Six years later, SEC drops claims of accounting fraud against biotech exec
The US Securities and Exchange Commission has dropped its claims against the former CEO of Osiris Therapeutics, who was accused of lying about the regenerative medicine player’s financial performance.
All claims against Lode Debrabandere have been dismissed, according to a court filing from late November, capping a legal saga that goes all the way back to 2017.
“The SEC’s allegations had no merit, and the complete dismissal is the only correct, fair, and just outcome,” Debrabandere wrote in an email to Endpoints News. “I am grateful that the SEC ultimately recognized it should drop the action against me.”
The SEC did not explain why the claims were dropped and did not respond to requests for comment.
Debrabandere said overall, the government agreed that he did “everything possible to steer the company in the right direction and added quality to the management team and partnerships,” by hiring new senior executives and swapping out a distributor network for new partners.
“I did all of that in the first 12 months of being CEO,” he wrote. “Not everything was perfect right away, but we were working towards that.”
Separately, the SEC also dropped all but one claim against Philip Jacoby, the ex-Osiris CFO. On Dec. 21, the SEC said in a court filing that it had reached a settlement in principle with Jacoby to resolve his case and avoid a trial.
Jacoby’s attorneys did not respond to a request for comment.
Debrabandere and Jacoby were set to go to a jury trial in February 2023 for accounting fraud.
The charges against Debrabandere were dismissed with prejudice, meaning the SEC can’t bring them again. Together with Jacoby, he had been accused of cooking the books inflating performance of Osiris, through everything from backdating a document to improperly recognizing revenue from products such as skin, bone graft and articular cartilage substitutes.
But he has been vigorously fighting the charges over the past few years. In a motion with the court filed before the dismissal, Debrabandere claimed that he had been lied to repeatedly by a business partner who admitted to the deception in a deposition.
Debrabandere and Jacoby were the last two of five defendants named in the SEC’s original case, which also went after Osiris itself and two other execs: Gregory Law, Jacoby’s successor as CFO, and Bobby Dwayne Montgomery. The SEC previously settled its claims against Osiris and Montgomery, and dismissed its claims against Law.
Medtech giant Smith & Nephew acquired Osiris for $660 million in 2019.
An alum of UCB and Bristol Myers Squibb before moving to Osiris, Debrabandere has since moved on to co-found a medical device company, where he now serves as CEO.