California Doctor to Pay $3 Million for Insider Trading

California Doctor to Pay $3 Million for Insider Trading

On December 18, a California oncologist agreed to pay the US Securities and Exchange Commission (SEC) $3 million to resolve allegations of insider trading. The SEC filed the case in Massachusetts federal court.

Dr. Sai-Hong Ignatius Ou, an oncologist and clinical professor at the University of California, Irvine, was accused of violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 after he purchased 80,000 shares of a biopharmaceutical company, Nuvalent Inc., after learning, through a nonpublic information, that a Nuvalent cancer-fighting drug was yielding positive results in a clinical trial. When Nuvalent went public with the information, its stock price went up 60% and the value of Dr. Ou’s shares increased by over $1.5 million.

Dr. Ou was allegedly a Nuvalent insider — he served as a principal investigator for two phases of the cancer drug’s clinical trials. The SEC alleged that Dr. Ou received confidential insider information about the success of the clinical trials on June 15, 2022, and on June 16, 2022, Dr. Ou began purchasing lots of 250-5,000 shares of Nuvalent stock.

Dr. Ou consented to a final judgment entry that requires him to pay $1.5 million in disgorgement fees and $1.5 million in civil penalties. Subject to court approval, he may also be barred from serving as a public company’s officer or director for five years.

The case is Securities & Exchange Commission v. Sai-Hong Ignatius Ou, case number 1:24-cv-13113, in the US District Court for the District of Massachusetts.

Mayor Adams’ Motion to Dismiss Bribery Charges Denied

On December 17, US District Judge Dale E. Ho rejected Mayor Eric Adams’ request to dismiss bribery charges from his indictment. Judge Ho found that federal prosecutors sufficiently alleged a quid pro quo bribery scheme between Adams and the Turkish government when they claimed Adams sought and accepted stays in opulent hotel suites and first-class flights around the world from Turkish nationals in exchange for official favors.

Judge Ho determined that even though Adams was not mayor when he allegedly influenced fire officials to approve building permits for a Turkish consulate, he nonetheless held positions where he could abuse his authority (e.g., as Borough President of Brooklyn). Judge Ho rejected Adams’ arguments that the recent Snyder v. US ruling, which found gratuity payments made after an official act can be legitimate and are not improper bribes. Judge Ho used the standard established in McDonnell v. US instead, which held that officials can only be convicted of bribery if they agree to accept a benefit in exchange for a formal exercise of governmental power on a specific issue. Judge Ho also stated that, “the government is not obligated to allege conduct to satisfy the ‘official act’ requirement as articulated in McDonnell.”

In September, Adams was charged with conspiracy, wire fraud, bribery, and soliciting donations from foreign nationals. Adams was also accused of accepting illegal foreign donations through straw donors and defrauding a city funding program. President-elect Donald Trump has stated that he would consider pardoning Mayor Adams.

The case is US v. Adams, case number 1:24-cr-00556, in the US District Court for the Southern District of New York.

Former Congressman Charged With FARA Violation

On December 18, a grand jury indicted former Congressman David Rivera for allegedly carrying out a scheme to violate the Foreign Agents Registration Act (FARA) and launder money to conceal his criminal conduct.

From around June 2019 to April 2020, Rivera allegedly provided consulting and lobbying services to a sanctioned Venezuelan businessman, Raul Gorrin, who was already on a Specially Designated Nationals and Blocked Persons List (SDN List). Gorrin allegedly paid Rivera $5.5 million to lobby US government officials to have Gorrin removed from the SDN List. As alleged, Rivera then created fraudulent Delaware shell companies using the names of a known law firm and of a US government official in order to make them appear legitimate, unbeknownst to both the law firm and the government official. Rivera also allegedly used the shell company to pay his assistants in the lobbying efforts with the money he received from the alleged scheme. The indictment alleges that Rivera willfully failed to register with the US attorney general while acting as an agent of a foreign principal (Gorrin), in violation of FARA.

Read the indictment here.