The Ontario Securities Commission has accused Rebecca Keeler, the former CEO of Dimethaid Research Inc., of failing to disclose bad news to investors in the drug company.

The OSC said Dimethaid filed misleading prospectuses in 2003 and 2004 outlining two offerings of special warrants.

Both prospectuses — legal documents that detail securities being offered for sale —said the company's new Pennsaid drug was being considered for approval by the U.S. Food and Drug Administration.

However, the OSC said, neither document revealed that the FDA had previously rejected Dimethaid's new drug application for Pennsaid as "non-approvable," because of insufficient information about Pennsaid's safety and efficacy.   

The OSC also said Keeler kept Dimethaid's board of directors in the kept about the non-approvable letter.

Those actions were "contrary to the public interest," the OSC said.

Dimethaid — now known as Nuvo Research Inc. — has agreed to a tentative settlement of the OSC accusations. A hearing is being held Thursday afternoon to determine whether the commission will approve the settlement worked out by its staff.

A hearing will be later to deal with the accusations against Keeler.

Dissident shareholders at Dimethaid ousted Keeler and replaced the board in 2004 following a bitter proxy battle.