On August 17, 2021, the Securities and Exchange Commission (the “SEC” or “Commission”), represented by Amy F. Hartman, Jonathan S. Polish, and Stephanie L. Reinhart, attorneys at SEC’s Regional Office in Chicago, filed a civil enforcement action against Rising Biosciences, Inc. (“RBII”), and Arthur Hall (collectively, the “Defendants”). Plaintiffs filed suit seeking injunctive relief, disgorgement of all ill-gotten gains with pre-judgment interest, and civil monetary penalties, for allegedly making materially false and misleading statements regarding disinfectant products RBII launched purportedly in response to COVID-19. This case was filed in U.S. District Court in the Northern District of Ohio with Judge James R. Knepp II presiding.
In its complaint, the SEC alleged that, “Between at least April 2020 and October 2020, defendant Rising Biosciences, Inc. (“RBII”), an Ohio microcap company, and its CEO, defendant Arthur Hall, made materially false and misleading statements regarding disinfectant products RBII launched purportedly in response to COVID-19. Defendants represented that the products, including Oxithymol, the Oxi Thyme system, and/or their ingredients, were approved by the United States Centers for Disease Control and Prevention (“CDC”) or registered with the United States Environmental Protection Agency (“EPA”). They made these false and misleading statements in RBII press releases, on two RBII websites, and in RBII social media videos describing efforts to combat COVID-19 in schools, daycare facilities, retail stores, fitness centers, hotels, and restaurants, among other public places.”
The SEC further alleged that, “Neither Oxithymol nor its purported ingredients were CDC approved, and neither Oxi Thyme nor Oxithymol was registered with the EPA for any use. Further, RBII did not use Oxithymol in its Oxi Thyme system. Instead, RBII purchased and rebottled Oxy Blast 50, a pesticide produced by another company, and sold that product for use in its Oxi Thyme system. Oxy Blast 50 is EPA registered as a pesticide. Oxi Blast 50 is not EPA registered for use in killing viruses, and it does not appear on the EPA’s “List N” of products that meet EPA criteria for use against the virus that causes COVID-19.”
The only claim for relief laid down by the SEC is against both defendants for violations of Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. The plaintiff alleged that, between April 2020 and August 25, 2020, RBII’s common stock was quoted and traded on OTC Link, whose parent company, OTC Markets Group Inc. Investors reacted enthusiastically to Defendants’ false and misleading public pronouncements, as reflected in the trading volume and price of RBII stock.
In its prayer for relief, the SEC requested the Court to permanently enjoin defendants from violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC also requested that the Court order defendants to disgorge the ill-gotten gains, including prejudgment interest, and to pay civil penalties pursuant to Section 21(d)(3) of the Exchange Act. Pursuant to Section 21(d)(2) of the Exchange Act, the plaintiff requests the Court prohibit defendant Arthur Hall from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. The plaintiff requests the Court permanently bar defendant Arthur Hall from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock.
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Pending - Other Pending
Finance - Security/Commodity/Exchange
James R. Knepp II
U.S. Securities and Exchange Commission
Rising Biosciences, Inc.
Amy F. Hartman
Stephanie L. Reinhart
Jonathan S. Polish
L. Sean Mathis
Joshua M. Fraley
Civil Cover Sheet
Magistrate Consent Form
Exhibit Certificate of Good Standing
DocketOrder [non-document] granting #5 Motion for appearance pro hac vice by attorney L. Sean Mathis for Arthur Hall and Rising Biosciences, Inc. Local Rule 5.1(c) requires that attorneys register for NextGen CM/ECF and file and receive all documents electronically. NextGen CM/ECF registration can be done online at www.pacer.gov. Login with your PACER credentials, go to the Maintenance tab, click Attorney Admissions/E-File Registration, select Ohio Northern District Court and then select Pro Hac Vice. If you were previously granted pro hac vice status and are already registered to file electronically, it is not necessary to register again. Judge James R. Knepp II on 10/15/2021. (S,JM) (Entered: 10/15/2021)[+] Read More [-] Read Less
Docket(#6) Corporate Disclosure Statement filed by Rising Biosciences, Inc.. (Fraley, Joshua) (Entered: 10/14/2021)[+] Read More [-] Read Less
DocketNotice by Clerk that Rising Biosciences, Inc. failed to file a corporate disclosure statement as required by Local Rule 3.13(b). (O,K) (Entered: 10/13/2021)[+] Read More [-] Read Less
Docket(#5) Motion for attorney L. Sean Mathis to Appear Pro Hac Vice. Filing fee $ 120, receipt number AOHNDC-11078977, filed by Arthur Hall, Rising Biosciences, Inc.. (Attachments: #1 Exhibit Certificate of Good Standing)(Fraley, Joshua) (Entered: 10/12/2021)[+] Read More [-] Read Less
Docket(#4) Attorney Appearance by Joshua M. Fraley filed by on behalf of All Defendants. (Fraley, Joshua) (Entered: 10/12/2021)[+] Read More [-] Read Less
Docket(#3) Waiver of Service Returned Executed by U.S. Securities and Exchange Commission. All Defendants filed on behalf of United States Securities and Exchange Commission (Polish, Jonathan) Modified on 10/13/2021 (O,K). (Entered: 08/20/2021)[+] Read More [-] Read Less
DocketNotice re Prompt Service. Counsel for Plaintiff is responsible for promptly serving the Complaint on Defendant(s) upon receiving the issued summons from the Clerk and, after service has been perfected, electronically filing a Return of Service or an executed Waiver of Service for each Defendant.Service is to be accomplished pursuant to Fed. R. Civ. P. 4, which includes provisions for personal service and waiver of service, and Local Rule 4.2. If you wish the Clerk to serve the Complaint on Defendant(s) (a seldom used alternative because it does not save time or money), you must provide the Clerk's office with copies of the Complaint along with other necessary documents, in the manner set forth in Local Rule 4.2(a). (M,L) (Entered: 08/17/2021)[+] Read More [-] Read Less
Docket(#2) Original Summons (4) and Magistrate Consent Form issued to counsel for service upon Arthur Hall (and c/o L. Sean Mathis, attorney), Rising Biosciences, Inc.(and c/o L. Sean Mathis, attorney). (Attachments: #1 Magistrate Consent Form) (M,L) (Entered: 08/17/2021)[+] Read More [-] Read Less
DocketRandom Assignment of Magistrate Judge pursuant to Local Rule 3.1. In the event of a referral, case will be assigned to Magistrate Judge Darrell A. Clay. (M,L) (Entered: 08/17/2021)[+] Read More [-] Read Less
DocketJudge James R. Knepp II assigned to case. (M,L) (Entered: 08/17/2021)[+] Read More [-] Read Less
Docket(#1) Complaint with jury demand against All Defendants.. Filing fee exempt. Filed by U.S. Securities and Exchange Commission. (Attachments: #1 Civil Cover Sheet, #2 Summons, #3 Summons, #4 Summons, #5 Summons) (Polish, Jonathan) (Entered: 08/17/2021)[+] Read More [-] Read Less