Cryolife ( CRY) is being investigated by the SEC in connection with its announcement last week that the FDA had ordered it to recall human tissue it processed after Oct. 3, 2001, because of contamination concerns.

Shares of Cryolife plummeted $4, or more than 40%, to $5.50 on Aug. 14 before trading was halted on the New York Stock Exchange for the announcement of the FDA action.

The death of a 23 year-old knee surgery patient on Nov. 7, 2001 in Minnesota led to the FDA order. Cryolife must not only recall tissue made on Oct. 3 but also destroy any tissue made after that time, according to the FDA order. Cryolife is appealing the FDA's order.

The "FDA is taking this action because it has been determined that Cryolife cannot ensure that the human tissue it processes for transplantation is free from fungal and bacterial contaminants," an FDA statement said.

Shares of Cryolife closed up 2% at $3.05.

At this time, the SEC's examination of Cryolife is a "fact-finding" investigation, according to the SEC, and it doesn't mean Cryolife has broken any laws. The president of Cryolife, Steven G. Anderson, said the company will cooperate fully with the investigation.

First Call/Thomson Financial analyst consensus predicts Cryolife will lose 32 cents a share in its third quarter and 16 cents for the year.

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