Dale B. Chappell, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26206 / December 30, 2024
Securities and Exchange Commission v. Dale B. Chappell, et al., No. 23-civ-03769 (D.N.J. second amended complaint filed May 20, 2024)
SEC Charges Humanigen’s CEO and Chief Scientific Officer with Insider Trading
The Securities and Exchange Commission today announced insider trading charges against Cameron Durrant and Dale B. Chappell, the CEO and Chief Scientific Officer, respectively, of New Jersey-based biopharmaceutical company Humanigen, Inc.
According to the SEC’s complaint, between June and August 2021, Chappell and Durrant sold Humanigen stock while in possession of material nonpublic information that the U.S. Food and Drug Administration was unlikely to approve Emergency Use Authorization (EUA) for Humanigen’s newly developed COVID-19 drug, lenzilumab. The SEC alleges that Chappell and three investment vehicles under his control sold more than 3.8 million shares of Humanigen for more than $68 million, including through Rule 10b5-1 trading plans, and Durrant sold more than 80,000 shares for more than $1.68 million. When Humanigen announced that the FDA had denied EUA for lenzilumab on September 9, 2021, Humanigen’s stock price dropped by nearly 50 percent. The SEC alleges that, as a result of their insider trading, Chappell avoided losses of more than $38 million while Durrant avoided losses of more than $1 million.
The SEC’s complaint, filed in the U.S. District Court for the District of New Jersey, charges Durrant, Chappell, and three investment vehicles under Chappell’s control—Black Horse Capital LP, Black Horse Capital Master Fund Ltd., and Cheval Holdings, Ltd.— with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and officer and director bars against Durrant and Chappell. On December 23, 2024, in a parallel action, the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the District of New Jersey announced unsealed criminal charges against Chappell.
The SEC’s investigation was conducted by W. Bradley Ney, Daniel Ball, George B. Parizek, Kevin Wu, and Zachary Scrima under the supervision of Melissa Robertson and Pei Y. Chung. The litigation is being handled by Anna Area, Daniel Lloyd, and Daniel Ball, and supervised by David Nasse.
The SEC appreciates the assistance of the Criminal Fraud Section of the U.S. Department of Justice, the United States Attorney’s Office for the District of New Jersey, and the Federal Bureau of Investigation.