Intelligent Systems Corporation (INS) Accused of Misleading Investors
According to the filed complaint for alleged violations of the Securities Exchange Act of 1934 between January 23, 2019, and May 29, 2019, Intelligent Systems issued a series of press releases and filings with the SEC touting positive financial results and affirming its control over financial reporting. This included a Proxy Statement filed in April 2019 regarding the selection of Parker Petit as director of the company due to his “extensive experience as a successful entrepreneur and as an executive,” deeming him a “financial expert.” These statements were materially false and misleading and failed to disclose that Petit engaged in accounting fraud as CEO of MiMedx Group and that Petit, Intelligent Systems’ CEO, and other Intelligent Systems employees had engaged in undisclosed related-party transactions to fabricate revenue for the company. This information became public in May 2019 when Aurelius Value and Grizzly Research LLC published reports that revealed Petit’s conduct at MiMedx Group and the related-party transactions at Intelligent Systems. On this news, the stock price dropped $12.12, or 30%, to close at $26.99.