Sientra, Inc., a breast implant distributor based in Goleta, California, and its former CEO, Hani Zeini, have been charged with fraudulently concealing information before the company closed a $60 million stock offering in 2015, according a press release by the U.S. Securities and Exchange Commission.
On September 23, 2015, Sientra closed its offering at $22 per share. However, three days prior, former CEO Zeini had learned that the certification of Sientra’s Brazilian manufacturer, Sillimed, had been suspended over concerns of potential particulate contamination. According the SEC announcement, “Zeini allegedly concealed this information from Sientra’s general counsel and the underwriters for the offering.” After Sillimed issued a statement disclosing the suspension the following day, Sientra’s stock price plummeted over 52 percent, closing at $9.70 per share. Zeini allegedly lied about the matter when asked and destroyed recording indicating he knew about the certificate suspension.
Following class-action lawsuits by investors filed against Sientra, independent members of Sientra’s board of directors hired outside counsel to perform an internal investigation. Zeini was asked to resign on November 12, 2015, and “thereafter, Sientra and its board of directors have cooperated with the Commission’s staff in its investigation,” according to the press release.
Sientra’s representative did not immediately respond to requests for comments.
In light of the legal proceedings, SEC has accepted Sientra’s settlement to neither admit nor deny the findings of the Commission. If convicted, Zeini will pay civil penalties and face judgement pursuant to the different sections of the Security Act and Exchange Act.