Neuralstem Worker Tipped Partner to Trial Results, SEC Says
(Bloomberg) -- A former project manager for Neuralstem Inc. was accused by federal securities regulators of tipping off her partner to the negative results of a clinical trial for an antidepressant the company was developing, allowing him and his uncle to dump their shares before the news was announced.
Holly Hand, 35, was a senior project manager for clinical trials at Neuralstem in July 2017 when she allegedly tipped off Chad Calice to the negative results of a trial for NSI-189, an antidepressant that was one of the company’s main drugs under development, according to a lawsuit filed by the Securities and Exchange Commission on Monday in federal court in Manhattan.
Hand, of Chenango Forks, New York, learned of the results around lunchtime on July 21 and called Calice later that day to tell him about the outcome and to convey “her significant concerns about its potential adverse impact on the company’s business prospects and her own employment status,” according to the suit.
Calice, 34, sold his entire position the following Monday, the day before the results were announced, allowing him to avoid losses of more than $103,000, the SEC alleged. He reinvested in the company the day after the announcement, buying 4,000 shares at $2.82 apiece, well below the range of $5.45 to $6 a share at which he sold his stock. Calice, a veterinarian, also tipped off his uncle, a 73-year-old retired math teacher who wasn’t identified in the complaint, allowing him to avoid more than $14,434 in losses, according to the SEC.
Neuralstem changed its name to Seneca Biopharma Inc. in 2019 and merged with Leading BioSciences Inc. in April to become Palisade Bio Inc.
Obligation to Shareholders
Without admitting or denying the allegations, the couple has agreed to a judgment in the insider-trading case that bars them from violating the relevant law and requires them to pay civil penalties, the SEC said in a statement. Calice agreed to pay $222,184, while Hand will pay $103,875. The settlement is subject to court approval.
“Public company employees owe shareholders a duty to safeguard the confidentiality of company information and not to personally benefit, directly or indirectly, from the misuse of such information,” Richard R. Best, director of the SEC’s New York office, said in a statement. “The complaint alleges that Hand improperly shared confidential information with Calice, allowing him to trade on and benefit from information that other Neuralstem shareholders did not possess.”
The defendants didn’t respond to voicemail messages seeking comment on the suit. Palisade Bio said in a statement that it “doesn’t comment on matters such as this.”
Hand subsequently took a job as a clinical project director at another pharmaceutical company, according to the suit.
The case is Securities and Exchange Commission v. Chad Calice and Holly Hand, 21-cv-5009, U.S. District Court, Southern District of New York (Manhattan).
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