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Biotech Executive Pleads Guilty to Securities Fraud
BOSTON – In a shocking turn of events, former Vice President of Investor Relations, Kenneth Stromsland, 46, of Rumson, N.J., pleaded guilty to charges of securities fraud and obstruction of an agency proceeding in connection with a scheme to manipulate trading in his former company’s shares.
Stromsland, a high-ranking executive at Boston-based biotech company PixarBio Corp, admitted to engaging in manipulative trades in PixarBio stock that simulated market interest and artificially pushed up the trading price. These trades included orders to buy at a price much higher than the price of the preceding market transaction.
The scheme, which began in November 2016, went undetected for months, with Stromsland buying and selling shares to create the illusion of investor interest. His actions artificially inflated the trading price of PixarBio’s stock, deceiving investors and causing harm to the company’s reputation.
During a 2017 SEC investigation into manipulative trading in PixarBio’s stock, Stromsland testified falsely before the SEC. He denied purchasing shares of PixarBio to affect the share price and denied being instructed to do so by PixarBio’s then Chief Executive Officer.
The charges of securities fraud carry a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $5 million. The charge of obstruction of an agency proceeding provides for a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
United States Attorney Andrew E. Lelling, along with Harold H. Shaw of the Federal Bureau of Investigation, Boston Field Division, and Carl W. Hoecker, Inspector General of the U.S. Securities and Exchange Commission Office of Inspector General, announced the plea agreement.
Assistant U.S. Attorney Sara Miron Bloom of Lelling’s Economic Crimes Unit is prosecuting the case. As Stromsland awaits sentencing, investors and shareholders are left reeling from the scandal, wondering how such a brazen scheme went undetected for so long.
Key Facts
- State: Massachusetts
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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