Bad boy…

September 21, 2004

BioVeris Corp. (BIOV) which should be flying high because its products — biological and chemical detection systems — are in high demand these days has instead taken its investors on a wild ride. The stock has dropped by about 2/3 since March. Why? Because the son of the chairman and CEO, who runs a private company that has a joint venture agreement with BioVeris decided to spend $7 million on high-end real estate and luxury cars, the company noted in its recent proxy. Needless to say, these were not business-related expenses. To its credit, BioVeris’ audit committee began investigating the transactions back in June and determined that the CEO’s son, Jacob Wohlstadter, was flying solo. It then filed two lawsuits to try and recoup some of the money. But it’s just another in a long line of examples of why investors need to pay close attention when a publicly traded company does business with a related party that happens to run a private company.

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