LAWFUEL – The Legal Newswire – The Australian Securities and Investments Commission (ASIC) has obtained orders in the Federal Court of Australia declaring that Citrofresh International Ltd (Citrofresh) engaged in misleading conduct in contravention of section 1041H of the Corporations Act. Citrofresh consented to the making of the declaration and an order that it pay ASIC’s costs.
ASIC’s proceedings against Citrofresh and Mr Ravi Narain, its then-managing director, arose from statements made in two company announcements to the Australian Stock Exchange Ltd on 27 and 29 September 2005. The Court declared that Citrofresh engaged in misleading conduct by, amongst other things:
• Falsely stating that it could offer a global solution to reduce and eventually stop the spread of human immunodeficiency virus (HIV).
• Falsely stating that its product provided a non-hazardous, non-toxic and effective solution that dealt with emergency disease control and prevention for HIV, human influenza A virus, SARS and human rhinovirus.
• Stating without reasonable grounds that it would market a range of ‘barrier protection’ products to be used in the first instance for men’s health (a post intercourse spray or lotion).
• Stating without reasonable grounds that the use of its product as a post-coital application would act as an ‘invisible condom’ and that this would have a significant impact on reducing the transmission of HIV and STDs.
• Failing to disclose that its product was not a vaccine, that the tests that had been carried out on the product were in vitro not in vivo tests and that further in vivo tests were necessary before the product could be marketed as a pre or post-coital application.
The hearing of ASIC’s proceeding against Mr Narain took place between 29 and 31 August 2007. ASIC alleged that Mr Narain engaged in misleading or deceptive conduct and failed to exercise his duties as a director with a reasonable degree of care and diligence regarding the announcements. The Federal Court of Australia has reserved judgment in ASIC’s claim against Mr Narain.