SEC Charges S-Ray Dental Ultrasound Start-Up for Fraudulence in Raising Money from Investors

These charges from the SEC allege that dental start-up S-Ray and its CEO Stephen Baird raised $2 million from investors by making false claims of products and revenue.

The Securities and Exchange Commission (SEC) has announced charges against S-Ray Incorporated and its CEO Stephen Alexander Baird. The charges raised allege that Baird raised at least $2 million from investors by making false claims about customers, orders for its products, and revenue potential, according to a litigation release from the SEC.

Founded in 2010, S-Ray claimed to develop ultrasound technology indicated for dental procedures, though, according to the SEC, the company had only developed a few prototypes in 8 years. In 2019, all employees left the company other than Baird himself. The SEC alleges that, despite this, Baird continued to sell S-Ray shares to investors by misrepresenting the company’s profits from customer orders. Reportedly, Baird told dentist and orthodontist investors that the company had booked $1 million worth of orders and that that number would soon increase to tens of millions in annual revenue.

Adding on to this, the SEC also alleges that Baird assured these same investors that more money would allow S-Ray to develop new technologies, and that he would forgo his salary and bonus. Despite saying this, Baird allegedly used half of these proceeds to pay himself and his wife back for loans made to S-Ray from May 2019 to May 2021.

The SEC charges S-Ray and Baird with violating antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. As part of these charges, the SEC is seeking injunctive relief, disgorgement plus prejudgment interest and civil penalties from S-Ray and Baird, and an order prohibiting Baird from acting as an officer or director of a publicly traded company as well as prohibited from participating in the issuance, purchase, offer, or sale of any security.