Billionaire Miami philanthropist Phillip Frost is denying allegations by the Securities and Exchange Commission that he committed securities fraud as part of a years-long “pump-and-dump” scheme.
In a statement emailed to reporters Friday afternoon, Frost said he was “stunned” by the SEC’s civil complaint, filed a week ago. He said he believed the SEC had “departed from its own longstanding practice of providing advance notice and a meaningful opportunity to address their questions in advance of filing an action.”
The SEC declined to comment. The agency alleges that Frost — along with nine other defendants and related companies including Frost’s OPKO Health Inc.—manipulated the share price of multiple small-cap drug and health companies by touting their potential on trading websites without disclosing their ownership positions. The SEC alleges Frost made more than $1 million from the purported scheme. As of Friday morning, Forbes listed Frost’s net worth at $2.4 billion.
“The allegations against me are belied by common sense, my history of supporting promising scientific technology, and the facts,” Frost said in his statement. “I invested in two of the entities identified in the complaint. These investments were made because I understood the entities presented promising medical developments and a real opportunity to deliver value for shareholders. I remain a significant long-term shareholder in both companies.”
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Though the SEC complaint did not name the companies involved, multiple media outlets have reported them as Cocrystal Pharma (formerly known as BioZone Pharmaceuticals Inc.), and MabVax Theraputics Holdings. Each trades at less than $5 a share.
Trading in Miami-based OPKO, which Frost runs, was halted Sept. 7 and reopened about 1 p.m. Friday. Shares closed down approximately 15 percent Friday, to $3.90. The company has also denied any wrongdoing.
Frost remains on the board of directors at the University of Miami, the Patricia and Phillip Frost Museum of Science and Coconut Grove Bancshares.
“Nothing is more important to me than my integrity and I am deeply proud of the role I have played over many decades in developing medicines and diagnostic tools that have improved many lives,” Frost said in his statement Friday. “I intend to fight the charges that have been brought against me and will fight to clear my name.”