Salem, N.H., May 24 -- The Securities and Exchange Commission (SEC) today filed, and settled, a complaint against StockerYale Inc. that charged the company and its CEO, Mark W. Blodgett, with fraudulently publishing false and misleading press releases about a potentially lucrative Department of Homeland Security project.
StockerYale issued the releases in April 2004 about an agreement to supply lasers to BAE Systems, a defense contractor. (See Photonics.com: "StockerYale to Supply Defense Lasers.") The SEC said the releases falsely stated that StockerYale was developing a laser for a missile countermeasure system for commercial planes for the contractor and that they created the misleading impression that StockerYale was supplying the lasers as part of a Department of Homeland Security project.
"In fact, StockerYale was not involved in any Department of Homeland Security project and the lasers that StockerYale was developing for the contractor were not intended for use on commercial planes," the SEC said in a statement.
Within minutes of the publication of the first press release, on April 19, the price and volume of StockerYale's common stock surged. On April 20, at the height of the surge, the share price reached $7.75, more than five times the average closing price for the prior 30 days and $6.30 more than the price at which the stock closed on Friday April 16. On the morning of April 20, Blodgett sold 250,000 shares of StockerYale common stock, reaping profits of almost $790,000, according to the statement.
Both the company and Blodgett consented to the order without admitting or denying wrongdoing. The order requires Blodgett to return his training gains, plus interest, and to pay a civil penalty of $120,000. StockerYale wasn't fined but will tighten policies on insider trading, ethics and public communications, the SEC said.
"Our company has cooperated fully with the SEC in an effort to resolve this matter and we are pleased to be moving forward," said Blodgett.
John Stark, head of the SEC's Internet enforcement office, said, "Public companies need to take special care when it comes to their press releases to verify that the information is accurate."
StockerYale makes structured light lasers, LEDs, fiber optic and fluorescent illumination technologies and specialty optical fiber and phase masks for use in industries including machine vision, telecommunications, aerospace, defense and security, utilities, industrial inspection and medicine.
For more information, visit: www.sec.gov