For small companies struggling to raise capital, a collaboration with a well-known and established company is a valuable fact to market to potential investors. Investors may reasonably presume that established companies are skilled at screening and selecting collaboration partners. Only those deemed worthy may collaborate. A collaboration therefore acts like a stamp of approval and a signal that the little company may be positioned to join its larger peers. It is therefore tempting for small companies to exaggerate or even fabricate collaborations with established companies. This type of misrepresentation, when used to raise investor funds, can be securities fraud. The SEC recently brought such a claim against BioChemics, Inc., and its CEO John J. Masiz, for allegedly touting collaborations with Cynosure, Inc. and Unilever United States, Inc., long after the collaborations had ended. [Read more…]