Gareth Sheridan, the Dublin entrepreneur who is making a bid for the presidency, was fined and issued with a cease-and-desist order by the Security and Exchange Commission (SEC) in the United States in December 2018.
Mr Sheridan temporarily stood down as chief executive of Florida-based Nutriband Inc earlier this month to seek a nomination for the presidential election, with his role being taken on by his Nutriband co-founder, Serguei Melnik, the company’s chairman.
The company, the shares of which are quoted on the US Nasdaq, is awaiting approval from the US Food and Drug Administration (FDA) for its patch medication technology.
The SEC instituted cease-and-desist proceedings against Nutriband, Mr Sheridan and Mr Melnik in 2018, with the company and its two co-founders making a settlement offer that the commission accepted.
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In an announcement to the market on December 26th, 2018, each of the two executives, at the time the company’s only full-time employees, agreed to pay fines of $25,000 each.
The two men agreed to the order solely for the purpose of the proceedings and without admitting or denying the SEC findings, the order said.
The commission said the “development-stage” company, Mr Sheridan, then its CEO, and Mr Melnik, then its chief financial officer, had, from approximately July 2016 to May 2018, made misleading statements in public filings concerning the FDA.
Since about January 2016, the company had offered for sale transdermal patches, including a vitamin patch, a weight-loss patch, and an energy patch, the commission said.
The FDA had determined that the type of transdermal patches sold by Nutriband required a new drug application or an abbreviated new drug application before they could be legally sold, but Nutriband “never sought marketing authorisation from the FDA prior to marketing its products in the US”, the commission said.
Public filings during the relevant period contained misleading statements mischaracterising the products as not requiring FDA regulation and approval, or saying the FDA might, in the future, determine to regulate transdermal patches.
“This was misleading because in fact the FDA already regulates Nutriband’s products,” the commission said.
In July 2018, Nutriband finally disclosed that it had retained FDA counsel who provided an opinion stating that Nutriband’s products are regulated as drugs by the FDA and “must receive market approval before being sold in the US, which may significantly limit Nutriband’s projected sales targets, the commission said.
“As the company’s CEO and CFO and only two employees, Sheridan and Melnik, respectively, caused Nutriband’s reporting violations because they drafted, reviewed, and approved the misstatements at issue,” it said.
It noted that Mr Sheridan signed reports in 2017 and 2018 stating that the reports did not contain untrue statements of material fact.
[ Analysis: Gareth Sheridan’s presidential nomination is by no means certainOpens in new window ]
Mr Sheridan, who is to hold a press conference today and take questions about his desire to contest the presidential election, has said he wants to be Ireland’s youngest president.
“I believe there has never been a time in our country’s history where the choice of a younger candidate being on the ballot paper has been more relevant or important than today,” Mr Sheridan said.
Asked about the fine at a press conference in Dublin on Thursday, Mr Sheridan said they had received advice from two attorneys and a dermatologist who had independently advised that FDA approval was not needed.
He said in the business he was in, “you have to rely on people who are experts in that space. I’m not for a second claiming that I’m an FDA attorney”.
Mr Sheridan said it was “an honest mistake” and that there has been no problems since then with SEC filings. “You pay your dues and you move on.”
