With over two decades of experience defending SEC insider trading investigations, and having conducted insider trading investigations when I served as Senior Counsel in the SEC’s Enforcement Division for several years, contact me if you’re facing an SEC insider trading inquiry and are looking for strategic guidance designed to avoid being charged. My analysis of a recent SEC insider trading case deals with a common scenario involving inside information learned in connection with FDA clinical trials and traded upon for significant profits.
The U. S. Securities and Exchange Commission (SEC) recently filed charges against Sai-Hong Ignatius Ou, a physician and clinical professor at a California public university for alleged illegal insider trading by utilizing material, nonpublic information. Without admitting or denying the SEC complaint’s allegations, Ou consented to the entry of a final judgment.
The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, charges Ou with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In that there is no specific statutory provision that explicitly proscribes illegal insider trading, the SEC uses this anti-fraud provision when charging insider trading cases.
The complaint alleges that Ou was the principal investigator at the California University for both the Phase I and Phase II clinical trials of NVL-520, a cancer fighting drug being developed by a Massachusetts-based pharmaceutical company (Nuvalent). Given his position, the SEC alleges that, through emails to which he was privy, he learned that Nuvalent would be publicly releasing positive trial results at an upcoming conference in four months. He immediately, per the SEC, purchased 80,000 shares of Nuvalent stock and then sold it after the public announcement for a realized profit of $1,520,455.
The final judgment, subject to court approval, enjoins Ou from violating the anti-fraud provision with which he was charged, and orders him to pay disgorgement of the $1,520,455 in illicit trading profits he realized, along with prejudgment interest, in addition to a civil penalty of $1,520,455, and prohibits him from serving as an officer or director of a public company for five years.
Are You Facing an SEC Insider Trading Inquiry?
David Chase is an insider trading lawyer who, in many cases, has secured successful results for his clients in which the SEC Enforcement Division opted not to charge his client with insider trading. Please see the “Recent Successful Results” section of his website. You may contact David, an SEC insider trading attorney, toll-free at: 800-760-0912 for a free consultation or e-mail at: david@davidchaselaw.com, and can visit the Firm’s website for more information and content on insider trading at: www.davidchaselaw.com.
