Summary
Opko's stock is now halted following SEC charges alleging fraud by both the company and its Chairman & CEO Phil Frost.
The company put out a rather impotent statement Friday evening claiming the SEC complaint "contains serious factual inaccuracies" without identifying a single factual inaccuracy.
We anticipate that criminal charges could follow given the reported FBI investigation that parallels the SEC charges.
Frost is Opko's key leader, key lender, and its largest holder with over 30% of the equity, leaving the company in a perilous position.
Opko's business was already in tatters. It is bleeding cash, has negative tangible equity, and a weak pipeline. We do not see a bottom for this stock. Price target zero.
Overview
Ten months ago we wrote that Opko Health (NADSAQ:OPK) was a "House of Cards Tumbling in the Dark". On Friday afternoon the SEC filed litigation against Opko's Chairman & CEO Phil Frost, Opko Health Inc., and multiple other related entities and individuals. The complaint's blistering allegations accuse Frost and Opko of aiding and abetting multiple pump & dump schemes led by notorious penny stock financier Barry Honig.
Frost stands personally accused of violating 7 sections of the Exchange and Securities Acts. Per the SEC complaint:
"In every scheme, Honig, and some combination of Stetson, Brauser, O'Rourke, Groussman and Frost, either explicitly or tacitly agreed to buy, hold or sell their shares in coordination with one another, knowing that a pump and dump was in the offing that would allow them all to profit handsomely."
Following the SEC complaint, Opko's stock plummeted 18% before being halted.
Several signs point to the strong possibility that criminal charges could follow. The complaint referenced "Company A" which has been identified by the WSJand others as Biozone Pharmaceuticals (now called Cocrystal, NASDAQ:COCP). In early 2017 investigative reporter Teri Buhl wrote that the FBI and the California Department of Justice (DoJ) had been involved in the investigation of Biozone. Per the article:
Sep. 11, 2018 12:32 PM ET
Summary
Opko's stock is now halted following SEC charges alleging fraud by both the company and its Chairman & CEO Phil Frost.
The company put out a rather impotent statement Friday evening claiming the SEC complaint "contains serious factual inaccuracies" without identifying a single factual inaccuracy.
We anticipate that criminal charges could follow given the reported FBI investigation that parallels the SEC charges.
Frost is Opko's key leader, key lender, and its largest holder with over 30% of the equity, leaving the company in a perilous position.
Opko's business was already in tatters. It is bleeding cash, has negative tangible equity, and a weak pipeline. We do not see a bottom for this stock. Price target zero.
Overview
Ten months ago we wrote that Opko Health (NADSAQ:OPK) was a "House of Cards Tumbling in the Dark". On Friday afternoon the SEC filed litigation against Opko's Chairman & CEO Phil Frost, Opko Health Inc., and multiple other related entities and individuals. The complaint's blistering allegations accuse Frost and Opko of aiding and abetting multiple pump & dump schemes led by notorious penny stock financier Barry Honig.
Frost stands personally accused of violating 7 sections of the Exchange and Securities Acts. Per the SEC complaint:
"In every scheme, Honig, and some combination of Stetson, Brauser, O'Rourke, Groussman and Frost, either explicitly or tacitly agreed to buy, hold or sell their shares in coordination with one another, knowing that a pump and dump was in the offing that would allow them all to profit handsomely."
Following the SEC complaint, Opko's stock plummeted 18% before being halted.
Several signs point to the strong possibility that criminal charges could follow. The complaint referenced "Company A" which has been identified by the WSJand others as Biozone Pharmaceuticals (now called Cocrystal, NASDAQ:COCP). In early 2017 investigative reporter Teri Buhl wrote that the FBI and the California Department of Justice (DoJ) had been involved in the investigation of Biozone. Per the article: