Five people have been charged for allegedly participating in an insider trading scheme tied to Novartis’ $3.2 billion acquisition of Chinook Therapeutics, including a former director of the biotech’s board.
Rouzbeh “Ross” Haghighat served as a Chinook board member up until the 2023 acquisition. Now, he’s being charged with securities fraud, 16 counts of insider trading and two counts of conspiracy related to his time there, according to a May 23 release from the U.S. Department of Justice (DOJ).
Haghighat was previously charged with one count of conspiracy to commit insider trading, according to the release.
A day after the charges were publicly announced, the biotech businessman submitted his resignation to Sernova Biotherapeutics, a cell therapy company Haghighat had chaired. In the announcement of his departure, Sernova thanked Haghighat for “his service as a trusted leader” and wished him luck in the future. The biotech had not responded to Fierce Biotech’s request for comment as of publication.
In May 2023, Haghighat allegedly viewed material nonpublic inside information about the anticipated Novartis-Chinook buyout, including deal terms, according to the DOJ. He is accused of then buying securities and tipping off others—including Bruce Haghighat, Kirstyn Pearl, Seyedfarbod “Fabio” Sabzevari and James Roberge—with the belief that they would also purchase shares, which the defendants allegedly did.
The five defendants allegedly profited more than $600,000 after buying securities in the Seattle biotech before the buyout was publicly announced in June 2023.
“Ross Haghighat and his associates thought they were above the law and colored outside the lines for financial gain, but yesterday’s indictment proves no one is above the law,” Eric Shen, of the U.S. Postal Inspection Service Criminal Investigations Group, said in the government release.
A securities fraud conviction carries a maximum penalty of 25 years in prison, while insider trading charges could result in up to 20 years per count. If found guilty of conspiracy, the defendants could face a maximum penalty of 25 years in prison, according to the DOJ.