DOCTOR BETRAYS CANCER TRIAL SECRETS FOR $1.5 MILLION WINDFALL!

SEC v. Sai-Hong Ignatius Ou — U.S. Securities and Exchange Commission Litigation Release No. 26198, dated October 28, 2022.

The SEC charged Sai-Hong Ignatius Ou, a physician and principal investigator for Nuvalent Inc. clinical trials, with insider trading. Ou illegally purchased 80,000 shares of Nuvalent stock after learning of positive, non-public clinical trial results. Following the public announcement, Nuvalent's stock price surged, netting Ou over $1.5 million in illicit profits. Ou settled with the SEC, agreeing to pay disgorgement, prejudgment interest, and a civil penalty, and faces a five-year officer and director ban.

In Plain English

Imagine you're a doctor helping test a new cancer drug. You learn some really good news about the drug before anyone else. Instead of waiting for the public announcement, you quickly buy a lot of the company's stock. When the good news comes out, the stock price jumps up, and you sell your shares for a big profit. This is illegal because you used secret information to make money before others had a chance.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Principal Investigator Role Sai-Hong Ignatius Ou, a physician and clinical professor, served as a principal investigator for Nuvalent Inc.'s clinical trials of a cancer-fighting drug, NVL-520, from January 2022 to January 2024.
2. Access to Confidential Information In his role, Ou gained access to material nonpublic information regarding the progress and preliminary results of Nuvalent's clinical trials.
3. Learning of Positive Results On June 16, 2022, Ou received an email containing confidential information about positive clinical trial results for NVL-520, along with notification that Nuvalent planned a public disclosure in October 2022.
4. Illegal Stock Purchases After obtaining this nonpublic information, Ou purchased 80,000 shares of Nuvalent stock through forty-two separate transactions between June 16, 2022, and October 24, 2022.
5. Public Announcement On October 28, 2022, Nuvalent publicly announced the positive clinical trial results at a conference.
6. Stock Price Surge Following the announcement, Nuvalent's stock price increased by approximately 60%, from $22.00 per share to $35.34 per share.
7. Illicit Profit Realization The 80,000 shares Ou purchased using material nonpublic information increased in value by $1,520,455.37.

The Enforcement Action

The SEC charged Sai-Hong Ignatius Ou with insider trading in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations, Ou consented to a final judgment that enjoins him from violating the charged provisions, orders him to pay disgorgement of $1,520,455 in illicit profits with prejudgment interest, orders him to pay a civil penalty of $1,520,455, and prohibits him from serving as an officer or director of a public company for five years. The judgment is subject to court approval.

Named in this action: Sai-Hong Ignatius Ou.

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