A New Jersey biostatistician, Hong Wang (王洪, also known as John Wang), is facing both civil and federal criminal charges for allegedly engaging in insider trading and illicitly profiting nearly $500,000. The U.S. Securities and Exchange Commission (SEC) brought a civil lawsuit against Wang in mid-last month and he is concurrently facing federal criminal charges, with both criminal and civil liabilities running in parallel.
On January 14, the SEC charged Wang, a resident of East Brunswick, New Jersey, and his company “Precision Clinical Consulting LLC” for trading the stock of biopharmaceutical company C4 Therapeutics, Inc. with material non-public information. C4 Therapeutics is a clinical-stage biopharmaceutical company headquartered in Massachusetts.
According to the complaint filed by the SEC in the federal court in Massachusetts, Wang, a biostatistician, had provided services as a consultant to C4 Therapeutics, including conducting biostatistical analysis of clinical trial data on the company’s flagship drug. The SEC alleges that Wang, while fulfilling his duties, had early access to positive clinical trial results of the drug for the treatment of multiple myeloma and non-Hodgkin lymphoma, which constituted significant non-public information of high interest to investors.
Federal prosecutors accuse Wang of breaching his trust and confidentiality obligations to the company by knowingly using the insider information to purchase a large amount of the company’s stock through four brokerage accounts under his control, one of which was registered under his company Precision. Prosecutors state that Wang acquired over 150,000 shares within about 22 days, sold around 20,000 shares after the company announced positive news, and continued holding the remaining shares, generating profits exceeding $450,000.
The SEC has determined that the actions of Hong Wang and his company, “Precision Clinical Consulting,” may have violated the Securities Exchange Act. In the civil lawsuit, the SEC seeks the court’s judgment for Wang to return his ill-gotten gains with pre-judgment interest, issue a permanent injunction against Wang, and impose civil penalties.
Furthermore, the U.S. Attorney’s Office for the District of Massachusetts announced on the same day that criminal charges have been brought against Wang for the same insider trading conduct. The related case is still pending, and all charges are subject to the court’s decision. Securities fraud carries penalties of up to 20 years imprisonment, a maximum of 3 years supervised release, and fines of up to $5 million.