Publicly Traded Health Care Company’s Chief Science Officer Charged with Insider Trading

A former chief scientific officer and board member of Humanigen Inc., a biopharmaceutical company, was arrested in Switzerland on charges of insider trading. Dale Chappell, 54, allegedly avoided over $38 million in losses by selling shares of Humanigen stock while in possession of nonpublic information about the FDA’s decision on a drug to treat COVID-19. Chappell sold the stock through funds he controlled.

The indictment claims that Chappell engaged in insider trading through Rule 10b5-1 trading plans, selling stock based on undisclosed information. After Humanigen revealed that the FDA had declined to approve the drug, Lenzilumab, the company’s stock price dropped by 50%. Chappell faces multiple charges related to securities fraud and insider trading, with a maximum penalty of 25 years in prison for the securities fraud scheme.

This case is part of a focused effort by the Fraud Section of the Criminal Division to detect and prevent abuses of 10b5-1 trading plans. The FBI is conducting the investigation, and international authorities will handle Chappell’s extradition. It’s a reminder that trading regulations exist to maintain a fair and transparent market for all investors.