Seattle law firm Hagens Berman Sobol Shapiro said it has filed a shareholder lawsuit against CellCyte Genetics, accusing the biotech company...
Seattle law firm Hagens Berman Sobol Shapiro said it has filed a shareholder lawsuit against CellCyte Genetics, accusing the biotech company and its officers of artificially inflating its stock price and defrauding investors with misleading claims.
The lawsuit seeks class-action status. The lead plaintiff is a San Diego-area stockholder who bought and sold several thousand CellCyte shares in the past three months, but attorney Steve Berman said the firm had been contacted by other investors as well. “We’ve got a huge response from people all over the world saying they feel they’ve been misled,” he said.
The suit names as defendants the company’s chief executive, Gary Reys; chief scientific officer Ron Berninger; Canadian stock promoter G. Brent Pierce, who owns 2 million CellCyte shares; and Robert Harris, the former president of the Canadian shell company that served as a vehicle for CellCyte to become public. Also named in the suit is James Rapholz, a Florida-based writer of reports on penny stock companies, who was paid $445,000 by Pierce’s firm to promote CellCyte in glossy mailers to potential investors.
The company, which has not even begun clinical trials in humans, saw its shares soar during the promotional campaign last fall, making the firm one of the most valuable biotechs in the Seattle area. Its shares — which traded above $7 in December — closed at $3.25 on Monday, down 18 percent from Friday.
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The lawsuit quotes extensively from recent stories about CellCyte in The Seattle Times describing the promotional efforts bankrolled by Pierce. A sharp drop in CellCyte’s stock coincided with a Times inquiry into Gary Reys’ professional and educational background as portrayed in the company’s regulatory filings.
CellCyte, which trades in the loosely regulated over-the-counter market and on the Frankfurt stock exchange, says it is developing methods to deliver stem cells to the heart and other organs, and has licensed technology developed by federal researchers.
CellCyte did not reply to requests for comment about the suit.
Ángel González: 206-515-5644 or email@example.com