Goleta Company and CEO Sued by SEC

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Source: US Securities and Exchange Commission (SEC)

SEC Charges Medical Aesthetics Company and Its Former CEO with Misleading Investors in a $60 Million Stock Offering

Litigation Release No. 24275 / September 19, 2018

Securities and Exchange Commission v. Hani Zeini and Sientra, Inc., No. 18-cv-08103 (C.D. Cal. filed Sept. 19, 2018)

The Securities and Exchange Commission [on September 19, 2018] charged Sientra, Inc., a California-based medical aesthetics company, and its former CEO, Hani Zeini, with concealing damaging news about the company's sole-source manufacturer before it closed a $60 million stock offering in 2015. The company agreed to settle the SEC's charges.

Hani Zeini

According to the SEC's complaint, Sientra sells silicone breast implants in the United States, and at the time of the offering, all of the implants it sold were made by a company in Brazil. Three days before Sientra was preparing to close a stock offering for more than $60 million, Zeini allegedly learned from the Brazilian company's CEO that its Brazilian manufacturer's "CE certificate," which is a sign of regulatory compliance required to sell products in the European Union, had been suspended. Zeini allegedly concealed this information from Sientra's general counsel and the underwriters for the offering. The day after the offering closed, news of the suspension became public, and Sientra's stock price fell 52.6% from $20.58 to $9.70 per share after it issued a release disclosing the suspension. Even after that, Zeini allegedly lied to those asking about the matter, and tried to destroy the records that showed he knew about the CE certificate suspension.

The SEC's complaint, filed in U.S. District Court for the Central District of California, charges Hani Zeini with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a penalty, an officer and director bar, and a permanent injunction.

Promotional graphic by Sientra

Without admitting or denying the findings, Sientra, consented to the entry of the SEC's order, which finds Sientra violated Section 17(a) of the Securities Act of 1933 and section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and orders Sientra to cease and desist from future violations of these statutes. In considering whether to accept Sientra's settlement the SEC considered Sientra's prompt action upon discovering the alleged fraud, self-reporting to the SEC, and extensive cooperation with the agency's investigation.

The SEC's investigation was conducted by Matthew Montgomery and was supervised by Robert Conrrad of the Los Angeles office. The SEC's litigation against Mr. Zeini will be handled by Amy Longo and Matthew Montgomery.

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a-1561507741 Sep 26, 2018 08:09 AM
Goleta Company and CEO Sued by SEC

The beauty of corporations. When you run it and do bad, you just get moved out, never fired. Once retired, the company no longer has responsibility and cooperates. They then claim they didn't know so get to take a charge admitting no wrong. Although the CEO was motivated personally, he committed the "crime" as the leader of the corporation. So now the SEC will "decide" if they want to go after him in civil court. Not criminal, for the crime rests on the company. Perfect separation of risk and responsibility.

pstarSR Sep 25, 2018 07:04 PM
Goleta Company and CEO Sued by SEC

these are the "job creators" and the people we put into office, watch in 5 years he runs for mayor. These people skirt the rules and fleece everyone in order to get ahead. Yet we cater to them like they are gods, wake up.

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