NJ Biopharmaceutical Executive Indicted for $38 Million Insider Trading Scheme
A former executive of a publicly traded biopharmaceutical company is facing serious charges of securities fraud and insider trading, as per the U.S. Department of Justice. Dale Chappell, aged 54 and currently a resident of Switzerland, has been indicted on five counts of securities fraud. Chappell, who previously served as the Chief Scientific Officer and a board member at Humanigen, Inc., was taken into custody in Switzerland on December 20. The U.S. is working to bring him back for trial in New Jersey.
The allegations stem from Chappell’s actions between June and August 2021 when he sold off millions of Humanigen shares, armed with confidential knowledge about the company’s FDA application for Lenzilumab, a COVID-19 treatment. These trades, executed through funds under his control, helped Chappell dodge losses amounting to over $38 million.
According to court documents, even as Humanigen publicly remained optimistic about obtaining emergency-use authorization (EUA) for Lenzilumab, internal communications with the FDA painted a less hopeful picture. Despite this, Chappell proceeded with trading Humanigen stock and made use of Rule 10b5-1 trading plans to shield his dealings.
When Humanigen eventually revealed the FDA’s rejection of EUA approval, the company’s stock price plummeted by approximately 50%. U.S. Attorney Philip R. Sellinger emphasized the commitment to accountability in cases where individuals seek gains through insider information, stating the importance of combating securities fraud and preserving market integrity.
Should Chappell be found guilty, he could face up to 25 years in prison for the securities fraud charges and an additional 20 years for each of the four insider trading counts. The case aligns with a wider effort by the Department of Justice’s Criminal Division to identify and prosecute misuse of 10b5-1 trading plans, with Chappell’s suspicious trading patterns being pinpointed through data analytics tools utilized by the Fraud Section.
