SEC

SEC obtains judgment against former Osiris CFO

SEC settles long running fraud case
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The SEC settled fraud charges with Maryland-based biotech company Osiris Therapeutics Inc.’s former CFO Phillip Jacoby earlier this month.

The SEC charged Osiris and four former executives with “prioritizing revenue growth over lawful accounting and misleading investors in the process” in 2017. According to the SEC, the company routinely overstated its performance and issued fraudulent financial statements for a two-year period.

Jacoby, according to an SEC release, caused the company to file “fictitious and premature revenue and [provide] false information to Osiris’s auditors.” According to the 2017 charges, the SEC alleges that Jacoby, along with other Osiris executives, made “false and misleading statements and omissions about the manner in which Osiris was recognizing revenue, including statements about its accounting for key contracts and relationships and its treatment of consignment inventory.”

Jacoby, as part of the settlement, will be unable to serve as an officer or director of a public company and will be responsible for reimbursing $45,000 of the $223,965.88 in Osiris stock sale profits that he was held liable for. Jacoby had previously pleaded guilty to lying to auditors, but avoided a prison sentence.

The long-running case has taken many twists and turns. Osiris paid a $1.5 million penalty in 2017 to settle SEC charges, as reported by the Baltimore Sun. Gregory Law, a former Osiris CFO, was dismissed from the case in September 2019. Osiris’s former CEO, Lode Debrabandere, was dismissed from the case in November 2022.—LR

News built for finance pros

The latest news and insights corporate finance professionals need to know to keep up with their constantly evolving industry.