ADMINISTRATIVE PROCEEDING
File No. 3-21512; 3-21513; 3-21514; 3-21515
 

July 5, 2023 – The Securities and Exchange Commission today announced settled charges against Co-Diagnostics, Inc., a Utah-based molecular diagnostics company, its CEO Dwight H. Egan, and its Head of Corporate Communications and Investor Relations Andrew B. Benson, for issuing two misleading press releases concerning a screening test that Co-Diagnostics had developed to detect COVID-19.  In addition, the SEC charged Co-Diagnostics with failing to disclose compensation paid by the company to the sons of Egan and Reed L. Benson, the company’s former CFO, Secretary, and General Counsel.  Egan and Reed L. Benson were also charged in connection with this conduct.

According to the SEC’s orders, in February 2020, shortly before a securities offering in which it raised millions of dollars, Co-Diagnostics issued two press releases concerning a screening test that it had developed to detect COVID-19.  Both press releases—which were drafted by Egan (CEO) and Andrew B. Benson (Head of Corporate Communications and Investor Relations) and also approved by Egan—misleadingly suggested that the test could be used by consumers to detect COVID-19 when in fact, at that time, the test could not be sold for clinical diagnostic purposes. According to the SEC’s orders, the Food and Drug Administration (FDA) contacted Co-Diagnostics to express concerns about the accuracy of the language used in the two press releases soon after they were published, but Co-Diagnostics did not correct them until after the FDA contacted the company again, approximately two weeks later.  The SEC’s order also finds that, in Co-Diagnostics’s annual reports for fiscal years 2018 through 2020 and in its proxy statements filed in 2019 through 2021, Co-Diagnostics failed to disclose compensation paid to the sons of Egan (CEO) and Reed L. Benson (former CFO, Secretary, and General Counsel), even though the compensation was required to be reported under Item 404 of Regulation S-K.  Egan signed the annual reports for fiscal years 2018 through 2020 and solicited proxies relating to the definitive proxy statements filed in 2019 through 2021.  Reed L. Benson signed the company’s annual reports for fiscal years 2018 and 2019. 

The SEC’s orders find that Co-Diagnostics, Egan, Andrew B. Benson, and Reed L. Benson violated the following provisions of the securities laws, and orders each to cease and desist from committing any future violations of those provisions:

• Co-Diagnostics:  Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Sections 13(a), 13(b)(2)(A), and 14(a) of the Securities Exchange Act of 1934 and Rules 13a-1, 12b-20, 13a-15(a), and 14a-3 thereunder;
• Egan:  Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 14(a) of the Exchange Act and Rules 14a-3 and 13a-14 thereunder, and causing Co-Diagnostics’s violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder;
• Andrew B. Benson:  Sections 17(a)(2) and 17(a)(3) of the Securities Act; and
• Reed L. Benson:  Rule 13a-14 of the Exchange Act, and causing Co-Diagnostics’s violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder.

Co-Diagnostics, Egan, Andrew B. Benson, and Reed L. Benson also agreed to pay penalties of $250,000, $75,000, $40,000, and $40,000, respectively.  Each consented to entry of the order against them without admitting or denying the SEC’s findings.

The SEC’s investigation was conducted by Heather L. Shaffer, Tian Wen, and Steven G. Rawlings, with assistance from Stanley Husband, and supervised by Tejal D. Shah of the New York Regional Office.  The SEC appreciates the assistance of the FDA, the Financial Industry Regulatory Authority, and Nasdaq’s MarketWatch and Enforcement Departments.