SEC Obtains Final Judgment Against Former CFO Charged with Fraud and Lying to Auditors

(HedgeCo.Net) The U.S. District Court for the District of Maryland entered a final consent judgment against Philip R. Jacoby, a former Chief Financial Officer of biotech company Osiris Therapeutics, Inc., for his role in Osiris’s fraudulent conduct.

The SEC’s complaint, filed November 2, 2017, charged Osiris with routinely overstating company performance and issuing fraudulent financial statements for a period of nearly two years. The SEC alleged that Jacoby caused Osiris to book fictitious and premature revenue and provided false information to Osiris’s auditors. On February 2, 2021, the District Court found that Jacoby violated provisions of the federal securities laws prohibiting: fraud in connection with the offer, purchase, or sale of securities; false certifications of SEC filings; aiding and abetting false SEC filings; and lying to auditors.

Jacoby consented to a final judgment enjoining him from future violations of: Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5, 13a-14, and 13b2-2 promulgated thereunder; as well as aiding and abetting violations of Section 13(a) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The judgment further prohibits Jacoby from acting as an officer or director of a public company, and finds Jacoby liable for reimbursement of $223,965.88 in Osiris stock sale profits pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, but waives payment of all but $45,000 of this amount, and does not impose a civil penalty, based on his sworn statement of financial condition.

Osiris previously settled the SEC’s charges and paid a $1.5 million civil penalty. One of Osiris’s former Chief Financial Officers, Gregory I. Law, was dismissed from the case in September 2019. In October 2019, Bobby Dwayne Montgomery, Osiris’s former Chief Business Officer, consented to a judgment enjoining him from future violations of the provisions of the federal securities laws that prohibit falsifying books and records and lying to auditors, and ordering him to pay a civil penalty of $40,000. Osiris’s former Chief Executive Officer, Lode Debrabandere, was dismissed from the case in November 2022. The final judgment entered against Jacoby concludes this litigation.

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