SEC and DOJ Flex on Life Sciences Insider Trading

On January 15, 2026, the U.S. Securities and Exchange Commission (SEC) announced that it had civilly charged Hong (John) Wang and his company, Precision Clinical Consulting LLC, with insider trading in the stock of C4 Therapeutics, Inc. (C4), a clinical stage biopharmaceutical company. In parallel, the U.S. Attorney’s Office for the District of Massachusetts announced criminal charges against Wang for securities fraud for the same conduct. This coordinated action by the SEC and the U.S. Department of Justice (DOJ) builds on recent enforcement measures targeting insider trading in the life sciences sector, underscoring an intensified focus on this area.

SEC Charges Against Wang and Precision Clinical Consulting LLC

In its complaint, the SEC alleges that Wang traded in C4 stocks when he had advance knowledge of clinical trial data in the company’s flagship drug. Wang purportedly purchased the stock when he was engaged in biostatistical consulting work for C4, including analysis of the drug’s clinical trial data. During his analysis, Wang allegedly became aware of material non-public information (MNPI) relating to C4 — here, positive test results for the drug — before he purchased its stock between November and December 2023. Later that December, C4 publicly announced the drug’s positive results, doubling its stock price. According to the SEC, Wang made over $450,000 in realized and unrealized profits.

The SEC’s complaint identifies C4’s policies and procedures against insider trading, as well as provisions in Wang’s consulting agreement with C4 that prohibited the use of any confidential information “except in the course of performance of [his] duties for C4.” In signing the agreement, Wang allegedly acknowledged that confidential information may contain MNPI concerning C4, meaning that federal and state law restricted his ability to trade on the information. The SEC alleges that Wang completed multiple C4 trainings on insider training, including a mandatory course that identified “[p]ositive or negative results of a clinical trial” as an example of potential MNPI.

Previous SEC and DOJ Charges Related to Biotech Insider Trading and Market Manipulation

Earlier this month, the SEC announced civil charges against three brothers — Muhammad Saad Shoukat (Saad), Muhammad Arham Shoukat, and Muhammad Shahwaiz Shoukat — and three of their friends in New Jersey for running a biopharmaceutical insider trading scheme, as well as two market manipulation schemes. One of the friends, investment banker Gyunho (Justin) Kim, allegedly tipped Saad with MNPI concerning nine potential acquisitions of publicly-traded biopharmaceutical companies. Saad then allegedly passed the MNPI to his brothers and two close friends, who traded ahead of the acquisitions. Ultimately, the group is alleged to have made $41 million in profits between 2020 and 2024. The U.S. Attorney’s Office for the District of New Jersey announced parallel criminal charges against the defendants in December 2025.

Takeaways

The SEC’s claims and accompanying DOJ criminal charges highlight how life science companies are particularly susceptible to insider trading risk, given the large amount of MNPI they possess, including clinical trial outcomes, complex scientific data, information on mergers and acquisitions, and insights into the Food and Drug Administration’s approval process. In recent years, the SEC has intensified its focus on the adequacy of issuer controls over such information. Accordingly, it is important for life sciences companies to adopt internal policies and contract provisions that address and prohibit trading on MNPI — as C4 is said to have done in the Wang case.

As the recent charges reflect, insider trading remains a cornerstone of SEC and DOJ enforcement programs and a focus of the current administration. The SEC and the Financial Industry Regulatory Authority have sophisticated analytical tools, including artificial intelligence tools, that identify patterns of aberrant trading and unusual profits, as well as relationships of traders to sources of MNPI. And, as in these cases, the staff at the SEC regularly collaborate with the Federal Bureau of Investigation and DOJ to investigate and separately bring securities fraud charges.

For questions about insider trading, securities fraud, or related matters, please reach out to the authors or any of their colleagues in Arnold & Porter’s Securities Enforcement & Litigation or White Collar Defense & Investigations practice groups. 

* Arman Antonyan contributed to this Blog. Mr. Antonyan is an Associate in Arnold & Porter’s New York office.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.