Kenneth Stromsland, Securities Fraud, Massachusetts 2020

Boston, Massachusetts - Securities Fraud Scandal

BOSTON – In a shocking turn of events, Kenneth Stromsland, the former Vice President of Investor Relations for PixarBio Corp., a Boston-based biotech company, has been sentenced for his role in a scheme to manipulate trading in the company’s shares and obstruct proceedings before the Securities and Exchange Commission (SEC).

Stromsland, 48, of Rumson, N.J., was sentenced by U.S. Senior District Court Judge Douglas P. Woodlock to six months in home detention, three years of supervised release during which time he must complete 200 hours of community service per year, and ordered to pay a fine of $60,000 and forfeiture of $25,700. In September 2018, Stromsland pleaded guilty to one count of securities fraud through manipulative trading, one count of obstructing an agency proceeding and agreed to cooperate with the government.

According to court documents, Stromsland admitted that beginning in or about November 2016, he engaged in manipulative trades in PixarBio stock that simulated market interest in the stock 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.

Stromsland also admitted that during a 2017 SEC investigation into manipulative trading in PixarBio’s stock, he testified falsely before the SEC. In his testimony on three different days, Stromsland falsely denied that he had purchased shares of PixarBio to affect the share price and falsely denied that he had been instructed to do so by PixarBio’s then Chief Executive Officer.

Stromsland’s co-defendant, Frank Reynolds, the former chief executive officer of PixarBio, was convicted by a federal jury in October 2019, and sentenced on Feb. 18, 2020, to seven years in prison.

The biotech officer’s sentencing marks the latest development in a high-profile case that has shaken the biotech industry. The Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) have been investigating the matter since 2017.

United States Attorney Andrew E. Lelling, Joseph R. Bonavolonta, Special Agent in Charge 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, made the announcement.

Assistant U.S. Attorneys Sara Miron Bloom and Leslie A. Wright of Lelling’s Securities and Financial Fraud Unit prosecuted the case.

Source: https://www.justice.gov/usao-ma/pr/biotech-officer-sentenced-securities-fraud-and-obstruction-sec-proceeding