SEC Charges Clinical Drug Trial Investigator with Insider Trading
Washington D.C., Dec. 20, 2021 —
The Securities and Exchange Commission today announced charges against Daniel V.T. Catenacci for insider trading in the securities of biotechnology company Five Prime Therapeutics, Inc. in advance of the company’s November 10, 2020 announcement that it had achieved positive drug trial results for its flagship cancer drug Bemarituzumab.
The SEC’s complaint alleges that Catenacci, a Chicago, Illinois based medical school professor, entered into a consulting agreement with Five Prime to serve as a lead clinical investigator for the company’s Bemarituzumab drug trial. Through this role, Catenacci allegedly learned material nonpublic information about the positive drug trial results for Bemarituzumab. According to the SEC, shortly after he allegedly learned of the positive results, Catenacci purchased 8,743 shares of Five Prime. After it publicly announced the positive drug trial results, Five Prime’s share price increased over 300%. The next day, Catenacci allegedly sold all of his shares, realizing illicit gains of $134,142.
“Clinical drug trials often involve highly sensitive and valuable information about the viability of a drug,” said Erin E. Schneider, Regional Director of the SEC’s San Francisco Regional Office. “As alleged in our complaint, Catenacci was required to safeguard the material nonpublic information he learned about Five Prime’s clinical trial, and not trade on it.”
The SEC’s complaint, filed in federal district court in Illinois, charges Catenacci with violating the antifraud provisions of the federal securities laws. Catenacci has agreed to be permanently enjoined from violations of these provisions, and to pay a civil penalty in an amount to be determined by the court at a later date. This settlement is subject to court approval.
In a parallel action, the U.S. Attorney’s Office for the Northern District of Illinois today announced criminal charges against Catenacci.
The SEC’s investigation was conducted by Madiha M. Zuberi of the San Francisco Regional Office, with assistance from John S. Rymas of the Market Abuse Unit’s Analysis and Detection Center. The case was supervised by Jennifer J. Lee and Monique C. Winkler of the San Francisco Regional Office, with litigation assistance from David Zhou. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of Illinois, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.