SEC Settles With Firms for Bioterrorism Claims

Federal securities regulators Thursday settled cases against three companies accused of trying to exploit the public’s bioterrorism fears by issuing press releases claiming to have anti-terrorism technologies.

The Securities and Exchange Commission said Disease Sciences Inc. of Boca Raton, Fla., and Classica Group Inc. of Lakewood, N.J., claimed to have technologies capable of killing anthrax in mail.

“In fact,” the SEC said, “neither company had a technology that had been tested or otherwise shown to be effective ... for that purpose.”

A press release by a third company, R-Tec Technologies Inc. of Flanders, N.J., falsely claimed that it developed and patented a system “to protect civilians in everyday life from biological and chemical terrorism attacks,” the SEC said. The commission found that no such system had been developed, patented or tested.

The companies settled the cases by agreeing to a cease-and-desist order without admitting or denying the charges. They did not have to pay fines.

Classica’s lawyer, Robert Kipnees, said the SEC action involved press releases Oct. 11 and 12, and that since then, the company has issued subsequent releases, “which we believe fairly and accurately” describe the status of its technologies.

Officials from the other two companies did not return calls seeking comment.

The SEC, criticized in the past for moving too slowly on suspected fraud cases, said it acted quickly in these cases under a new policy of real-time enforcement.

“The conduct that led to these enforcement actions is reprehensible,” said Stephen Cutler, head of the SEC’s fraud-fighting enforcement division.