Litigation Release No. 24567 / August 16, 2019
Securities and Exchange Commission v. Hani Zeini, No. 18-cv-08103 (C.D. Cal.)
The Securities and Exchange Commission announced today the entry of a final judgment against Hani Zeini, the former CEO of Sientra, Inc., a California-based medical aesthetics company, for concealing damaging news about the company’s sole-source manufacturer before it closed a $60 million stock offering in 2015.
In September 2018, the SEC charged Zeini with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities and Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. As alleged in the SEC’s complaint, Sientra sells silicone breast implants in the United States, and at the time of the offering, all of its implants were made by a company in Brazil. Three days before Sientra was preparing to close its stock offering, Zeini allegedly learned from the Brazilian company’s CEO that its manufacturer’s “CE certificate,” which is a sign of regulatory compliance required to sell products in the European Union, had been suspended. Zeini allegedly concealed this information from Sientra’s general counsel and the underwriters for the offering. The day after the offering closed, news of the suspension became public and Sientra’s stock price fell 52.6% from $20.58 to $9.70 per share after it issued a release disclosing the suspension. Even after that, Zeini allegedly lied to those asking about the matter, and tried to destroy records that showed when he knew about the CE certificate suspension.
Without admitting or denying the allegations in the complaint, Zeini consented to the entry of a judgment permanently enjoining him from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The judgment, entered on August 15, 2019 by the U.S. District Court for the Central District of California, also orders Zeini to pay a $160,000 civil penalty, and imposes a five-year officer and director bar.
The SEC’s investigation was conducted by Matthew Montgomery and supervised by Robert Conrrad of the Los Angeles office. The SEC’s litigation was handled by Amy Longo, Donald Searles, and Matthew Montgomery.