David Johnston CFO – Is He a Fraudster and Misleading Investors? Uncovered! (Update 2023)
David Johnston CFO used to be the chief financial officer of ImmunoGen. However, he had to step down from that position when the SEC found him guilty of fraud and misleading investors.
SEC attorney, Eric Fornii even compared David Johnston CFO to a shady used car salesman. The attorney pointed out that he had schemes to defraud biotech investors by telling them that the FDA had many positive things to say about tivo.
While he noted that FDA had some concerns, it was similar to a salesman telling a customer that the engine might make a few noises while leaving out the part about needing an entirely new engine.
The jury found David Johnston CFO liable for securities fraud.
According to the SEC, he had played a significant role in misleading investors. He tried to push the line that tivo was heading into the market. However, he didn’t tell them about the many issues the Richard Pazdur’s group at the FDA had regarding their trial design.
Also, the FDA had issues with how tivo was described to investors.
Clearly, David Johnston CFO didn’t care about all that. When the media reached out to ImmunoGen (his employer at the time), they said the case is not related to them so they can’t comment.
While they kept him as the chief financial officer for the rest of that year, David Johnston CFO resigned.
It was a civil proceeding after all. Recently, the FDA has expressed concerns about how several biotechs tend to mislead investors while describing their dealings with the agency.
SEC has even raised this subject by issuing a public warning to biopharma. However, the FDA is bound by law to stay silent.
More Details on the Case Against David Johnston:
Aveo, the company for which David made misleading claims, has a rocky history. The company faced a lot of backlash from the regulators when the company pushed for an approval of tivo in 2013 even though a study showed a 25% fatality risk.
When that happened, the company’s stock prices plummeted. For the subsequent years, David Johnston CFO and his colleagues tried to mitigate teh negative impact of FDA’s statements.
Eventually, the company entered into a settlement agreement with the SEC. They would pay $4 million after an $18 settlement with shareholders.
Aveo’s shareholders had sued the company for failing to disclose the concerns FDA had raised.
What is Investment Fraud?
Investment fraud constitutes a white-collar criminal activity wherein individuals intentionally mislead or deceive investors to achieve financial gains. It is unlawful for any party to conceal essential information regarding investments, including associated risks, with the intent of persuading investors to invest their capital.
Where is David Johnston CFO Now?
According to his online profiles and latest updates, David Johnston CFO has launched DBJ Consulting.
His current title is – Biotechnology Financial Executive and Fractional CFO.
He served at ImmunoGen, Inc for 9 years and he had to leave that firm after he was found guilty of fraud.
Before that, he was at Aveo as their CFO for 6 years.
David Johnston CFO has an MBA from University of Michigan – Stephen M. Ross School of Business and a Bachelor of Science in Commerce from Washington & Lee University.
There are plenty of fraudsters in the biotech industry. Investors and professionals need to be extremely careful who they deal with in this sector.
For example, Dr Leen Kawas is another top-level biotech executive who was found guilty of lying in her research papers. Although her company tried its best to cover up the whole story, it had to sever ties with her eventually.
Still, she didn’t lose any of her shares in the firm and earns dividends for lying in her research papers.
The case of David Johnston CFO is similar. He lied to investors about what the FDA said about his company’s product.
The only party which suffered losses in this deal were the investors. They were misguided and misled.
David Johnston CFO has a history of fraud. It would be best for companies and investors to avoid dealing with him. He was found guilty of lying to and misleading investors of his past company.
- Misled investors