The SEC has accused an investment banker and a trading ring of exploiting healthcare M&A intelligence and fake pharma news to pocket US$41 million.
The Securities and Exchange Commission has accused Gyunho "Justin" Kim, a former investment banker in the healthcare M&A group of a U.S.-based investment bank, of tipping material nonpublic information about nine pharmaceutical acquisitions to a close friend who then spread the tips across a network of traders.
According to the SEC, Kim passed confidential deal intelligence to Muhammad Saad Shoukat, who traded on the information and relayed it to his brothers and friends. The agency describes this group as a "Ring" that collectively reaped approximately US$41 million in trading profits between June 2020 and February 2024.
The case also involves two alleged market manipulation schemes targeting Olema Pharmaceuticals and Opiant Pharmaceuticals. The SEC says Saad and his brother, Muhammad Arham Shoukat, impersonated doctors through spoofed email accounts to steal confidential clinical trial data from Olema. They then allegedly hijacked breast cancer patient forum accounts to post falsified study results, triggering a stock spike that allowed them to sell shares before the company exposed the fraud.
Saad pocketed approximately US$182,408 and Arham approximately US$75,554 from the Olema trades, the SEC said.
In the Opiant matter, the brothers allegedly registered a fake company domain and created imposter executive email accounts to distribute a fabricated press release announcing a US$225 million deal between Opiant and Hikma Pharmaceuticals. The bogus news drove a sharp intraday rally before Nasdaq halted trading and both companies denied any agreement. Saad, Arham and a third brother, Muhammad Shahwaiz Shoukat, sold into the spike, generating combined gains of approximately US$372,000, according to the agency.
The insider trading allegations span deals involving Aimmune Therapeutics, Immunomedics, Five Prime Therapeutics, Adamas Pharmaceuticals, Sierra Oncology, Global Blood Therapeutics, Oak Street Health, Reata Pharmaceuticals and ImmunoGen. The SEC said Kim obtained deal intelligence through internal communications, virtual data rooms and deal documents while working at his bank, identified in filings only as "Firm A."
Saad allegedly traded through U.S. broker-dealers and UK spread-betting firms, tipping his brothers and friends Izunna Okonkwo and Daniyal Khan. The group used accounts belonging to relief defendants Mishaal Anwar and Gozie Anthony Okonkwo to build positions ahead of public announcements, the SEC said.
For investment professionals, the case underscores the SEC's continued focus on M&A information controls, tipping chains and the use of offshore accounts to mask trading patterns. Kim received a Rolex watch, help drafting a work presentation and job-search assistance from Saad in exchange for the tips, according to the agency.
The SEC is seeking permanent injunctions, disgorgement of profits with prejudgment interest and civil penalties. It also wants Kim permanently barred from the securities industry.
No final determination has been made in this matter.
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