SEC reaches $1M settlement with imaging vendor Nanox over misstated cost of flagship device
Imaging vendor Nanox and its former CEO will pay more than $1 million to settle charges stemming from a federal investigation into its business practices, the U.S. Securities and Exchange Commission announced Friday.
Authorities charged that the Israeli device-maker misrepresented the estimated price tag to manufacture its flagship product, the Nanox.ARC, a “purported low-cost alternative to existing X-ray devices.” From August 2020 to May 2021, Nanox and its former CEO, Ran Poliakine, had claimed to investors that they could build the machine for as little as $8,000. However, behind the scenes Poliakine had “ignored” higher alternative cost estimates provided by company executives while “touting the lower manufacturing costs.”
“The complaint alleges that Nanox included this misleading cost estimate in reports filed with the commission prior to raising $165 million in an initial public offering,” the SEC said in its Sept. 29 announcement. “The company continued to include the estimate in subsequent financial filings, and Poliakine repeated this estimate in numerous earnings calls and media interviews.”
Authorities filed the complaint in New York District Court, charging that Nanox violated the Securities Act of 1933 and Securities Exchange Act of 1934. The company has not admitted to any wrongdoing. But the SEC has ordered Nanox to pay $650,000 in civil penalties while Poliakine will pony up $150,000 more. The former top exec and current company chairman also will pay another $266,836 in disgorgement and prejudgment interest, with the settlements still subject to court approval.
Nanox first hinted at the forthcoming civil penalties in August.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.