Financial regulator tells investors to beware of wonderdrug claims

Following news from Biomed, the meditech company based in the eastern Polish city of Lublin, that they had found the first cure for COVID-19, which sent their share price up by 50 percent, the head of the Polish financial regulator (KNF) Jacek Jastrzębski sent a strong message for investor caution and issuer responsibility.

A tweet from the KNF Director of Communications Jacek Barszczewski confirmed that the regulator’s office is “in contact with the company and is taking appropriate action regarding an explanation of its communication with investors.”

As we reported yesterday, the excitement around the life sciences firm’s announcement was a little too premature for the Polish health authorities, who said that the Biomed research on the use of plasma from cured COVID-19 patients was only one of several projects which was being considered for further testing. It was felt that the Biomed announcement indicated that they had a product which was ready to go on sale in the chemists any day, which was stretching the truth.

As Biomed is a listed company, the over-enthusiastic claims of the board led to calls that investors had been misled.

The KNF communications director Jacek Barszczewski wrote today that they had been “monitoring the medtech industry since March” and had warned investors to exercise caution in the given circumstances. However, much of the responsibility lay with the issuers themselves such as Biomed to provide reliable information.

Barszczewski stated that if there was a breach of disclosure obligations, the KNF “has the possibility of issuing recommendations to companies aimed at ceasing breach of disclosure obligations, and often uses this right.”

The KNF has meted out some multi-million EUR fines over the past couple of years since the current director Jacek Jastrzębski started in his role in December 2018, including to companies implicated in the Getback affair, which led to 9,000 investors losing over EUR 2.5 bn.

A report by the Supreme Audit Commission had been critical of the KNF’s speed of acting in cases of misleading information from listed companies in previous years, including during the Getback scandal which broke in April 2018 but had been brewing for months prior to that.