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SEC Charges SCWorx And Former CEO With Misleading Investors About Sale Of Covid-19 Test Kits

The U.S. Securities and Exchange Commission charged New York-based SCWorx Corp. (WORX) and its former Chief Executive Officer, Marc Schessel, with making false and misleading statements about the company's plans to distribute COVID-19 rapid test kits in April 2020. SCWorx has agreed to settle the SEC's charges and will pay a $125,000 civil penalty.

In a parallel action, the U.S. Attorney's Office for the District of New Jersey announced criminal charges against Schessel.

The SEC's complaint, filed in federal district court in New Jersey, alleged that Schessel and SCWorx issued a press release on April 13, 2020, falsely stating that SCWorx had a "committed purchase order" from a purported buyer to purchase two million COVID-19 rapid test kits.

The press release also stated that the purchase order included a "provision for additional weekly orders of 2 million units for 23 weeks, valued at $35 million per week."

Following the issuance of the press release, SCWorx's stock price had surged 425% from the prior trading day on volume of 96.2 million shares, which was more than 900 times the prior three-month average daily volume.

The SEC alleged that Schessel and SCWorx issued the press release despite having neither a legitimate supplier of COVID-19 test kits nor an executed purchase agreement with a buyer.

The complaint further alleged that Schessel and SCWorx publicly repeated the false and misleading statements about the distribution of COVID-19 rapid test kits over the course of April 2020.

The SEC had ordered that trading be suspended temporarily in the securities of SCWorx between April 21, 2020, and May 5, 2020, because of questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace concerning SCWorx.

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