
CareDx Notified that the SEC Will Not Pursue Enforcement Action Following Investigation
CareDx, Inc. has received notification from the United States Securities and Exchange Commission (SEC) that the SEC has concluded its investigation into the company and does not intend to recommend enforcement action. The SEC’s investigation centered around matters related to a civil investigative demand from the United States Department of Justice, as well as certain accounting and public reporting practices of the company.
However, CareDx continues to face legal challenges in the form of a securities fraud class action filed against the company and certain senior executives. The class action alleges that CareDx made materially false and misleading statements about its business, operations, and prospects, causing investors to suffer substantial losses when the truth was revealed.
The company’s stock price fell significantly in October 2021 when the company disclosed the government investigations in its 3Q21 10-Q. The 10-Q revealed for the first time that CareDx was the subject of at least three government investigations. Specifically, the Form 10-Q reported (1) the Company had “recently received” a civil investigative demand (CID) from the U.S. Department of Justice requesting the Company produce documents in connection with the DOJ’s False Claims Act investigation; (2) the Company received a subpoena from the SEC in relation to an investigation by the SEC “in respect to matters similar to those identified in the CID, as well as certain of our accounting and public reporting practices” and (3) the Company received an information request from an unnamed state regulatory agency (collectively “government investigations”).
Additionally, in 2022 the Company’s former Head of Community Nephrology, Dr. Michael Olymbios, filed a complaint in California Superior Court that the Company was using its patient billing and home phlebotomy platform (RemoTraC) to improperly bundle testing services with other blood tests and were the source of the government investigation. The complaint also alleged that the defendants were aware of the misconduct and attempted to conceal it.