CellCyte agrees to settle SEC investigation

CellCyte Genetics, a Bothell biotechnology company whose promoters and executives were the focus of Seattle Times articles in 2007 and 2008, has tentatively agreed to settle a yearlong investigation by the Securities and Exchange Commission (SEC).

The company said in a regulatory filing today that the agreement, reached earlier this month, calls for a consent decree in which it neither admits nor denies wrongdoing. Terms won't be announced until the SEC approves the deal, which is expected next quarter.

"We are committed to resolving the issues raised in connection with the investigation," the company said in an annual SEC filing.

The substance of the SEC's formal investigation has not been disclosed.

In December 2007, as CellCyte's share price passed $7 and its market capitalization climbed beyond $400 million, The Seattle Times reported that promoters outside the U.S. were behind a wave of glossy brochures and spam faxes that hyped the company with unsubstantiated claims such as "a practical 'pill-in-a-bottle' application puts the miracle of regenerative medicine within immediate reach!"

The promotions were traced to a Zurich firm controlled by G. Brent Pierce, a Canadian penny-stock promoter who at the time was under a 15-year ban from the British Columbia securities industry.

After inquiries from the newspaper, the company removed from its Web site a variety of claims about CEO Gary Reys, among them statements that Reys had led his previous company "from conception to early human clinical trials in 18 months" and that he had helped an early generic pharmaceuticals company through an initial stock offering and a sale to a drug-industry giant.

CellCyte's shares now trade at 6 cents, and it faces a shareholder lawsuit alleging it made false statements in its regulatory filings and on its Web site.

The company hasn't paid rent on its offices since August and currently has no full-time employees, though some scientists are working for it as contractors, according to its regulatory filing.

The report is signed by John M. Fluke Jr. as interim principal executive, although it still lists Reys as chairman, president and CEO.