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US SEC charges clinical trial supervisor with insider trading

By Daniel Tyson

15:17, 21 December 2021

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SEC charge doctor with insider trading - Photo: Shutterstock

A Chicago oncologist was charged with insider trading on Monday by US federal agencies, alleging he used non-public information about cancer drug trial results “to reap illicit profits” by buying shares of a biotechnology company where he consulted.

The US Securities and Exchange Commission (SEC) and federal prosecutors in Illinois alleged Dr Daniel VT Catenacci, a gastrointestinal medical oncologist, profited more than $134,000 in illegal profits from the purchase of and sale of Five Prime Therapeutics’ securities.

The charging document states Catenacci, an associate professor at the University of Chicago’s medical school, purchased an undisclosed number of shares of the biotechnology company in advance of its November 2020 statement of positive drug trial results for a cancer drug, Bemarituzumab.

Catenacci is accused of gaining non-public information about the positive results via his role as a lead clinical investigator for the drug trial.

Accused cooperating

He has been cooperating with the government since the start of the investigation, Catenacci’s attorney Jacob Kahn told Reuters. “This is a complex area of law, and Dr. Catenacci did not intentionally breach any duty of confidence,” Kahn said.


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Neither Kahn, Catenacci nor the University of Chicago’s Medical School returned emails from seeking comment.

However, the university did tell Chicago media outlets that it “remains fundamentally committed to research integrity, protecting the rights of patients who participate in clinical trials, and honouring its obligations to government and industry research sponsors.”

Catenacci is charged with criminal information, a type of charging document usually used by prosecutors in connection with plea deals. Neither the SEC nor US Department of Justice clarified if Catenacci had a plea deal by Tuesday morning.

To settle the SEC's civil charges, Catenacci has agreed to pay a penalty in an amount to be determined by the court at a later date, the SEC said. The settlement is subject to court approval, according to a seven-page federal complaint.

Read more: Game Stopped? WallStreetBets in search for the next meme-stock

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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