Zymergen Settles SEC Charges Over Alleged Violations Linked to IPO

By Sabela Ojea

The Securities and Exchange Commission has settled charges against biotechnology company Zymergen for allegedly misleading investors about its overall market potential and revenue prospects ahead of its initial public offering.

The Emeryville, Calif.-based company, founded to replace petroleum-based products with bio-based products, chemicals and materials, has agreed to pay a $30 million civil penalty to resolve SEC charges over violating a number of antifraud provisions of the federal securities laws, according to the SEC's order findings.

From 2013 through the fall of 2020, Zymergen raised over $800 million through private offerings. The company added about $530 million in capital as a result of its April 2021 IPO after having allegedly misled investors from at least March to August 2021.

Zymergen provided revenue forecasts to research analysts that far exceeded internal expectations and misled investors during its first earnings call about the customer, technical and commercial problems its only commercially available product, an electronics film named Hyaline, according to the SEC.

It also claimed that it had a $1 billion electronics display market opportunity for Hyaline. However, the estimate was based on flawed and unreasonable assumptions that included product markets that were poor fits for Hyaline's technical characteristics and unsupported premium pricing, the SEC said Friday.

Zymergen was acquired by Ginkgo Bioworks in 2022, a year after going public. The company filed for bankruptcy in 2023. After the U.S. bankruptcy Court for the District of Delaware confirmed Zymergen's plan of liquidation in February, its assets and liabilities were transferred to a liquidating trust.

Zymergen agreed to a cease-and-desist order and pay the civil penalty without admitting or denying the SEC's findings, and subject to bankruptcy court approval.

Write to Sabela Ojea at sabela.ojea@wsj.com

(END) Dow Jones Newswires

September 13, 2024 13:55 ET (17:55 GMT)

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